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TCW8: The worst week in markets and how investing has nothing to do with maths.... · The Curve

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  Progress is part of Audi's DNA and as a brand they're leading the way in premium electric mobility
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  with their fully electric Audi eTron range. Thanks so much to Audi for sponsoring this podcast
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  and if you haven't already, check out our savings calculator that we've created together to help
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  you reach your savings goals. Hi and welcome to the Curve Weekly, the podcast that keeps you up to date
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  with all the money, business and stock market tea. Everyone should experience for us class
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  at least once in their lives and Annie shouldn't miss out just because she can't afford it.
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  Help me own pool. And we are live. Welcome everyone. Hi. We are happy. We are away. We are.
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  What is that thing? We're like, what? Me, ma'am. Me, ma'am. Me, ma'am.
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  La, la, la, la. All I can say is I'm really glad the cat's out of the bag with you going full time
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  and the curse that we can say this will be one of the very last seven a.m. recordings that we
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  hopefully will do in a while. Yes. It's fine being up at this hour but it's it's being up and on.
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  Yeah, you're right. Like, everyone must be like, ah, seven, that's fine. But it's like being like,
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  yeah, I remember when I had my job at Milford and we used to, we were based in Aussie and we had
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  638 meetings. So we had because of New Zealand being 838. I see where this is stemming from.
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  The finance industry. And so we had to be up and on at 630 and they'd be like, so what do you think,
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  Aussie team? And we'd be like, I was like, it was like, it was like, we were there, but we were there.
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  Did you have to have like video on or any video on? Yeah. But it was quite good because you go
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  and you do it and then you go to the gym or something and then, well, you'd leave it at least. That's
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  a good role. So you'd roll out of being the first thing you do is have a meeting. Yeah. No. Yeah.
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  Oh, yuck. Okay. You were like, we are not doing it. No, we'll be starting with, you know,
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  how we mean to continue, which is not. Yes. But it's kind of early mornings. God. Okay. Are you with me?
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  I'm sort of with you. Okay. Yeah. That, you know, last night I hated a selfie video on the
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  Instagram. Yeah. Can I go selfie? I was just before I was going out. Sorry. I was going to say,
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  you look so cute, but also you've gotten so much better at it. I was like, wow. I learned from the
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  best. No, seriously. And then after that, because it was just a reminder about the curved classroom,
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  that it starts on Wednesday. And I, there were so many people have bought seats since they saw
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  that selfie video and I thought, good for me, but I know. Imagine if I had that effect on my personal
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  with like, you know, what do you mean? I just see anyone want to go on a date, date, date,
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  he's my calendar. Imagine if I had heaps of people. He's my calendar just slot in the time.
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  Available. We never know. Not available. We never know. Not even anyone on Monday.
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  But if you want to join it starting in two days, which is so exciting and kind of scary.
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  Kind of scary. We've got quite a bit to do, don't we? Yes. Yeah. It starts in two days and we've
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  got a little welcome live on Thursday. Yeah, just to make sure everyone can log in and do all that
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  stuff. Say hi, meet your new friends. Yeah. Figure out how the platform works, all that. Yeah,
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  I'm so excited. And I was also really stoked to see how many people from all over the world are joining.
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  Oh my gosh. It's not just Zealand. There are some of the countries that people are quite a lot of
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  Australians. Yeah. Hong Kong, Amsterdam, US, someone in Poland. Serbia.
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  And I. How cool is that? Yeah. Yeah. So all over the world, which is quite amazing.
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  Yeah. Because if you are listening from somewhere in the world that is not New Zealand,
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  this course is universal. Yeah. The content in it is the, you know, doesn't matter what country you're
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  in. So that was really cool to see people from different parts of the world. Going global, babe.
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  Okay. Okay. Okay. Now, talk to me about the markets. What's happening? Is it good news? Is it bad news?
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  Yeah, it's pretty bad news. Yeah, just, you know, a nice way to start your Monday. Is it?
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  Yeah. So we had a pretty brutal week on the ESM P500 in the US market. It was down 2.6%
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  last week, which is, it's worst week this year. So we had some pretty good weeks. So this was
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  a pretty bad one. And then the NASDAQ as well, which is the more high growth index that was down
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  3.3%. So I mean, but that one always tends to move quite a bit more either way. So if the ESM P500
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  is up one percent, then usually the NASDAQ is a lot more advice. And this was all around inflation
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  figures that came out bloody. And we're going to have to change this podcast format because I
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  cannot listen to this every Monday morning or like, but it wasn't your typical inflation. It was
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  just some other economic data around inflation and in prices. And so that kind of spooked the market
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  and people decided to sell these shares. And then in Australia, we had the market off 2%. Which means,
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  sorry, just means it was down 2%. Good girl. She's correcting myself. And then it a little
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  old New Zealand was down 1.5% so that our market did quite well actually. And that was because
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  we've got a lot of companies reporting financial results. So we've got our kind of earnings season
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  at the moment. And people are doing well. People are doing well. Yeah, there's a lot of
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  gold for that. And so some economic data that we had in Wyke's life, it's nothing that you
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  forgot to press record on your video and we're halfway through this recording.
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  Folly. God, that you noticed though. Yeah. So much more annoying if we'd got to the end
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  in New Zealand. I know. We had an interest rate announcement in New Zealand.
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  Oh, I did. Yeah. So how do I miss this shit? Where was it announced?
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  It's not an out some daily mail, babe. I don't even look at the daily mail. I'm not
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  interested in contagion button plans. I've seen your shirt's history. I honestly don't think
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  I'd be embarrassed if someone looked at my shirt. We had a guest on the podcast and she had to
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  e-drop her recording to self-slap type and self-slap pop stuff and it's all out. All out podcast
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  videos and stuff. Sorry, it kind of looks like PornHub, doesn't it? I was like, whoa,
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  getting real comfortable with the with the guest. Oh, I love that. No, um, do you know what was
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  funny? The other day someone was e-dropping something to me. It was another guest that we
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  hit on the podcast and it was Porn. No, it wasn't Porn, but one of my friends has recently broken
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  up with her boyfriend and I thought it would be quite funny to video call her naked just because
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  I thought it'll make you smile. You know, like, lol, that's why I was standing. We're so different.
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  I've seen flowers and soap scenes nodes, but yeah. I was standing there. I was video calling her
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  and I was just, oh my god, you called your dad. No, I was standing there and I was just like,
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  thought it was, oh, I think funny, but she didn't, oh, it's a screen recorder. Oh yeah.
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  I mean, when someone was sending a podcast video, it came up with me just standing in
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  tubeless and I was like, oh god, god, god, god, god. Looked way more sexy than I think he was.
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  Anyway, back to the market. Yes. So we had the New Zealand official cash rate.
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  No, this is really important. I'm listening. We had the cyclone and a lot of storms that have
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  happened in New Zealand lately and this is really increased inflation. So we're now thinking that
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  inflation is going to be at that 7% for much longer just because farmers have lost crops.
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  You know, like, there's going to be a lot of increase in prices. And so that means that interest rates
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  going to have to stay higher for longer or increase, we're going to have to increase interest rates more.
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  So it's kind of, but this decision was really important because we're like, well, at one point,
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  we've got the economy that's like really struggling because of the cyclone and all the storms.
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  So therefore, let's not increase interest rates as much. But then on the flip side, we've got
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  that has caused inflation. So it's kind of, it's a good reminder that there's this constant like
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  battle, I guess, between interest rates and inflation and the effect that it has on the economy.
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  We also had last week in the US, we had a lot of retailers announce results. So we had Walmart.
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  So they're one of the biggest retailers in the US. They've got a market cap of about 400 billion.
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  So that's just, so it's like, explain please.
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  What was I remember in the co-classroom, even when you, the first place, and you did on that,
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  I was still like, what is it? So I'm imagining for people who are listening, who haven't done
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  the co-classroom in their market cap. And then they're like, so market cap is the size of a company.
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  Yes. So it's the number of shares times the share price. So the market cap moves up and down when
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  the share price moves up and down. But it's just, it shows the value of the company. So all the size
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  of the company. So it's a $400 billion company. And then we also had Home Depot, which is,
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  what kind of company is that? It's like, it's like a bunnings or like a lighter tin. And again,
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  very, very large retailer, $300 billion market cap. So Walmart, $400, Home Depot, $300,
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  they're both really big retailers in the S&P 500. I guess why are these results important? Well,
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  because they're such large retailers, they've got a really good read on the consumer, on spending
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  habits, on different regions, different countries. So it's actually really, really interesting
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  when they report, you know, people do actually read their results and listen to what they say.
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  And so Walmart, their share price fell 2% for the week. And there's was all around like really
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  cautious guidance. So when a company reports its results, it has the current year, well, what it's
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  done for the last 12 months. And then it usually gives some commentary about what it's seeing for
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  the future. So if you were looking at a company result and you had 30 seconds, you would skip to
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  the last page and you would just read that outlook statement or that guidance that they're giving
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  because that's markets forward looking, you know, so you want to know what does the future hold.
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  And so that's your best indication. So you jump to the last page and their guidance was pretty
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  weak. You know, they're getting pretty concerned about the outlook for the consumer, which is
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  very enough. We've got huge inflation, you know, and so the market took that and that's why it's
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  share prices. How annoying for them to have to report that publicly, like, yeah, the future's
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  looking dire, you know. And if you think if you think a company is always trying to sell its stock
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  to shareholders effectively, it's trying to be the CEO of the salesperson. That's what I mean,
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  it's awkward to be like, by the way, we're syncing. So the fact if they're like, oh look, we're
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  a bit cautious. It's like, oh, are you actually really cautious and you're just being, you know,
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  you're trying to, you know, make it sound better. So there's a lot of kind of psychology investing
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  actually, you know. So you read people so well, bad. I know. I reckon, honestly, for that reason,
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  I think that it gave me more confidence in the idea that I could invest because
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  the idea of investing being related to money or maths or division or any of that scares the
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  shit out of me. But the idea that it's about understanding consumer behaviour and how people
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  react in situations and what, like, that is also quite a feminine trait. It's almost like
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  intuition really. And you can get really bogged down in the detail and like, you can, you know,
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  in terms of valuing companies and doing spreadsheets and figures and all that. But if you kind of
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  zoom out and you go, you know, what, like, what is a big trend that's happening in the world at
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  the moment? What are companies that are going to benefit? You know, like, it's, if you just break it
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  down and make it simple, it kind of is. Yeah. Yeah. I love that. I'm not actually that smart.
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  Yeah, she's faking it at everyone. And then every time I'm like, hey, could you do this
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  maths equation? She's like, oh, give me my calculator. Yeah. And then we also had home depot. So
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  their share price was down 7% for the week. And again, similar thing. They're seeing, you know,
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  pretty, pretty tough outlook, even though they raised their dividend in sort of warm up, which
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  is really good. Which is, so their dividend is when company pays out a portion of its profits.
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  So it's kind of a good indication that business is going well. We don't actually need all the
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  profits. We'll give you, we'll give you some. So that's good, but that was kind of overshadowed
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  by this, you know, what's, what's coming in the future? What's looming, you know, this. So it would
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  warm up and home depot, depot? Yep. Be companies that are they the blue chip companies, the ones that are
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  for potentially sometimes slightly older investors who do want to be getting a dividend?
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  Yes. Yeah. So because they dividend paying companies, they, I mean, they're not blue chip,
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  blue chips more like your big pharmaceuticals and like, you know, those real, real boring,
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  boring companies that have been around friever. Some people might classify these as blue chip
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  companies, maybe warm up, because it is so massive and it's been around friever. And blue
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  chip is just really stable. Real stable companies that have been around friever, kind of pretty
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  household brands, like Procter & Gamble, Johnson & Johnson, you know, those real, steady, boring.
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  It's good though, boring can be good in a portfolio. Yeah. One bit of boring. And then we also had,
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  this one's going to be a bit up your alley soap. Oh, thank God. What? Beyond meat. Oh,
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  sorry. I am into Beyond Weight. No, sorry. It was more just yesterday. I went to a tennis tournament
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  and they had tennis tournament. It was a social one, obviously. But they were serving burgers and
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  they were so good. And I must say, the vegetarian one just had a big mushroom rather than a
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  beyond meat. And it was quite nice. Oh yeah. Because sometimes when I'm with Beyond Meat,
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  they're like, what's in this? Yeah, totally. Is it like, is it even worse than just having meat?
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  Yeah. But anyway, interesting. But it's a big thing. Because they were not doing particularly well.
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  Not. Good memory. Thank you. Thank you. Are they doing better or worse?
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  Well, so the share price was up 10% last week. And that's because they announced... 10%?
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  Yeah. They announced the result. But yes, you're right. It IPOs, which means that that's when a company
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  first lists on the stock market. So it becomes public for the first time. People public can buy
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  shares. So it IPOed in 2019. And everyone kind of thought it would be this the start of a, you know,
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  a plant-based trend and even run moving to, you know, even more plant-based and, you know,
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  focusing on health and wellness. And it was. There's been a lot of companies that have
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  done particularly well in this space. But I think there was a lot of hype around Beyond Meat.
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  And so it's share price jumped from $60 to $230 in, like, weeks.
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  Whoa. Over the space of, like, three or four weeks. And it's now down to $19.
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  Yikes. So people that bought, so that person that bought, sorry, shouldn't laugh.
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  The person that bought that last share at $200, $3, you know, that didn't get you.
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  You don't want to be the last person to buy. But anyway, share prices now are $19. But it had a good
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  result. And it's all around improving cash flow. So a company, it's all about cash, you know,
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  like revenue and earnings. They can kind of be manipulated with accounting. Fudgery.
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  But cash is cash. Cash coming in and cash going out. You can't really manipulate that. That is,
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  that is key. So it is cash flow positive, which means it now has cash in the bank effectively.
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  Because in the curve weekly, they know you've seen that last week, I was shocked to see the Airbnb
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  was only just making a profit. Yeah. Yeah. Because you think companies like that that are
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  seen from the exterior, like, super successful in a household name. And you use them all the time.
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  Yeah. I mean, I don't know about Uber and things like that. But to think Airbnb is still not
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  making a profit. Yeah. But then Beyond Meat are. So that's really good. Oh, no, so Beyond Meat's
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  make it. It's cash flow positive, which means so it's like cash coming in and cash going out
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  rather than like revenue and earnings. There can be, there's a lot of like non-cash adjustments if
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  that makes sense. That's not to do that. Yeah. Too early to go out. Yeah. Anyway, it's in the
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  it's heading in the right direction. And when a company turns cash flow positive, like a
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  use a lot of cash to grow a business when you're when you're new, when you're starting out,
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  you know, it does, you want to grow as fast as you can. So you use a lot of cash. So now that they're
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  actually cash flow positive, meaning that they've got a little cash left over after they're
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  growing is actually a really good sign. And so, but one thing with this is it's really catering
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  remember, we saw it with all birds as well. Like, you know, a lot of these companies can get really,
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  really hyped and you can feel like you've missed out on the like getting a good and good price at
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  an IPO. And I think this is a really good example to know, you know, don't don't feel like you've
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  missed the boat or you've missed the opportunity because, you know, you're buying Beyond Meat now if
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  you were going to at a much cheaper price than you would have been at IPO. So it's just a really
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  good reminder that, you know, the markets are constantly changing, companies are constantly changing,
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  so, you know, don't feel like you've missed out because there could be another opportunity down the
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  track. And on that note, I really enjoyed that episode. Yeah, I feel like I learned a lot. Yeah,
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  good. Thanks for coming prepared. I hope you learned a lot on the other episodes. It's not that you
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  like I'm unprepared, but I'm going to get my coffee. Okay, bye. We're really excited to have
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