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Cameron: Welcome back to QAV, the American Edition. Tony. I think this is episode 24. How are you doing?

Tony Kynaston: I’m very well. Thank you. Nice and

Cameron: I know that ’cause we, we just did our Australian edition. Yes. Very hot. Where I am. Very cool where you are. That’s Australia right now, depending on which part of the coast you’re in. Well, Tony, uh, talking about American news. Got a, they’ve got a, a shutdown. They’re funny. They have these shutdowns. We don’t really understand shutdowns.

Last time we had a shutdown kind of thing in Australia. It was during the Whitlam government, wasn’t it?

Tony Kynaston: November, 1975. Yep.

Cameron: Yeah, it is. 50 years ago. The last time we had a government down, and it’s still talked about in Angry Voices to this very day.

Tony Kynaston: We’ve had a couple of other examples, like a, ’cause they call it block supply here. So a government has to [00:01:00] be able to guarantee convince the Governor General, they can guarantee supply, which means that their budget will pass. So there’s been other cases where there’s been minority governments that can become topsy tur.

Like the most recent case was in Tasmania when, uh. The minority government there had a vote of no confidence and the blocking of supply, and then they had to go to an election and they got reelected. Same problem. Yeah. Different time.

Cameron: Well, the market, uh, you know, did stumble a little bit when they couldn’t, uh, prevent it, but yeah, thinner. Well, I don’t know. I mean, I have seen these sorts of things before. Not exactly with this level of urgency and animosity, I think,

Tony Kynaston: always is that level of urgency and animosities happened what 11 times since Clinton or something’s been a lot it, [00:02:00] and it’s always brinkmanship.

Cameron: yeah.

Tony Kynaston: for the government workers who don’t get paid and they may not get paid under this current In the past they generally

Cameron: Yeah,

Tony Kynaston: they’ll get back pay.

But that’s, there’s threats to withhold that. So we’ll see what happens.

Cameron: I like other things that happen in the news, in the economy. We tend to ignore it and just stick to our knitting. Um, I do wanna. Talk about our portfolio performance, though our US portfolio, which for new listeners, we’ve been running well for new listeners. Uh, we’ve been doing a value investing podcast for six years in Australia.

Tony’s been a value investor for 30 odd years. Oh, gangbusters. Absolutely. Our por, our Australian portfolios are all doing gangbusters, double market or better. Um, our US portfolio is doing okay. Not as well. It was, it was like three times market before the Trump administration came in. [00:03:00] It’s come back a little bit this year, but it’s only two years old and, you know, we work on five to 10 year timeframes for cycles to, uh, come and go.

Um, I’ll start with the all time performance. So we started the US portfolio back. A little over two years ago, 19th of September, 2023. Since then, our portfolio is up 62% versus the s and p 500, up 51%. So we’re doing better than the s and p 500 over the long haul, but we’ve come back a long way. Um, a year ago we were up a hundred percent versus the s and p up 34%.

So, uh, after the Trump administration came in, things started to go south for some of our stocks, but it’s not that bad. I mean, Willis Lease Finance Company, WLFC, which is our best performing stock, at one point it was up 300%. It’s [00:04:00] now up 189%. So it’s come back nearly half then, but still up 189% since we added it.

I don’t know when, uh, let me see.

Tony Kynaston: blame the Trump government on some of those. I mean, they wouldn’t have an impact on Willis Lee’s finance. It’s probably got more to do with interest rates than anything else. I would’ve thought,

Cameron: I am not blaming them. I’m just saying it’s a fact. Since the Trump administration came into power went backwards,

Tony Kynaston: well, it’s, but

Cameron: we’ve.

Tony Kynaston: is it just coincidence?

Cameron: Who knows. That’s beyond my pay raise. My pay grade, Tony. Um, we bought Willis Lease Finance Company in November, 2023. It’s up 180% since then. So I’m not complaining it’s at all. But year to date, our US portfolio, uh, is down 13.44%. By the way, year to date, I’m talking. Um.

Tony Kynaston: Calendar.

Cameron: Uh, [00:05:00] calendar year. Yeah. So January 25, it’s down 13% this calendar year versus the s and p 500, up 14%.

In the last month. Our portfolio is down 6% versus the s and p up 4%. So it’s not a good part of the cycle for us, but as we were just talking about in the Australian show, some of our Australian portfolios were underwater. Six months ago, now they’re doing double market ’cause they’ve exploded in the last few months.

So it comes and goes. At the end of the day, the QAV philosophy is to buy. Shares and companies that seem to be generating a lot of cash when we can buy them at a discount to their intrinsic valuation for whatever reason, hold them as long as we possibly can. We have a couple of sell triggers that we will obey, but other than that, we hold them as long as we can wait for their share price to regress to the mean wait for the market to [00:06:00] pick up in one way or another.

This is actually a healthy little business and. Six times outta 10. We hope that we buy the right ones and, uh, we outperform The market that seems to have worked for you over 30 years seems to have worked for other value investors over many, many decades, and in the years we’ve been doing the show, it seems to work well for us as well.

Tony Kynaston: And we saw the same sort of thing happen with the Australian portfolio when we first set it up. And the first couple of years it, remember it in the first year, I think it outperformed about four times compared to the index. And then it went backwards and there were periods of underperformance.

That’s, it does take a little while for a portfolio to beat itself down, usually. Um. it stutters and you have to sell things quicker than you’d like, and then start again. So, yeah, it’s, it’s the old, I mean, you talk to anybody about, um, investing and they say don’t base your decision on the one year return. at a longer term. So we have [00:07:00] a two year track record now. It’s still outperforming the market. But yeah, give it, it three to five before you sort of can see the real proof in the pudding. I think.

Cameron: And since we started doing this show regularly in March of 2025, I’ve been doing a deep dive or a pulled pork, as we call it, on a stock every week. And most of those have been doing gangbusters since we talked about them. Uh, the one I always start with, Zep, which we did in July Z Double P, Zep Health Corporation, is now up nearly 1800% since we talked about it.

Um, which is like, it’s not a Mag seven, no one’s heard of it. But, uh, doing gangbusters share price has gone from $2 98 when we talked about it to $56 today. They make, uh, like an iPhone competitor. Um, and they’ve just not an iPhone Apple Watch competitor, smartwatch, uh, company.

Tony Kynaston: people who,

Cameron: Yeah.[00:08:00]

Tony Kynaston: fans like me would know that’s reference to

Cameron: A Chinese Watch

Tony Kynaston: really

Cameron: this. Watch. Ready? Yeah.

Tony Kynaston: Yeah.

Cameron: Mother. Um. Yeah, but a lot of, uh, a lot of the other companies that we’ve talked about have done well as well. ChemX is up 59% cement company, Canadian Imperial Bank is up 28%. Orx up 24. Jackson Financial up 22 IHS holding 24 Ford Motor Company, which has a little bit to do with the company I’m talking about today.

Up 18%. Gray media, up 28% Sasol. Up 24%. Couple have gone backwards. Titan Machinery’s gone back 14% since I talked about it. Um, it’s the most surprising one. Zim Integrated shipping, which we said was looking dodgy at the time when we talked about it’s gone back 24%. But, uh, you know, the rest have done pretty, pretty well.

So, as I always say, you know, I [00:09:00] mentioned. In my last show that I was on the value investing subreddit the other day, and people are complaining about how there’s no value opportunities left in the US market. I did my US buy list over the weekend and there was 170 companies that our checklist system, uh, identified that we think are worth having a look at anyway.

Tony Kynaston: And I think it’s fair to say some of those names you’ve read out that, that you’ve done deep dives on, they’re not part of our portfolio. So it’s

Cameron: Oh yeah. Most of them aren’t because we’re fully invested. We were fully invested when I started doing this show, so, um, yeah, a couple of them. Jackson Financial, gray Media, we do hold. I think that’s. It. But to give people an example, like so the stocks that we do hold Willis, lease Finance Company, I mentioned up 189% since we bought it.

Euro, CS ESE, A shipping company up [00:10:00] 105% in over International, up 85. BLX Foreign Trade, bank of Latin America up 84%. Regional management RM up 66 UBS up 33 gas, stealth gas, GASS up 30%. Kt your initials backwards up 27. Um, gray media are set up 20% since we bought it, so yeah, so there’s a lot of opportunity in value stocks despite what you may believe or may hear in the, uh, investing media.

And the company I’m gonna talk about very briefly today. I didn’t have a lot of time to prep for this this week, but uh, I’ve done a quick overview of it. They’re called American Axle. A XL is their ticket code, American Axle and Manufacturing Holdings, a a m. They’re commonly referred to. Uh, they did drop a little in trading today.

I did my analysis on ’em yesterday when they were a buy. They’ve dropped a little bit below our buy price, uh, [00:11:00] overnight. They’re down by like 15 cents, but they’re another classic boring business. Like, uh, some of the ones we’ve done before, but like Seneca, the canned food companies. You know, over the last six months we’ve been doing the show.

The stocks that I’ve been picking. I always say that when I look at a buy list every week in the US they’re mostly shipping companies and financial services companies. Uh, and I and I look for different things to talk about, and they fall into two categories. The ones that I find that aren’t one of those two, they’re either dirty businesses.

Things that are involved in some dirty industries with a lot of scandal surrounding them or ESG issues. And so investors are steering a little bit clear of them, or they’re a little bit complicated, but we see value in them or this claim, which is just boring. No one’s heard of them. They’re not sexy.

They’ve been around a long time. They make boring components for boring things, [00:12:00] but they make money. And they’re not sexy, but that’s a classic value type investment.

Tony Kynaston: Correct. story. hard work.

Cameron: Yeah, so these guys make, uh, axles basically, um, if I’m gonna simplify it, they make heavy bits of machinery that turn engines or motor of motor power of some sort into wheel motion axles, drive shafts, differentials. E-beam axles for EVs. Do you know what an e-beam axle is? Tony?

Tony Kynaston: I don’t have an ev.

Cameron: Neither did I. An e-beam Axle is a self-contained powered axle for

Tony Kynaston: okay.

Cameron: that bundles an electric motor.

A reduction gearbox and an inverter inside the axle housing or attached to the axle housing. In some cases, you swap a conventional rear axle for [00:13:00] this unit and it spins the wheels electrically. They also have a business that makes a broad set of forged or metal formed parts used in engines, transmissions and safety critical components.

Think what connects torque to tires. That’s basically what these guys do. For pickups, SUVs, and EVs. They do. They torque T-O-R-Q-U-E to tires. Yeah. Hey, customers, general Motors, 42% of sales, uh, stellantis, 13% of sales. Stellantis, if like me, you’ve never heard of them. You’ve heard of Atlantis. Well, stellantis is got nothing to do with Atlantis.

It was, uh. It’s a global automotive company that was formed in 2021 via the merger of Fiat Chrysler and the PSA group, which was Pergo, Citron, and Opal. Speaking of Fiat, I just did a. [00:14:00] Podcast on the rise of the fascists under Mussolini in Italy, one of his big funders and supporters was Fiat. Uh,

Tony Kynaston: Makes sense.

Cameron: they were like, yeah, smash the socialist.

Let’s get that Mussolini boy into work. We like the cut of his jib in his black shirt, say sexy in his black shirt. And Ford Motor Company is 13% of their revenue. Say what you want about the fascists in the early 20th century, Tony, they were dashing Good, good uniforms. Hugo Boss. Yeah. Making Nazi uniforms.

Uh, so the founding of this company, a a m, born in 1994 when Richard Dick. Dauch, D-A-U-C-H pronounced Dauch rhymes with ouch LED investors to buy GM’s final drive and forge unit, and then they later iPod in 1999. Dauch. [00:15:00] Had a background in manufacturing at gm. VW Chrysler wrote a book not long before he died in 2013, he died quite young of cancer.

It’s like 71. He wrote a book called American Drive about rebuilding US manufacturing. His son, David Doch, is now chairman of the Board and Chief Executive Officer, but somewhat surprisingly, only owns about 2% of the stock. Thought he might own a bigger chunk, and we like to score companies where you have a founder or executives that own a big chunk, but not the case for the douches.

Apparently still, I wouldn’t mind.

 Nice one. Yeah, I’ll pay that. Very good. Uh, so that’s what they do. As I said, relatively boring. I mean, I don’t need to go into a lot of detail. I think about this. They make a, they make axles and different bits of cars that make wheels turn. They’ve had a few major pivots in m and [00:16:00] as over the years. 2017, they acquired a company called Metal Dine that added scale and, uh, the metal forming segment of their business in 2019.

They sold a casting unit to sort of streamline, but the big announcement at the moment is at the beginning of this year, they agreed to buy a company called Dow Lice. They’re a British company, owner of GKN Automotive, spelled D-O-W-L-A-I-S Dow. LAIs is, it’s how it’s pronounced. They’re buying ’em for a $1.4 billion cash in stock deal.

Um, they’re gonna de-list and then maybe list, do a secondary listing of the merged entity in London. Dow Lice is a British specialist engineering slash auto components group that was only formed in April of 2023 via the demerger of GKN automotive, GKN power metallurgy, and GKN hydrogen [00:17:00] from a company called Melrose Industries.

I think we’ve talked about them in the past too, for some reason. Sounds familiar. Anyway, they have a bunch of businesses that are somewhat similar to the business that a a m are in, uh, driveline, powertrains E drives, um, CV joints, powder metallurgy, metal powers, precision parts, and hydrogen Clean Energy Engineering, which is a smaller but an emerging vertical.

So it has a, has a footprint in. The UK and Europe, 25,000 employees across 19 countries, but has been losing money in recent times since it was created. And so these guys have swooped in and, uh, merging with it. So a xls current segments are basically drive lines, axles, AWS four wds, [00:18:00] EBE drive, about four point.

Two, 4.3 billion in external sales, which is about 69% of their revenue and metal forming where they’re forging gears and shafts and engine and transmission parts, which is about 1.8, 1.9 billion of their revenue. The other 31%. Uh, that’s, that’s it. That’s what they do. Nothing fancy. Uh, just make bits that make cars move.

Tony Kynaston: Hmm.

Cameron: Why is it cheap? Well, first of all, I should point out that the reason it’s on our buy list is their price to operate in cash flow. AKA, the prop calf is 1.63 times. So not as low as some we have seen recently, but low enough. For us, um, trying to figure out why the market is discounting it, you know, [00:19:00] it throws off a lot of cash when volumes are steady.

If you look at their, if you look at their revenue, like it’s not that exciting. Let me pull up their, uh, revenue page here.

Tony Kynaston: that? I mean, I can, I can just see the management consultants now saying, oh, it’s the price taken or the price maker. face competition from overseas. Who can do it cheaper? Blah, blah, blah, blah, And yet, it’s

Cameron: Yeah.

Tony Kynaston: long has it been around for?

Cameron: Uh, 30 years. Nine, four. Yeah. And you know, they’ve obviously got deep relationships with these, with gm, with Ford, with Stellantis. If you go back and look at their revenue line 20 19, 6 and a half billion, drop down to 4.7 in 2020, up to 5.1 in 20 21, 5 0.8 in 22, 6 in 23, 6 0.1 in 24. Estimate for this year is 5.8, so [00:20:00] they’re not growing.

Sort of their sales are just kind of hanging in there. Operating profit though in that time has gone from negative 300 million in 2019 to 241 million profit in 2024. Time to market is 100 and uh, sorry, time to market trailing 12 months. The other TTM 172 million net profit estimate for this year will be 54 million.

This is going from a 444 million loss in 2019. So they’re doing something right. They’ve gone from making a.

Tony Kynaston: which probably means that there’s opportunity, right? Well, m and a.

Cameron: Streamlining. They got rid of divisions and that kinda stuff. Yeah. Um, if also you look at their operating margin, 2019 it was negative four point a 5% dropped to negative eight point a 5% in 2020 it’s up to positive 3%. This year it [00:21:00] was 4% last year. So they’re doing some something right in the background to make money and make a profit.

Tony Kynaston: percent’s a very low margin, but that could be their strength, right? It’s a barrier to entry. Why would you billions in all the equipment you had to make axles? out and try and pick up business from established players if you’re only gonna make 3% margin.

Cameron: Yeah.

Good point. Uh, so anyway, you know, the, and you know the, I think the car market, we talked about this when we did Ford. Um, the car market is a bit choppy in the us. Goes up, goes down. EVs have been stop, start. So these guys, uh, riding sort of these uneven cycles. It’s not exciting. It’s not a Mag seven, it’s not an Nvidia or it’s not an open ai, but they seem to know what they’re doing in terms of running a [00:22:00] steady as she goes business and tweaking it year after year to become more and more profitable.

They do have deep know-how in rear axle and four by four manufacturing and long program lives with GM and Ford. They have a manufacturing footprint in the US and Mexico, which is possibly a good thing in the tariff wars that are going on. The e-beam tech that lets them electrify trucks without redesigning frames is a big strength for them.

If they, um, if that, you know, continues to be an ongoing trend. Although I know Trump thinks petrol is great and we EVs are terrible, but didn’t ask Elon about that before he said that. So they’ve got maybe a a bit of a moat in terms of switching costs and validation cycles with their relationships with these big American automobile manufacturers.

Tony Kynaston: Mm-hmm.

Cameron: [00:23:00] The market might also be discounting it though because of concentration risk. Gm, as I said earlier, is 42% of sales cyclical exposure to North American trucks and that whole EV demand whiplash, which makes, uh, e e-beam investment and predictability on returns on that. A little bit iffy, but then they’ve got the Dow lice.

Merger, uh, which is a potential win for them depending on how well they execute and how that plays out. So we’ll see how that goes as well. So the, they’re, they’re waiting on some approvals for that too, with various regulatory bodies. So that may or may not actually see the light of day. No one really knows.

And there’s also tailwinds If US truck production stabilizes, um, who knows what’s gonna happen with the US economy. I know when we talked about. Some of our agriculture plays too. We know that [00:24:00] trucks along with, um, agricultural machinery, I can’t remember who that was. We talked about a, um, big US agricultural play recently.

Um, the whole farming sector is struggling a little bit over there at the moment. They probably buy a lot of trucks as well, or Utes as we would call them here, utility vehicles. So. But again, our basic policy is we stay outta prediction. We stay out of both mi microeconomic and macro analysis. We just look at the fundamentals of the business.

Does it seem to be well run? Are they generating cash and can we get it at a discount? And we let management. Figure out the rest of it. Let them run their business to the best of their ability. Assume that the incentive programs that they have will mean that they do the right thing by the business long term.

More often than not, we hope. [00:25:00] Lemme run through the numbers. Um, do, do, do, do, do. Oh no. They’re at the top of my thing, not the bottom.

Tony Kynaston: And we don’t have companies like this in Australia, or at least listed companies like this. It’s not a big, we don’t even have a local vehicle manufacturing base anymore in Australia. ’cause it was subsidized for a long time. Um,

Cameron: Yeah.

Tony Kynaston: Yep. And, uh, it’s, probably a weakness for Australia at some stage.

I mean, I, you know, I understand why we don’t have it ’cause we can’t stack it up overseas imports. But, um, you know, it’s, it’s, it’s gotta be a strength for a country like America to have a local base that can produce parts for vehicles calls, have all that technology available.

Cameron: yeah, although, I mean, I believe that people aren’t gonna buy cars in the near future. You, you’ll just have AI driven shared vehicles that you just book on [00:26:00] your. You tell your AI that you need a vehicle and one will turn up in your house a minute later. So I dunno what that’s gonna do to car ownership.

And car sales trucks might be different, but uh,

Tony Kynaston: so this company’s probably

Cameron: yeah.

Tony Kynaston: Yeah.

Cameron: Well I’m talking about Australian manufacturing, but I also believe we will see the cost of manufacturing drop when we have. Robots building vehicles along with everything else. You know, one of the reasons we can’t be competitive in terms of building anything like that here is that.

We can’t compete with China in terms of labor costs and insurance and all those sorts of things that go with hiring human labor. When you get rid of the human labor and you have robots building these things, all of a sudden your unit cost drops dramatically and maybe we can build them competitively, price competitively.

Of course, no one will have a job, so no one will be able to afford to afford to buy a car or a truck. So.

Tony Kynaston: But we don’t predict, but our, but our market is, is also very [00:27:00] small. So there’s economies of scale we just can’t achieve in Australia. just for the US listeners, our market’s about the size of California the US market overall is a lot larger than that, 10 or 20 times bigger. So, um, yeah.

Cameron: Anyway, to the numbers for American axle, average daily trade, about $22 million. So quite large Pr/OpCaf, as I said, 1.63. Uh, in Wikipedia they get a quality rank of 63, which is above our cutoff of 60, so we scored them for that. They also scored for a stock rank greater than 90 and f scored greater than 4.5, so they score very well Inia for those.

Metrics. Um, their, their value score is 97 in stock. Edia momentum is 90, surprisingly, and the stock rank is 98. So Wikipedia’s analysis really likes them. They did not score for the price being [00:28:00] less than our IV one or IV two. Did not score for price being less than book, but they did score for price being less than book plus 30.

They also scored for a new three point upturn. That was when they were actually above the byline yesterday. But, um, I’m assuming that they will go back above that in the next couple of days. If not, we wouldn’t buy them. But they did get a score for that when I did this over the weekend. They did not score for growth being greater than PE over 1.5 and, uh, they didn’t score for PE uh, less than yield ’cause they are paying a, a dividend.

Also, don’t score for yield greater than bank debt. Don’t score for future IV being higher than, uh, double the price. So they, uh, added 12 items that they scored for. They got a nine out of 12, which is a [00:29:00] quality score of 75%, which is pretty good for us. And, uh, a QAV score of 0.41, which again, is, uh, pretty good for us.

Yeah. Sh. Boring, but solid. And I like it, Tony. I like it. What do you think?

Tony Kynaston: it’s necessary. Um, it you spot on. It’s a, it’s a classic value play. It’s low growth, um, grinding every day to make a 3% margin, but throwing off lots and lots of cash heavily embedded in the industries with relationships. Uh, which has gotta be a MO for it. So yeah, it’s, um, it’s a classic value play.

Cameron: By the way, I didn’t say that their F score is actually eight out of nine, like one of those. Healthiest F scores that I think we’ve seen since we’ve been doing this show. So financially, very solid and, uh, [00:30:00] doing, doing okay. So there you go. Boring axles, axle rose, boring. Um, you Guns N Roses fan, Tony.

Tony Kynaston: bit.

Cameron: That first album.

Actually, the first couple of albums pretty good. You know,

Tony Kynaston: I agree.

Cameron: appetite for Destruction, though. Can’t, can’t Beat it. Great album.

Okay. After hours. Tony,

Tony Kynaston: Yeah, a couple of things. Um, I’ve had a, had a nice

Cameron: I.

Tony Kynaston: I went out to Flemington, to the Turnbull Steaks Day with Ruddy. We had a nice lunch in the member’s dining room. Caught up with some friends, so that was lovely. Um, he came down from Wagga Wagga, uh, which was nice. and continuing on the social trend, I had the visit from Alex and her boyfriend and their, their family. Yesterday. So they drove around to come and see us. They’re over here from Adelaide Holiday. Well, the parents are, and Alex and Sean came down from Melbourne. So it was lovely. Had a nice, [00:31:00] uh, nice week of socializing, which I don’t often do down here at Cape Schanck, away from things. And on the listening front, red continent, have you heard that Cam?

Cameron: What’s that?

Tony Kynaston: so Jim, you know Jim Mo or NY Hurst. Two x

Cameron: I know Rob Hurst.

Tony Kynaston: So

Cameron: Oh yeah.

Tony Kynaston: to record and they put out an EP recently. It’s, it’s pretty good. In the style of

Cameron: Is the. Group called Red Continent or is that the album name?

Tony Kynaston: the ep. It’s got, I think it’s only got four or five tracks on it. But they’re pretty good,

Cameron: Right. I’ll check that out. I love Rob Hurst. Great drummer.

Tony Kynaston: is, isn’t he?

Cameron: Well, I’ve got a film for you Stalker by Andre Tak Kovski. You ever seen a Tchaikovsky film?

Tony Kynaston: no,

Cameron: Uh, you’ll love it. I think you’ll love it. Tchaikovsky. Um. Soviet, um, art [00:32:00] house director seventies and eighties, much Bel he died in 86, age 54,

Tony Kynaston: Oh.

Cameron: beloved by um, David Stratton. I remember

Tony Kynaston: He

Cameron: David Stratton used,

Tony Kynaston: did Tchaikovsky make, uh, Solaris?

Cameron: he did make Solaris, the original Solaris. Yeah. Yeah. You remember David talking about that? When Soderbergh’s, well, Soderberg and Clooney’s ver uh, remake of it came out and, uh, I remember David just saying, no, the Tarkovsky film was far superior and I watched, I’d never heard of Tarkovsky and I tracked it down somehow and watched it after that and loved it.

Very moody. No dialogue. Well, stalkers another film he made in 79. Um, he did five films and it was the last of his films. Um. Oh no, he made a couple more after that. Sorry. But, uh, he made them outside of the Soviet Union. I [00:33:00] think he, he moved to Paris, but a Russian friend of mine at Kung Fu said, have you seen Stalker by Tchaikovsky’s name?

He goes, oh, you gotta see this. It’s great. So I’ve been watching it and it’s fantastic. Very lynching. Um. Based on a science fiction novel, about three guys, the stalker, the professor, and the writer, and the stalker is taking the other two to the zone where all their wishes will come true. And it’s, that’s all you know.

And it’s very mysterious, very atmospheric. Not a lot of dialogue. Beautifully shot. You can find it on YouTube. So there’s a. There’s a YouTube channel called Moss Film, MOS Moscow film, MOS film that has a whole bunch of Soviet films for free. And, uh, this is one of them that I’ve been watching and it’s beautiful.

It looks, must be a digitally remastered version of it. It looks glorious [00:34:00] and, uh, just really weird and moody. So yeah, very lynching. Um, it reminds me at the beginning a lot of, um. A Razorhead,

Tony Kynaston: okay.

Cameron: but was made after a razorhead. Uh, razorhead was like 70, 77, 78, I think, wasn’t it?

Tony Kynaston: Oh, I’m not sure remember

Cameron: Mm.

Tony Kynaston: so it must have been done by the eighties.

Cameron: 77. Just looked it up. Yeah. Anyway. I highly recommend that. Um, as I’ve mentioned off air, I’ve been reading Asimov’s original Eye Robot novel, which I’d uh, never read before. I think we talked about some of his short stories in the Positronic brain, uh, last year when I read one, but I got into this and I was just really, it’s, it’s kind of archaic, 1950.

So his depiction of robots and everything’s a little bit off, but, um, his introduction of the three laws of robotics, I found fascinating. The [00:35:00] way he positions it, the way he introduces it, and the problem’s inherent. In the logic of it was brilliant, like really, really clever.

Tony Kynaston: Yeah,

Cameron: Not surprisingly for Asimov.

Tony Kynaston: two books. It’s the rest of the robots as well, just keeps the theme going and.

Cameron: Right. Well, the one, I’m not sure if the one I’m reading is a compilation. What, but there’s, I’m up to like chapter four. But, um, I like in, I think the third chapter, the two main guys, Donovan and whoever the other one is the two robot engineers. They’re on some distant space station where they, um. Put together an advanced robot QT QT one, and it’s a highly advanced, intelligent robot.

And the first thing it says is they said, we major. And it’s like, yeah, I don’t think that that, that makes any sense. I’m gonna have to take some time to reason this out ‘ cause I’m [00:36:00] obviously far superior to you and it doesn’t make any sense logically that a less superior being could build a. More superior being so I’m not buying that.

They’re telling him. But there’s all these humans, there’s billions of humans on earth that make robots and it’s like, nah. So it ends up deciding, it ends up basically building a cult where it and the robots are worshiping the master, which made all things and believes the humans are just delusional.

’cause they believe in this fairy tale because they have to tell themselves that because they’re inferior Anyway. Fascinating.

Tony Kynaston: Great. Great stories. Almost detective stories.

Cameron: Yeah, but also interesting to me to read it. So here we are, 75 years later, he was trying to work out how do you design adv artificial intelligence? In a way that it will be aligned with what’s good for humans. Here we are, 75 [00:37:00] years later, we’re now actually dealing with that, and we still have no idea what we’re doing, how to do it.

You know, everyone’s mucking around trying to talk about alignment, but yeah, when you read between the lines, no one cares. No. It’s just like build it as quickly as. Build it as quickly as possible. Make as much money as possible. Establish our dominance as, and we’ll worry about it later. We’ll worry about stopping it from killing us all down the track.

Tony Kynaston: were talking about off air before too. Like in a hundred years ago or so, the, the Royal Society of England would’ve been the hot bed of debate about ai. the great minds of the world would’ve gotten together and made presentations, debated, argued, up with the, with a good solution.

Cameron: Yeah.

Tony Kynaston: like it’s been corrupted by capitalism. It’s like, uh, we’ve gotta build our own ip. Keep it quiet. Get out there, fasten the market, build a moat, become dominant. Gather all the eyeballs and bugger if it’s good for society or not.

Cameron: Yeah, we’ll [00:38:00] worry about that later.

Tony Kynaston: Hmm.

Cameron: Well, actually that reminds me, I told you that I just did a couple of shows on fascism this morning on the bullshit filter with Ray, uh, talking about Mussolini, Hitler and the rise of fascism in their respective countries and. You know, when you study the history of it, fascism both in Italy and Germany was as, um, Trotsky wrote in the early thirties.

It was the response of the bourgeoisie to what they saw as the imminent threat of socialism, uh, post the Russian Revolution and World War I, and then the Great Depression in Germany’s case, the threat of. Socialism arising in their countries. They needed someone at arm’s length to come in and crush the unions and the workers and the socialists.

They outsourced that in both cases to the black shirts and then to the brown shirts, [00:39:00] and then put them in positions of power legally. To finish the job, to crush socialism. There was the petty, there was the industrialists and the large landowners and the church that came together to put the fascists in power in Italy and Germany with the view that, well, we’ll just put ’em in power for a few years and they can crush the socialists and then, then we’ll get rid of them and everything will be fine.

Right.

Tony Kynaston: Right. They just got rid of

Cameron: It was this short.

Tony Kynaston: Yeah.

Cameron: Yeah, it was the short termism. Well, we’ll just give them dictatorial powers. Well, they didn’t even think that. We’ll just put, put them in government. And then the first thing that both cases they did was take dictatorial powers and then get rid of all of the opposition and all of the dissent and, and

Tony Kynaston: We’ll just put

Cameron: yeah.

Did not end well.

Tony Kynaston: See

Cameron: Yeah. It’s this short termist thinking like Ray and I always laugh when we did the Caesar show, the assassins, uh, of Julius Caesar, Brutus, and Cassius, like it was step one, kill [00:40:00] Caesar, step two. Ah, let’s not worry about that right now. Like, like, whoa,

Tony Kynaston: I got a

Cameron: let’s not get ahead of ourselves.

Tony Kynaston: lots on my plate. Come on. Just do. Just do it.

Cameron: Yeah.

What are we gonna do after we kill Caesar? Well, we’ll worry about that when we worry about that. Let’s not, let’s not get ahead of ourselves here. You think too hard. Stop overthinking it.

Tony Kynaston: predicting.

Cameron: and Yeah. Never turns out well, this short termism, which you know, and I’ve said this before, this is why the Chinese are brilliant.

The Chinese figured out. The flaw in capitalism, which is short term thinking capitalists only think as far as next quarters profit statement. And the Chinese came in after, you know, after dong took over and was like, well, you can make stuff cheaper if you give it to us to make. Just give us all of your manufacturing finance, our factories, teach us everything, and you’ll make better profits.

You’ll be able to keep more money. It’ll all be great.

Tony Kynaston: not just capitalism, it’s democracy, isn’t it? As we do it with three or four [00:41:00] year terms, you can’t, government’s

Cameron: yeah.

Tony Kynaston: to build a highway that if it takes 10 years.

Cameron: Yeah. Well, it’s democracy as we do it. That’s right. It’s the, it’s the short termist view of

Tony Kynaston: Mm-hmm.

Cameron: China has a democracy too, but their democracy is, we’re gonna take a hundred years to become the most powerful country on the planet again. And, uh. No one get in the way of that. We’ve got a plan. We’ve got a vision.

Tony Kynaston: Yeah.

Cameron: 50 years actually is what Dong said.

Tony Kynaston: And when in 10 years or 20 years or 50 years, it becomes an issue and Amer America will throw all its resources at a short term solution for it.

Cameron: Yeah. Oh,

Tony Kynaston: it’s a

Cameron: how do we stop it?

Tony Kynaston: bit like climate change. It’s not really affecting us yet.

Cameron: Yeah. We said during COVID, when COVID hit. Every government in the world said, right, we need to fix this now. This is, this is gonna hurt the economy. We need to get on it. And all of a sudden you could just print money out of the blue to fix a [00:42:00] problem.

Tony Kynaston: yeah. No, exactly. Yeah.

Cameron: that. To fix climate change, but to fix COVID. Sure. Whatever it takes.

Tony Kynaston: it to fix climate change potentially. I.

Cameron: I know, but they won’t. They, they said you can’t. We’ve been told for the last couple of decades, well, we can’t do anything that might affect the economy to prevent climate change. COVID. Yeah. We just print money. Worry. We’ll worry about what that means later on.

Tony Kynaston: As as you are sitting in a room of what’s the temperature in Brisbane today? In the

Cameron: 34 in my office right now. Yeah.

Tony Kynaston: start of October, Uhhuh.

Cameron: I got my kung. Grading pre-assessment on Friday. It’s gonna be 35. I’m gonna be doing two hours of uh, K FU and 35 degree heat. It’s gonna be so much fun.

Tony Kynaston: I am guessing the gym

Cameron: Um, my,

Tony Kynaston: the dojo.

Cameron: it is air conditioned. Um, unfortunately the air conditioning always seems to fall, fall over and die. That’s what they tell us because their previous [00:43:00] dojo before this one had no air conditioning and no fans and was in corrugated iron.

And all the old timers say to us, you guys are so weak, you should have been in the old school. Um, my music recommendation this week, Tony is Lyle Lovet.

Tony Kynaston: Really,

Cameron: gotten to Lyle Lovet?

Tony Kynaston: not

Cameron: I, I’ve loved Lyle Lovett for decades. I hate country music, but my exceptions are always Johnny Cash, Dolly Parton, Kenny Rogers, Lyle Lovet, and, uh, I don’t know, maybe.

And, and Willie Nelson. Like, they’re the, they’re the five that you’re allowed to listen to, uh, in our house. Yeah. You know, like Dolly Parton. Come on.

Tony Kynaston: Uh,

Cameron: Anyway, lol. Love it. He’s kind of sits in this weird space between, it’s sort of Americana country. It’s more like sort of Neil Young, I think of him in that sort of space.

There’s an album [00:44:00] he came out with in the early nineties called I Love Everybody. Which I lo I’ve always loved. I used to have it on CD and I’ve just got back into listening to it again, along with some of his more recent albums with a big band, does some jazzy kind of stuff. He’s very experimental.

Anyway, check out Lll. Love it. I love everybody. Songs like Fat Babies have no pride. Um,

Tony Kynaston: I heard a good country in Western Song title recently. My best

Cameron: yeah.

Tony Kynaston: my wife and boy do I miss him.

Cameron: That’d be you and Roddy. Um, I. Yeah, like he’s, he’s his, his lyrics are quite funny, quite satirical, acerbic. Um, it’s got that humorous thing. Oh, the Sparks just came out with an EB EP two for the, I know we’ve got some listeners that love the Sparks, like I do check out their new EP there. Our last album that came out six months ago was called mad and they just [00:45:00] came out with a four track EP called mad.

Uh, and all the tracks are great. Terrific. Ron just turned 80, Russell just turned 78. Their songs are terrific. Very funny. Um, great riffs. Anyway, so that’s my music for this wing.

Tony Kynaston: Good. I’ll check it out. And the movie too. Looking

Cameron: Let’s, oh, it’s really good. Like really good. Yeah.

Tony Kynaston: Yeah, well when people listen to this, you’ll be another year older, so happy birthday for, is it Thursday or Friday this week? I think

Cameron: Friday. I’m also doing a Kung kung fu pre-assessment for my grading, which is basically the grading before the grading. So we’ll see how that goes. Not feeling confident. Yeah, thanks.

Tony Kynaston: So this

Cameron: Kung fu is hard man.

Tony Kynaston: to improve for the grading, is it?

Cameron: No, it’s where he says you’re not ready to do the grading or you are ready to do the grading. Um, as you know, I just got my nose broken at kung fu last week. I think it’ll just be healed. Takes about six weeks to heal. My grading is in. [00:46:00] Two weeks, so it’ll just be time to get it broken again when I do the sparring round of the grading, where I will inevitably get punched hard in the nose 20 times.

So

Tony Kynaston: you, can’t put a helmet on, can you? This is

Cameron: no,

Tony Kynaston: felt like

Cameron: no, no. I just gotta,

Tony Kynaston: right?

Cameron: I just gotta walk in there and hope it doesn’t get re broken too badly during my grading, but

Tony Kynaston: Can’t they

Cameron: this is why we do it.

Tony Kynaston: snatch a pebble from his hand or something? Isn’t that how kung fu gets created?

Cameron: Well, that’d be better than, uh, picking up the boiling vat with my forearms from, uh, cane of Kung fu. Yeah.

Tony Kynaston: Well, good

Cameron: Yeah. So that’s, thank you. It’s gonna be a big week. Fun week. Fun.

Tony Kynaston: Hmm.

Cameron: Hmm. All right. Talk to you later.

Tony Kynaston: See you.

Bernard: Q A V is a checklist-based system of value investing developed by Tony Khighneston over 25 years. To learn more about how it works and how you [00:47:00] can learn the system, visit our website, Q A V Podcast dot com.

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