#387 James Whelan – Transcript

Ben Nash
What’s up? Hey guys, welcome back to the ensemble podcast. And today I’m here with James Whelan. James is an investment manager at VSF VFS group rather. And pretty timely that we’re at the time of this recording the were four or five days into this silicon bank, Valley Bank collapse and the flow through into markets. James, good to be chatting me.

James Whelan
How are you now Ben? It’s great to talk and don’t worry about getting the name wrong mate. It’s been via VHS a few times. It’s I didn’t come up with the name of the the guys that came up with them. It used to be called vertical financial solutions, and then they shorten that to VFS group. And so I go on, I go on hospice, and I go on anyone’s show. Bloomberg VHS so we get James Whelan from VHS group. He’s gonna come and tell us all about equities bear. And it’s yeah, it’s, it’s fine. It happens it happens to the best of us.

Ben Nash
I get I think that I’m thinking with that on but anyway, here we are, Mehta look, I thought a good place to start is if you could you’ve had a bit of an interesting background just tell us it talk us through how you ended up where you are today.

Unknown Speaker
Okay. One of the things that I don’t I don’t really enjoy talking about is talking about myself but I’ll do it just for the just for the sake of it, but I do love talking so that’s okay. So, then I cracked in got my start in the industry working in the surveillance department of the ASX back when they were a part of the the governance of the of the market as before it went over to the ASIC side. And so that learnt from there, you learn the ropes on how the markets move, how what people are watching the way, you know, things that you probably do and do not want to do when in equities. And in options as well.

Ben Nash
Sorry. No doubt. Yeah.

James Whelan
Yeah, it’s always good to see what sets of red lights and what doesn’t set off red lights, bouncing off the regulator is absolutely something that everyone should try and avoid doing. And it’s a great way to learn how to do it. From there, I got to start a desk assistants assistants assistant at a little place called Oh stock, which is sort of where I learned a little bit about advising. Amazingly, the switch from our stock to when I when I went to UBS came when a senior adviser turned to me and asked me he said, James, can you figure out what I think it wasn’t mortgage backed securities? It was it was the debt, the collateralized debt obligations or something like that, that this stuff that was packaged up and just absolute garbage? He asked him turned to me and said, Can you figure out what all this is about, and that was sort of the prelude I looked into sweat. Well, this is this is a calamity. I didn’t know how big a calamity it was actually going to be. It was garbage. I went to UBS, learn how to do a back office, the best piece of advice I got from, from a senior advisor at all stock was learn how an actual shop runs. And every single intricacy and every detail of that. Get into it. There are people the worst advisors are just guys who sit at the front. They know how to pick up the phone, and they know how to do everything. But if you couldn’t service, everything to do with the client, at the post sale, then you weren’t going to survive. I learned that at UBS the way that UBS was moving. And this is where their investment banking team, I learned that with them just saying if you don’t know every single thing about how all of this stuff at the back works, a the people at the back will not be nice to you. And then it’ll make your life a lot harder. And also the people at that you’re dealing with on the on the sales tax sales side. So the buy side, if you don’t if you can’t answer their questions about why something hasn’t sailed, or why some hedging wasn’t done right. How the PB wasn’t working, a prime broker wasn’t working properly, or anything like that. If you couldn’t answer those questions, they don’t want to know you either. So it really became a situation where you’ve got to know how that how the entire situation works. from UBS, I saw an opportunity come up because Ribbit trikon trikon failed, failed to settle to the market two days straight here in the in Australia. And the opportunity. The reason was because the collateral that the brokers had to have up on the market was this this is actually GFC related to since about 2009. The reason the collateral that brokers had to have up on the mark was like 50,000 or $100,000. It was nothing compared to billions and millions and millions of dollars worth of settlements that they owed to the market, your collateral that you had up was was was nothing miniscule. So we saw an opportunity there. I had a friend of mine that I had sort of worked for with his name was Craig Mason. Amazingly, everyone knows him. He was starting up a little operation that was going to take care of that collateral on behalf of brokers for a variable fee. And I saw that as being the future of broking. We set up. I was third person through the door at this little startup was just three or four of us when we kicked it off in 2009. And it also coincided with the announcement that my wife was three months pregnant with my first daughter and so I’m not going to worked these 14 or 16 hour days at UBS, which was a great shop, it just wasn’t lifestyle friendly. I’m gonna go to the startup and and do something that’s a bit more empowering. That gives me a bit more time we started Penson Henson got bought out by being why Mellon which became purging and purging by the time we built, it was clearing for about a third of the market, which was great a huge opportunity, AUD minutes doing what they do what they’re doing with us Wilson’s think about short stock broking, all of the big names came through us and and they cleared through us. So I built that I built the disaster recovery plan for it. The BCP from scratch. These are significant achievements of mine, which I don’t really like to I don’t talk about enough, I think that there’s so we built that built the connectivity through it. And it’s sort of the connectivity training that I’d learned at UBS really gave me a huge advantage of purging of just going okay, I can connect your iris screen, to a GBS T shares terminal. And then from there, have the post trade reporting that then comes back into your platform as well. And learn how to connect all of these things up together, purging, I went to CommSec Advisor Services to sell margin lending services and cash accounts to the people that I already knew, from purging sort of just a way of getting into the big bank. Big Bank had a bit of a reshuffle, changing what they were doing in the context side, got a big fat redundancy check at the same time as BB why collapsed. I had a friend of mine that I that I’ve been working with at Pershing, who was messaging me every 20 minutes just saying James we’ve bought or we’re about to buy the shell of BB y, which has absolutely gone under, nobody knows where their money is. Nobody knows what’s going on here, we’ve got advisors that are just walking in and out of the place, someone’s Jimmy door open and it’s just propped open. And so I took my box straight up from CommSec up to BB BB y on a contracting highest classic Hired Gun sort of scenario you walk in, and there’s just stuff everywhere. And it’s like, there’s advisors that are sleeping on the floor, someone had someone had managed to get into the to the to the locks, there was two padlocks on the wine fridge. And I managed to get in and steal all the good stuff, which I was really waiting to get my hands on. First thing I did. So I’ll just go on, you know, I’m head of strategic OpSec get myself a title, any any set of keys in the entire place, just grab all these keys, change it get bpy set it up. So we’ve managed to turn that into a functioning broker called a PP securities. And the My job was done there. From there, I moved over to some friends of mine that I actually ironically, I helped set up their first advisor cards when they first cracked into the market when I was at UBS. So full circle. And some people that I’ve known for a fair chunk of my life had a little thing called VFS group, which is where I am now. So I took the book that I’d built up as being the operations manager or the just the guy who was on the phone, calling clients saying I’m going to help you, I’m going to protect to protect your money. I’m going to show you how to get this out from the ASX. And I’m going to show you how to get control of your Superfund and your stocks. And anything that you’ve got, I’m going to help you do that the clients that I had help, were really happy to move with me over here to VFS. And from there, I’ve been doing this advisory thing and kicking it off, we started a we sort of took the managed discretionary account side of things which which the VFS group had on their license that we’re under utilizing, I think so we managed to take that, clean it up and really launch it and just go you know what we can go overseas with what we can do, and we can go overseas really, really well. And we can we can do this quite well, because we have the technology and the knowledge to do that. But to do that, you’ve got to do it on a discretionary basis, you can’t be calling clients at three o’clock in the morning saying there’s an opportunity to go long banks, because there’s a GFC version two in the midst, right now, you’ve gotta be able to do it on discretionary. So we’ve taken that our matters discretionary service, and really ramp that up colossally clients are much happier at not being continually bothered with this sort of stuff. But they are very happy to have, you know, continual portfolio reporting and, and the access that they have. So we sort of have this global shift, which which we call loosely the global macro Fund, which is sort of what I what I manage. And that’s just a loose way of just saying it’s just managed discretionary acc
ounts. We invest, you know, I invest mostly overseas ETFs, for the most part, some single names that are in there as well, but it’s just my ability to just go in and out of these big thematic shifts, which we’ll get to in a second Ben, that I do, and that’s sort of what I that’s sort of what I do now. And that affords me the chance to do this. We do a lot more of the media stuff and talking to people like you and we sort of took that that’s been my main job that I’ve done here. And I think that we’ve had we’ve had a pretty good run of it.

Ben Nash
And so VFS are doing a bunch of different advice areas.

James Whelan
Sorry, Ben, I just lost you the first segment.

Unknown Speaker
You there

James Whelan
Now I’ve lost your bed

Ben Nash
how’s that? James?

James Whelan
B? I’ve got you now.

Ben Nash
Sorry, I just switched over my internet. As I said, it gets a little bit.

James Whelan
That’s right. I just checked, I just checked my, I didn’t get any of your question.

Ben Nash
Okay, that’s all right, I’ll have one into that one again. And we’ll get to kinda so VFS group do sort of the full range of financial planning, but your role is specifically around the investment management, you know, given the background that you’ve just unpack for us. And interesting, as I said, at the start, like interesting that we’re talking now, given that this SVB, banking collapse has just kicked off and is in essentially full, full swing, you know, massive spikes in in VX, and, you know, choppy markets, what are you seeing out there at the moment?

James Whelan
Seeing I’m seeing a lot of opportunity out there in the moment, but the ability for everyone to panic has never changed, sort of, I was thinking before, and especially over the weekend about sort of, you get to your early 40s, and you start to consider your career, like you’re an old man in this industry. But the I go back to my time at during the GFC. And we’re going back to the UBS times then, and thinking, I can now remember what happened during that GFC. And we were booking out 10% of the market every day, 1416 hour days, just absolute, you know, just a calamity and seeing the markets absolutely devastated. And then going down to the to the trading floor, talking to that talking to the guys that are actually on the coalface making the decisions down there. And some of them just just go James, these are generational buying opportunities that you’ve seen down here and some of these things, and just being calm as cucumbers, not panicking. Like, you go up in the office department and everyone’s going, oh my god, it’s off 8%, everything’s all good, it’s good. It goes to hell in a handbasket, we’re all gonna die, you know, look at all this money that’s sort of being lost. And then the guys down on the trading floor, who seen these sorts of things before, going, You know what, this is cool, I can see this happening and picking up this research and just being very, very calm. And going, you know, what today’s the day that we buy, or Tomorrow’s the date and just picking up some of these things, I’m seeing that same sort of thing that’s going on. However, what we’ve seen, then just talking generally sort of, you know, broadly about the market as a whole. What we’re seeing, though, is that when the GFC was happening back then the time for information, the information curve, whatever you want to call it is was really sort of quite wide. So the difference between someone knowing something, and then someone else knowing something was was huge. You know, you’d have the guys down on the trading floor, just go, I’ve got this particular thing that sort of just come up on the screens, no one else would know about that for a very long time. And definitely the people that were on the outside of the market. Now, you got your tweet feed, every single operator has got their Tweet Deck sitting up there just for the live, someone actually told me that they have me on their tweet day, I don’t know why. But going, this is where my information comes from. And this is people who are telling me what’s going on, and I get this live. So your Bloomberg screen is important, obviously, as well. But your tweet feed, and they’re coming in with that live information. We saw that in 2016. We saw how quickly information comes in Brexit happens and you just like great. In two days time I’m going to buy Trump got this is Trump got elected, and the market absolutely pooped its pants. And it was just like, wow, and it’s just you know what, tomorrow, I’m gonna be able to just roll in calm as a cucumber, and just buy the crap out of this thing. And it’s going to be sensational. And you didn’t even get that chance it rallied a few hours later, Brexit similar sort of thing. You just went, there were opportunities to get up and you had to be so much quicker. The same thing is happening with with this right now. So Ben, I mean, over the weekend, I’m just like, oh, this is going to be sensational. Everyone is going to even higher learn. I don’t learn anything. Completely refuse to but I’m, I’m sitting there on Sunday just going, this is going to be sensational. I’ve got a whole bunch of fat dividends that are going rolling in hitting accounts right now. I’m going to be looking at charging into some of this stuff and just going to buy some of these banks, some of these US banks at generational lows, it’s going to be absolutely pristine. I’ve got the whole thing planned out later in the week. It’s just going to be wonderful. It turns out that well, the way that it looks, you had to be really quick on the button on Monday night. And you don’t get that secondary chance because because the thing is not only has information really started to catch up with how fast everyone knows everything all at once. Now, that’s that’s that’s a kicker, that we’re seeing the differences between these two things, but also that the remedies to these things are so much quicker to be enacted. Whereas before the GFC you had Bernanke who was talking about maybe it was going to do something they’re going to go in front of Senate inquiry to looking about how much money he could print? And then everyone’s saying, Oh, what are they going to do, and it was just this long drawn out, okay, we might have a solution about what it is that we’re going to do, and that there’s going to be a top and we’re going to prop things up, and it’s going to be okay. And now it’s just like, Yeah, we just had a meeting, everything’s fine. It’s just like, oh, that’s, that really ruins my idea that I have of actually being able to go and have a, you know, have a beer have a beer on Sunday, you got to be really quick on the on the button on Monday, otherwise, you miss out. And it just shows you just gotta but you just got to be fast, you got to have your thing set, because the markets are so super efficient. What I’m seeing out there in the market now and answer to it, I still see that there’s value in the bigger end of town. In the banks, I think that if the Fed aren’t going to be raising rates as aggressively now, I think that tech, which has always been some great value with all of its massive amounts of free cash flow. Tech is a spot that you want to be having a look at as well, just based on that simple, it came off when the Fed was aggressively raising. And now if they’re not aggressively raising the the the other side of that coin now flips over. So there’s some value that’s in that still some value in tech, in the big banking side as well. And if you’ve got a USD, if you’ve got a US dollar that we’re making may potentially keep on coming off, and that’s going to be assisting the commodity side. China is still very much a big growth engine. But that’s, that’s a whole different conversation.

Ben Nash
Yeah, it’s interesting, I think that like, doing nothing is always risky. But I feel like at the moment, it’s, it’s more risky than ever before. And I think like we’re having conversations with clients day in and day out, they hear all the noise and get swept up in all the fear and they’re going all you’re probably open to play it safe. And, you know, just stick the money in the in the offset account, or, you know, pocket away in cash. And that feels like a comfortable thing to do. But I don’t know, like, in my view, it’s like you only get so many of these golden periods as an investor that you can use to series wealth building. And it’s like people that have the right support the right plan, that, as you say, are ready to rock. They’re the ones that can take full advantage, whereas the other ones are then scrambling and they’re left behind miss the boat. And I was looking at some really interesting stats that came out from this actually from perl, or the micro investing or ETF investing platform or whatever. And they talked about, if you put 10k into the s&p 530 years ago that it’d be worth about $208,000 today. But if you’d miss the 25 best days in market, so your 10 grand would be worth 36,000 So you’re like $170,000 worse off. For me. I

James Whelan
love that. Yeah, I love that. And yeah, there are these there are these seagulls are called seagulls, seagulls, the seagulls on Twitter, who were like, Yeah, but if you know, you’ve got to just pick those days that you’re going to have pick it in and out. It’s just like my I’ve already got a job, my job. Most people most people also already have a job. They’re not picking those days, mate. They’re not they’re not being able to pick those days of in and out. Stay in stay invested. I will tell you what I have done actually painted. This is this is cool. You like this? So last year, I don’t know if you saw that the stat that was being thrown around a bit, which was it was just based on simple just the VIX, right? So the volatility index, if the and it was a simple sort of back test for what happened in 2022. If you had just simply buying and selling the s&p 500 not that people should do this, but this is just a simple example. Buying and selling the s&p 500 If you sell when the VIX goes below 20 And you buy when it goes above 30, you would have outperformed like you I can’t remember how much it was but the performance was sensational. Right? Not even outperformance you actually genuine alpha, you would have made a lot of money that I’ve carried that into 2023 thinking 2023 is going to be sort of similar to the way that we saw 22 The news inflation up markets come off Feds going to be raising and then ik it’s actually not that bad markets, you know, maybe the Feds going to ease back a bit markets gonna go up and that just that ebbs and flows that we’re going to have. And I’m and just on the VIX. So if you just want to go, okay, when should I be overweight and when should I be underweight. So you still you still invested, just go and have a look at the VIX. Because you can see it hit 30 The other night, and that was a great time to buy. And when again, when it was dwindling around at 20, that’s probably a good time to maybe sell if you just want to have that really easy how much you want to be in overweight or underweight the market. But still stay invested, try and have a look at the volatility index over in the States. It’s not that difficult to look up. Anyone can do it. So but that’s one that I’m looking at just going you know what it was dwindling around 20 For a while there may be I just want to ease back on some of this stuff. And then especially if you see that the to the to if the front end of the yield curve in the States is showing you a 5% number. You definitely want to have a look at getting a bit invested in that as well going long bonds at that front end of the curve was was a really smart move as well. Now starting to switch that out and moving that into equities and just having that staying invested. But definitely using that 6040 portfolio just with how you’re going to be over and under invest listed is probably the best way to look at 2023.

Ben Nash
Yeah, it’s an interesting one, I feel like at the moment that there’s a lot of money that’s sitting on the sidelines and all these people panic with, you know, fear and all the noise that’s out there. But it seems like as soon as, and there’s a lot of like disastrous predictions floating around as well, which is contributing to that, to that feeling. But the like, whenever we get some positive news or positive signs, or something’s not as bad as these dire predictions that everyone’s sort of throwing around, then it’s like rallies and rallies quickly. So yeah, it’s an it’s an interesting time as an advisor, and for investors as well, like I get a fear, but it’s hard, you sort of just want to shake people sometimes and go like, don’t listen to the lunatics on Twitter, or tick tock or, you know, those clicky headlines there. Because they’re really, they’re really not serving you.

James Whelan
That’s and I’ve spoken to go.

Ben Nash
I was just gonna say, how do you see it playing out? Sort of from from here?

James Whelan
How do I how do I see it playing, I was going to talk about the hack journalists on Twitter in the way that they probably just need to be very careful with what it is that they say and how they say it, because the panic that they cause is actually not is actually not good. And it comes back in. And I get a call from someone saying to say, one of my clients, St. James, I just saw this guy’s an ABC journalist on Twitter, and he says that Credit Suisse is gonna go under very soon, it’s just like, well, it’s not. So take it easy. And I know it’s not because I actually know what I’m talking about. So this person, there’s a lot of those financial hacks that are out there and one of the legacies that I want to have so when I started here at VFS, a friend of mine, Paul Colgan was running Business Insider. And he was the editor here in Business Insider, and he and I talked to we don’t each other for a long time. And it’s just like, we need to make the way that people receive their information better. And we need to make it I hate to use the word democratize, but we need to just need to make it more accessible. Because it’s got this sort of view, especially with the way that that so many retail, the retail client has basically been screwed over so much recently, by regulations, and how they until recently, has been screwed over by the regulations of not being able to get the advice that they want. Because physically, it is actually too difficult to deliver them the advice that they need in a nice concise format. And also, a lot of the space is moving away from retail advisors, because the risk is just too high. You know, a complaint will usually fall in the clients favor, regardless of who’s to blame or not, we’ve seen the royal commissions or dragging everyone through the mud, once again, people just want to stay away from that sort of stuff, and to stay away from the retail space. So we need to make the way that people get their information as accessible. And as simple as possible. My legacy to the industry, if I have one is going to be a drink all the beer, and B, I want to I want to be known as the guy that could take a very complex financial theory, or a complex financial scenario, and being able to put it into something that actually makes sense that people can actually understand. And that’s that’s been my sort of my legacy of just going you know what, there was a time when people didn’t understand how the yield curve work, there were time, there was a time when I didn’t understand how how bond prices, you know, bond prices move up, I believe Martin Whitman, a good friend of mine, who is head of fixed income and FX over at Commonwealth Bank. You know, he’s he’s very happy to always, always comment and mentioned that yes, bond prices do go up and yields go down, and they move inversely to each other. That’s, that’s something that people didn’t really always know until all of a sudden bond prices started started to matter when everything sort of went set to go to zero. But that just taking those complex things of being able to put them into packages for people to actually understand and go, Okay, this is now how this affects my portfolio. This is how it affects my actual Superfund, as opposed to I trust this smart guy, who I don’t know is actually screwing me over or not. And you don’t know how it what’s going on, you can still have some control over your of your portfolio that way has control over your life, if you can actually understand what the hell’s going on out there. I think that we’re doing a good job of doing that. Now, what was your question? Sorry? What was playing out?

Ben Nash
Yeah. Particularly, I suppose, like looking at the situation in the US, you know, how far they might have to push it. The fact that inflation just seems so stubborn and not coming down, and then and there is, obviously there’s a lot of noise out there and a lot of opinions as well as to you know, how long the the high interest rates might might be with us for. Yeah, and obviously, yeah, that playing through to investors. So what’s your take from from seeing it at the coalface?

James Whelan
I think I think that if you talk about what Powell what Powell has said in the past, and I was reminded, especially over the weekend, and on Monday night, sir Monday morning with the fixes that they’ve that they’ve put in, don’t forget, there was a couple of months ago when Powell sort of did this thing. And once again, financial journalism, the press got up everyone and just said look at the people that’s coming, the pivots coming, the pivots coming, it was way early for a pivot call as the market was setting itself up to fall. And because and then Powell came out, and he gave a speech that was very hard about we’re going to keep on powering on. And we’re going to go higher for longer. And I will not forget, someone sort of paraphrased exactly what he said, where he said, it is easier for me to fix something that we break by doing this, than it is for us to continue to perpetuate this low rate cycle nonsense. And that’s that that that is stuck with me, you should put it, put it on a piece of paper, laminate it, put it up on your wall, because he’s going harder for longer for as hard as he wants to do until don’t forget until something breaks. Because we just saw something break. This the banking system, there were banks that are actually broken that they had these held to maturity, they’ve got held to maturity bonds, that have actually plummeted. So the valuation has gone and they’ve got about what they’re receiving about one and a half, maybe 2%, tops and interest. And then you’ve got clients, clients of the of the of the bank that were expecting, why aren’t I receiving four or 5%? Okay, I’m going to move my money over here in four or 5%, because you’re only paying me 2% on that, and that that’s, that is something that’s broken, could they fix it? Easy. They did, it’s fixed, and see how quickly they fix it. And easy it was Don’t forget, the power is going to do that. So it was easy for him to fix it. So yeah, they can keep on keeping on and keeping on doing what they need to do in the face of inflation. So I will stand by this view, as long as inflation is staying where it is staying and going, where it is going. They will keep doing what they need to do to stop that. And they can fix things to break instead of perpetuating the low rates. So we’ll see where I’m at. Yeah, totally.

Ben Nash
And I think that that’s what some and I suppose you could see. Right, right or wrong. But as investors, it’s one of the things that that we’re talking about that it’s we know that the regulator’s step in when, like you say when when something breaks that the property market starts breaking like you look back at the stats in Australia, we do a lot of strategic advice around property. And it’s like, anytime that things start to fall down. And they the the the RBA step in the bank stepping in the regulators stepped in to save him in markets. Well, and I think that is, you know, like I said, rightly or wrongly like a bit of a parachute for for investors that the governments and central banks do not want there to be massive fallout. And if that happens, they’re going to step into to do that. So

James Whelan
it’s, here’s where I am, I’m going to ask you then, if I may now become the interviewer because I have my own podcast. So I know how to ask a question or two when I need to. Where do you stand on the bailout? On the bailout question, and a lot of people this is brought up as sort of this whole moral hazard BS that everyone wants to talk about. Do? Do you think that investors if there is if there is a crisis that hits something? Because I mean, let’s be honest, if you run your if you’re running a bank, and you run your risk badly, do you think that you should be bailed out for for that erroneous situation that you put yourself and your investors in? Well, who should be bailed out? Also as another question?

Ben Nash
Well, look at the core, I’d say that from a from a principals perspective, you’d say no, and I consider myself a free market capitalist. So I’d say let the market decide. I suppose though, that the issue as an investor, I’m like, I’m happy when shit doesn’t explode, because the downside is limited. And then upside is swift and strong. So I think that this is the you know, the world that we live in political cycle, media cycle, like, it’s, no one wants to deal with the pain of long term extended, you know, downturned pression, dealing with the fallout and the easiest solution is that people step in regulators step in, central banks step in and, you know, they do something to fix things and fix things faster. But I am concerned with that, that the, you know, how long can that go on for? And will it gets to a point where they say, well, actually, just too much, and now we need to let stuff break. But now because so many things are breaking that it’s going to be worse and bigger and more. So.

James Whelan
Yeah, it is it? Yeah, it’s sort of I’m very much of the view that the individuals should be protected from from scandals and loose, you know, loose risk policy that they have. So if you’re an individual deposit holder at a bank that that does manage their risks, and yeah, you should probably be insured for that. And you should probably, you know, make sure that your money is safe because Because trust in the banking system is imperative to an actual free market working and an actual civilization actually sustaining itself. We don’t need roads, we need banks. The couple of voters said that someone’s gonna someone’s gonna crucify me for that. But anyway, I’m sorry. But the on that regards to depositors, however, I’m reminded 2019 BARRY RITHOLTZ from RITHOLTZ wealth did an episode of Macro voices, which is a great podcast. I mean, plugging other podcasts, anyone who wants to learn a bit more about the way that big picture stuff works in the world, macro voices is a good podcast. And he was on there. And I remember him talking, it stuck with me so strongly to say, this isn’t capitalism that we’ve got, if you know, a guy down it down it down at the Fed, that you’re running a bank, and you can say, You know what, we can do whatever we want, because I’ve got a guy who’s down there who’s going to be able to bail me out, you know what, no, it shouldn’t work that way. If you can’t manage your risk, then you take your ass down. It’s a big, big, fancy building. It’s got big columns downtown New York, it’s called bankruptcy court, you’re going into bankruptcy and you go through it the right way, the way that it should. Because if you don’t take the risk, and if you don’t know that you’re on the risk of taking the risk that you don’t care about, you’re your own risk, right? If there is no risk, then why should you get the reward? And why should you only get the rewards if everything goes well, but not carry any of the risk if things go badly, stuck with me so strongly? That was out because we don’t have capitalism right now. It’s, it’s a form of crony capitalism, that that is just the way of just creeping in and just saying, you know, what, the investors, they that they need to be bailed out to not just the depositors and decide, you know, what, pump the brakes on that. And I think the same thing about property as well, if you’re, if you’re, if this is something that’s probably going to be eventually everyone is saying about just how much it’s going to break, maybe I don’t know where it’s going to break. Everyone says, Australia, I think everyone needs to come down there. But somewhere, it’s going to break the property market, okay, the property market is going to teeter over and investors going to lose their money. You know, you and I both know that there’s going to be front page of the fin front page of the telegraph front page of the age going these these property investors, there’s noble landlords, these people out there doing God’s work, investing for people and giving people a place to live, they need our help, too. And they do. And you know, what? If you then because if you if you make an investment, and it goes badly, that’s on you. I don’t care what you want to say about that. Because if one of if I make an investment on behalf of the client, and it goes badly, I don’t get to be on the front page of the telegraph and say bhp drop 20%. That doesn’t work that way, investment properties is the same way and should be treated the same way as well. I mean, COVID was a bit of an exception, because the government actually forced everyone to shut down. So I mean, that’s, that’s a bit of a situation there that if, if, if a whole bunch of property hits the wall, if you’ve got what Steve, I think was his name was Steve was in the paper yesterday. See, he’s got 12 investment properties, and they’re all in debt. And he’s in a real situation. Well, Steve, I don’t know how to tell you this mate, you’re stuffed. So you need to sort that out. And you need to pull back because this is the part of the economy that needs to start retracting. These are those things that everything needs to start coming backwards. Otherwise, we’re not going to get a lid on the inflation situation. Yes, Bill. That’s the soapbox boxing.

Ben Nash
I agree with the sentiment. And yeah, I think that there are a number of property investors out there that are hurting at the moment. But the reality is that they they went into it looking to make money and did it without the appropriate risk management in place. And I think there are a few of those stories that that happened during COVID. And it was it was slightly different as well, but also with the some of the boom cycles, and we saw, like the mining boom for properties, and then you had these property investors that were buying up all of these multiple properties in these mining towns, and then why that’s right. Yeah, yeah. And then they’re going up for me. And, like, I think you went in there hoping for significant upside returns. It’s like that sort of is the game. So yeah.

James Whelan
You can’t put it that you can’t privatize the reward. But socialize the the risk, you sort of see what I’m saying that so it privatize the profits and socialize the losses. It doesn’t work that way. It shouldn’t work that way. And we’ve really moved in that direction, which is, which is, which is annoying, and it’s upsetting. It’s there. And anyone and the people that I’ve had on my podcast have had senior economist, Junior economists, people who just pick up the garbage. Anyone with half a brain knows that Phil Lowe did not specifically say I won’t raise rates, he put caveats on that about inflation. He put caveats on that about the whole thing. Also, don’t forget there was an election going on. We don’t talk about that either. And I think that he was told what to do, but that’s a different scandal that we’ve got going on. I’m not going to go into that too bad. But the that that he didn’t he didn’t say he wasn’t going to no one wouldn’t put a gun to your head and said, You know what, Phil? Phil says he’s not going to raise rates. So you’re okay to buy that $1.4 million place in botany. Good luck to you mate. It’s going to be fantastic. You can absolutely guarantee that you’re going to make money on this thing. Here’s another one then real estate agents real estate. Okay, I was we’re here now. I say something crazy, I’m gonna get myself sued the app, what we’ve got is, you know, I’ve got to do 5060 hours of continuing personal development, professional development, to be able to maintain my authorized representations, certification so that I can be an advisor. And also I’m responsible manager too, right. So we’ve we’ve got that, in real estate, what I think it’s about five or six hours that they have to do, it’s clicking a few buttons, and that’s about it. They’re advising, and they are, and I’ve heard them say it, they’re giving personalized advice to retail investors, to retail people on the biggest transaction of their life, the biggest transaction of their life, and they’re saying, you know, what, if you buy there, you’re going to do well, that’s a guaranteed outcome. And you’ve seen those guys is real estate, cowboys that are there that will say this sort of thing, and just go, you know, we’ve looked at your personal situation, and it looks like that you can actually afford this. It’s all retail, it’s all personal advice. And they’re doing the biggest transaction. And we’re the ones that get the cop that that that have to cop the regulatory changes, were the ones that have to COP, an actual functioning complaint system, were the ones that have all of the downside of all of the risk, because we’re out there on the wire protecting people from the sharks out there, and trying to keep their Superfund safe. Whereas real estate agents get scot free, and do whatever they want and take a much bigger rip than we do. Don’t worry about that. And to be able to advise people and have absolutely do is downside scot free. What like, there’s, the system is broken, that’s the side that needs to be fixed.

Ben Nash
The Broken side is broadly the same, although they are making steps in the right direction on that side, but massive decisions. And for the large part, it’s like people don’t need as much as I feel like they do sort of, you know, should should need an advisor, but they don’t they can not have that relationship. But typically, it’s those their real estate agent, the mortgage broker, they’re the ones that are all involved. People don’t know. But look, I could, I could talk about that all day. But you know, we might end up in a random test, and then you might get in hot water with you with your people. So I’ll, I’ll steer away from that one, mate. My last question for you. Is, what are you? What are you focused on? What’s what’s coming up for you?

James Whelan
Yeah, so I’ve got a few side hustles sort of going on at the moment, which is, which is always good. I hate the term side hustle as well, I really wish I hadn’t said that now, but I so in the background, it’s always frustrated me. So I do ETFs. And I do ETFs quite well. But it’s always frustrated me the access that you have to the manage funds space. So for example, is, it’s really difficult for you to buy a managed fund overseas, it’s sort of a little bit of a pain for you to buy a managed fund here, you got to go through a broker and there’s no funds. It’s basically they’ve built and this is me, I’m someone who builds brokers and builds back offices and builds these things. It’s a difficult process to go through the situation in Australia to get a managed fund, it’s impossible to buy a managed fund. In India, for example, you can get an ETF, it doesn’t have it. But if you want something that specific, you can’t do, you can’t do it. So for the last couple of years, I’ve tasked a group of guys, a couple of Ukrainian guys actually, believe it or not pre war, obviously, they’re a little bit delayed, because one of them actually went to go and fight and protect his homeland, which is amazing. But we built an app, we built a product that allows you to buy and sell manage funds around the world, you can buy and sell them just at the click of a button, deposit your money buying, buying and selling. And what we did, and this is really close to my heart, because of how frustrating it was, you can now get access to a powerhouse like India through this method. And nobody else can do this. So if you want to by the Indian credit fund or the Matthews growth fund or something like that, the actual invest in that fund, you get access to it through this through this way of doing it into the Indian market. No one else can do it, no one else has done it, we built it. And I’m really proud of what we did. So this is something that I’ve been beavering away at for the last few years. And we’ve finally managed to get it done. It’s called the Australian mutual funds exchange shortener to an FX again another name, which I didn’t get to decide, but there you go. But the Australian mutual funds exchange so check it out am fex.com you do a Google search, you’re gonna be able to find it. But that’s what I’m working on. That’s really close to my heart because it has been able to give retail investors the ability to get access to places they didn’t have access to before and open up more markets to them, especially a powerhouse like India, which is getting all this amazing flow of people who are now moving shifting their business from China. You get access to somewhere like India powerhouse. We’ve just had our prime minister over there going around with Prime Minister Modi in a motorcade, shaking hands with the cricket and everyone’s fantastic their relationship has never been stronger. So we managed to build something that allows you to invest over there. I’m pretty I’m really stoked about that. So an FX thank you for letting me just have a bit of a say about that. But it’s good that in this industry, if you stay busy, you could build stuff on the side that will actually help people I’m really proud of that. We managed to do that.

Ben Nash
There mate. It’s awesome to see that access, increasing and getting easier better information. products so good to see. James thanks so much for for taking the time I really appreciate it I’ll let you go out there and you know do some more deals and get some more wins for the clients but again thank you for the time

James Whelan
No worries, mate, it was sensational, always good to catch up, look forward the next one.