The Rules of Investing
The Rules of Investing is one of Australia’s longest-running business podcasts, providing investors with unparalleled access to the ideas and insights of Australia’s leading fund managers, economists and industry experts. Learn how the industry’s best invest, with the help of Livewire’s James Marlay and Chris Conway. Whether you’re new to investing or a seasoned professional, this podcast is for you. New episodes are released every second Friday, available on Livewire Markets, Spotify, Apple Podcasts, and YouTube.
Episodes

Monday Feb 06, 2023
Why this ex-central banker fears a second (and even bigger) mistake
Monday Feb 06, 2023
Monday Feb 06, 2023
If there's one group of people who cop a lot of flak in financial markets, it's central bankers. Whether you believe they get too much or too little of it, they're the ones who print the money and make decisions that influence the wallets of billions of people. That was particularly true in 2022, as many on the economic spectrum were caught unawares by the surge in inflation (and its persistence thereafter).
And depending on which central bank you most closely watch, they may also provide intentionally vague answers - or at least, avoid giving the direct and certain feedback you desire.
A beautiful example of this stems from Federal Reserve Chairman Jerome Powell. In his post-decision press conference last week, Powell argued "certainty is not appropriate". In layman terms, he's simply saying that singular data prints are not Gospel, even if financial markets may see otherwise.
Now, at this most crucial time in financial markets, EFG Bank Chief Economist Stefan Gerlach has granted us an exclusive interview about the state of the global economy and what central banks are doing as a result.
Gerlach was the Deputy Governor of the Central Bank of Ireland between 2011 and 2015. As part of this role, he also sat in on the meetings of the European Central Bank under its former President Mario Draghi.
You can read an edited summary below:
https://www.livewiremarkets.com/wires/why-this-ex-central-banker-fears-a-second-and-even-bigger-mistake
Timecodes:
1:00 - Why were central bankers caught so off guard by the inflation surge?3:38 - Could central bankers have better forecast this mess?4:51 - Did central banks react quickly and forcefully enough to avert a recession?7:29 - Would you have handled things differently if you were still in your old role?8:08 - What is the risk central banks will make a second big mistake?11:17 - What advice would you give investors who want to understand central bank messaging better?16:46 - Will the Eurozone avoid a deep recession?18:42 - Will China’s reopening save Australia from the global recession?20:12 - How has your asset allocation strategy changed?23:47 - What’s one macro theme investors are not talking about enough?

Friday Feb 03, 2023
Lazard’s Philipp Hofflin reveals how the stock market really works
Friday Feb 03, 2023
Friday Feb 03, 2023
We’ve got a slightly different episode for you today on The Rules of Investing. A departure from the norm!
A lot has been said about the change from growth investing to value investing.
This shift has been easy to see in aggregate. In 2022, the MSCI world growth index was down 29.05%, compared to just -6.5% for the MSCI Value index.
But indices are just that - aggregates. They do little to explain the why behind the what.
Why has this shift occurred? What signals should investors watch? How should we interpret these signals? And what traps lie in weight to catch out investors?
In short - how does the stock market actually work?
To answer these questions and more, we're joined by Dr Philipp Hofflin, Portfolio Manager on the Australian Equity Team at Lazard Asset Management. Phil's an expert in market bubbles - how they grow and, importantly, how they burst. So he's the perfect guest to break it all down.
(He also happened to be the most popular ROI guest in 2022).
Note: This episode was recorded on Monday January 30, 2023.
Timestamps
3:20 – “The central bank always wins”
5:15 – The most striking US market change since last September
8:00 – Why 2023 will be a tough year, but less so for Australia
10:30 – Recessions are almost always unexpected – and what this means for investors
11:00 – Will the Fed’s slowing of rate hikes flow onto RBA
14:00 – The normalisation of equity valuations is only halfway through
17:00 – 80% of market volatility is driven by noise – only 20% by fundamentals
28:30 – The surprising reason Value always beats Growth
36:00 – Why migrations are so important for Value portfolios
39:00 – How Lazard ascribes value to companies
42:00 – A case study of James Hardie (ASX: JHX)

Friday Jan 20, 2023
Steve Johnson’s hunt for tomorrow’s market movers
Friday Jan 20, 2023
Friday Jan 20, 2023
Professional investors have been banging the quality drum with intensity since since the June sell-off.
It makes a lot of sense. In today's market turbulence, the companies that will survive (and thrive) need strong balance sheets, consistent earnings and high return on capital. All the good stuff.
But that alone doesn't make them good investments. Quality companies only make sense if you buy them at a good price.
Today's episode of The Rules of Investing features a Livewire favourite: Steve Johnson, Chief Investment Officer and co-founder at Forager Funds.
Forager started life in 2009 and now manages approximately $350 million across an Australian share fund and an unlisted international shares fund.
Forager are on the hunt for undervalued and unloved companies, mainly in the small cap space, but they also invest in mids and large caps to add some liquidity to the portfolio when volatility spikes.
Today we discuss lessons learned from 2022, the small cap cycle and earnings downgrades, and the one Aussie company with a market monopoly in the US.
Note: This episode was recorded on Monday 16 January 2023.
Timestamps
1:10 - Lessons learned from 2022
2:30 - The right time to sell
3:40 - Preserving capital
5:00 - Managing risk through weightings
6:30 - Managing investor expectations
8:40 - Inflation, rates and the Aussie consumer
13:00 - Earnings downgrades and small caps
16:00 - Are quality companies crowded?
21:20 - Forager's shopping list
33:00 - Forget about picking the bottom
35:00 - Biggest wins, deepest losses
39:00 - The Big Tech stock for the bottom drawer

Wednesday Dec 21, 2022
Success and More Interesting Stuff is back
Wednesday Dec 21, 2022
Wednesday Dec 21, 2022
The Rules of Investing is done for another year. But fear not! For those looking for some summer listening we’ve got a fresh Series of Success and More Interesting Stuff going live right now. Search for Success and More Interesting Stuff on Apple Podcasts, Spotify or Podbean.

Friday Dec 16, 2022
Friday Dec 16, 2022
When volatility strikes, investors invariably become more reflexive and less disciplined. But investing with reckless abandon is almost certainly going to lead to bad outcomes.
Experienced investors stick to the game plan - a game plan borne of experience and a process that's been tried and tested through the full business cycle.
On today’s episode of The Rules of Investing, David Thornton sits down with Matt Williams from Airlie Funds Management.
Matt cut his teeth in 1993 when he joined Perpetual Investments as an equities dealer. That was followed by 17 years at Perpetual, working alongside heavy hitters including Anton Tagliaferro, Peter Morgan, and John Sevior. There he held the role of head of equities from 2011 to 2015. He joined Airlie in 2016, with a remit that includes Australian share strategies for institutional clients and the Airlie Australian Share Fund for retail clients.
This year, Matt was recognised as one of the best in the business and inducted into the Hall of Fame, joining a small and distinguished list of Australia’s best fundies (including the three Perpetual alumni mentioned above). Matt explains why the Aussie market has fared better than its global peers, where valuations are and where they're going, and the one Aussie company Matt reckons is made for Berkshire Hathaway's portfolio. Note: this episode was recorded on Thursday December 13, 2022.Timestamps1:40 - Leaning from mentors, past and present3:15 - It's not only what you own, it's what you avoid5:00 - Why the Aussie market has outperformed global peers8:00 - Cash is king14:00 - Stress testing companies18:30 - Defensive anchors20:00 - Getting in early with Mineral Resources (ASX: MIN) 22:00 - Upgrade the quality when the market falls23:00 - Buying blips28:04 - A business made for Buffett

Friday Dec 02, 2022
Move over Big Tech, these are the new flag bearers of growth investing
Friday Dec 02, 2022
Friday Dec 02, 2022
Growth investing has ruled the roost for the last decade. If you wanted astronomical gains, Big Tech was the train you needed to be on. Didn't matter which carriage, they were all coupled together.
But that all went belly up this year, with the growth-focused Nasdaq losing roughly a third of its value thanks to inflation, rates and slowing output.
If 2022 has taught us anything, it's that a regime change in markets has arrived with a bang.
In the latest episode of The Rules of Investing, Livewire's David Thornton sits down with Sam Ruiz, a Portfolio Specialist in the Equity Division at T. Rowe Price. Sam hasn't lost any enthusiasm for growth investing. Instead, he acknowledges that the rulebook that worked so well through the 2010s should be put back on the shelf.
Among many other key insights, Sam believes that the choice between growth and value is not the binary choice many make it out to be. The growth stocks that will excel in this market, and there are many, will share many many attributes with their value-focused cousins.
Topics discussed include the muscle memory plaguing markets, the changing face of growth, and the importance of capital. He also goes deep on a widely dismissed traditional sector that he believed could grow 2x in the coming years!
Note: this episode was recorded on Monday November 28, 2022.
Timestamps
1:30 - Will the multiple mindset continue?
4:30 - Dark days for speculative growth
5:55 - Prices follow returns and narratives follow price
8:20 - Pitfalls of total addressable market
10:10 - Growth companies fed off multiples
16:30 - Dispersions = opportunities
18:40 - Don't count out cyclicals
21:20 - False dichotomy of growth vs value
22:15 - Importance of cash balances
28:00 - Hunting for idiosyncratic companies
29:00 - Opportunities in emerging markets
23:40 - A contrarian view on a dismissed sector
32:00 - Fight for money has changed the game
33:40 - A Big Tech stock worth its weight
36:30 - A Brazilian bank for the bottom drawer

Friday Nov 11, 2022
Luke Smith: This commodity will grow 10x in 10 years
Friday Nov 11, 2022
Friday Nov 11, 2022
It’s been a crazy year for virtually every asset class. Commodities have been particularly interesting, though, because earlier this year, when most everything was selling off, commodities went on a bull run!
It’s a highly volatile sector, exposed to just about every macroeconomic variable there is, so investing in it takes a unique skill set. But as you'll learn, it's a first-order beneficiary of the big trends that will define markets over the coming decades. And that means massive returns.
In today's episode of The Rules of Investing, Livewire's David Thornton is joined by Luke Smith from Ausbil Investment Management. Luke runs Ausbil’s Global Resources Fund. The fund invests in natural resources companies using a top down and bottom up approach. It also goes short to help manage risk.
Luke explains why he's so bullish on battery metals, how the decarbonisation supercycle will pull commodities along for the ride, the mismatch between the nearish micro narrative surrounding China and what he's seeing at the micro level, and how he finds companies with relative value.
Note: this episode was recorded on Thursday November 11, 2022.
Timestamps
1:20 - Ausbil Global Resources Fund
4:10 - High demand, low supply in battery metals
9:30 - Falling demand in the West, accelerating demand in the East
10:15 - Macro fears distracting from micro strength
11:50 - Positioning through the commodities bull market
12:40 - Lacking investment in new supply
13:30 - Lithium spodumene price goes 25x
16:00 - Lithium, Cobalt and Copper are key for electrification
18:30 - Energy was on a tear before Russia-Ukraine
19:00 - Don't write off fossil fuels
20:50 - Separating signals from noise
24:00 - Don't be negative in a negative market
30:00 - Don't equate Aussie EV penetration with demand for electrification
32:00 - As relative value shifts, so should your exposures
37:00 - Commodities fundamentals are stronger than the macro narrative
41:08 - Betting against the market in 2020
43:10 - A Decarb stock for the bottom drawer

Friday Oct 21, 2022
Bob Desmond: We’re finding value everywhere
Friday Oct 21, 2022
Friday Oct 21, 2022
When I ask most fund managers about today's operating environment, they almost invariably respond with words like 'difficult', 'complex', or 'bearish'.
And you can't blame them. The age of cheap money and growth at any cost is over. They're not defeatist, by any means, but it's safe to say they've had easier days at the office.
So it was a breath of fresh air to sit down with Bob Desmond from Claremont Global to record this latest episode of The Rules of Investing. Bob's optimistic, and he's "finding value everywhere."
Claremont Global run a high conviction global fund of just 10-15 stocks. Being that concentrated would send shivers down the spine of many investors at a time like this. But while it's true that diversification is the only free lunch in finance, it's also no coincidence that the vast majority of the world's top investors pass on the free lunch and choose to be concentrated.
Bob takes comfort in knowing a few companies well. You could say that the quality growth companies Bob invests in are made for the moment. That is to say - indispensable large cap companies with lots of cash and big moats.
In today's episode we cover the kind of big tech stocks Bob likes, the stock he's just bought after waiting years for the right price, how he manages investor expectations during a bear market, and much more!
Note: this episode was recorded on Monday October 10, 2022.