The Rules of Investing

Small industrials have fallen more than 20% from their highs, but Chris Stott thinks the best buying opportunity is still ahead. So what would convince him it’s time to buy? In this episode of The Rules of Investing, 1851 Capital’s CIO explains the signals he’s watching, why he’s sold his AI infrastructure winners, and where he’s finding value while he waits. He also makes the case for Bapcor, his largest holding, and reveals the stock he’d own if the market closed for five years.

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This latest episode is brought to you by AlphaSense.
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Chapters:

00:00 – Launching 1851 and managing the fund’s size

07:28 – Why Stott has sold his AI infrastructure winners

12:18 – Is the small-cap buying opportunity still ahead?

17:25 – The signals that could mark a turning point

20:42 – Finding growth and the case for COG Financial

24:35 – Bapcor and the turnaround thesis

31:24 – The shrinking pool of listed companies

35:36 – Tracking crowding and revisiting GDG

40:29 – Two recent IPOs Stott likes

42:35 – The lesson from selling Afterpay

44:06 – What investors may be underestimating

45:51 – A stock to own for five years

Last time veteran property invesrtor Andrew Parsons joined The Rules of Investing, he warned that Australia had its head in the sand on the prickly issue of housing. Fast forward two years, and affordability and the supply of new housing remain unresolved. In this episode, Parsons breaks down the state of the property cycle and where Resolution Capital is identifying the strongest structural demand. He also shares a candid view on the challenge of affordable housing, which he says isn't unique to Australia.

 

Thanks to our Sponsor AlphaSense
This latest episode is brought to you by AlphaSense.
Discover decision-grade AI now - Visit alpha-sense.com/livewire to get started.

Dr David Allen from Plato Investment Management examines how behavioural biases shape investment decisions. His presentation covers overconfidence, the hot hand fallacy, loss aversion, anchoring, base rates, herding and confirmation bias.

Topics include:

What a sharp rebound in short positions taught Allen about complacency.

Why he questions the persistence of exceptional company growth.

How waiting to break even can influence decisions about losing holdings.

How a hypothetical IPO price can become a valuation anchor.

Why the search for the next NVIDIA should include historical success rates.

How Plato uses automated red flags to challenge company assessments. Allen concludes with the practical checks he advocates: express conviction as a probability, seek evidence that could disprove the thesis, reassess the portfolio from cash and systematise the investment process.

Chapters

0:00 The seven deadly sins of investing

1:45 Overconfidence: how good an investor are you?

5:52 The hot hand fallacy: chasing exceptional growth

8:08 Loss aversion: the urge to break even

10:47 Anchoring: when a price shapes your valuation

11:40 Base rates: could this be the next Nvidia?

14:09 Herding: the pull of the crowd

15:38 Confirmation bias and company red flags

17:21 Building a process to keep bias in check

General Advice Warning

Livewire gives readers access to information and educational content provided by financial services professionals and companies (”Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

A handful of powerful megatrends are driving trillions in investment. Here’s what’s behind them and how investors can gain exposure.

Speakers:

EQT’s Sam Franklin focused on the energy infrastructure needed to power the digital economy.

Munro Partners’ Nick Griffin argued the AI boom is only getting started.

Janus Henderson Investors’ Daniel Sullivan made the case for a new resources supercycle.

VanEck’s Jamie Hannah highlighted a transformation in global defence spending.

TIME CODES

00:15 – Sam Franklin (EQT)– The energy opportunity

02:50 – Energy demand is accelerating

05:05 – Why solar, batteries and gas are winning

07:06 – What EQT looks for in energy investments

11:04 – Nick Griffin (Munro Partners) – AI: The next great platform shift

13:49 – Why AI compute demand is exploding

16:44 – The ‘shovels’ powering the AI boom

19:43 – AI applications: Where the winners could emerge

23:00 – Daniel Sullivan (Janus Henderson Investors) – The new resources supercycle

25:45 – Critical minerals take centre stage

28:23 – Why copper is the backbone

30:39 – Building a resources portfolio

32:09 – Jamie Hannah (VanEck) – The global defence supercycle

34:09 – Where defence spending is going

36:01 – How investors can play defence

39:03 – The case for diversified defence exposure

41:11 – The OODA loop: Investing ahead of the market

General Advice Warning

Livewire gives readers access to information and educational content provided by financial services professionals and companies (”Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

The winds of change are upon us. The forces currently shaping Australian and global markets feel more whipsaw and shape-shifting than ever before and investors today must contend with a far broader set of variables.

As Livewire’s Chris Conway put it: "When I was coming up, admittedly many moons ago in markets, there was only three things that you needed to pay attention to have a handle on the macro, and that was inflation, interest rates, and growth. Now we have to worry about policy mistakes, housing, AI, deglobalisation and US exceptionalism, to name but a few."

So is it the same game with more moving parts, or is it genuinely more complex? That’s the question we put to our panellists at Livewire Live:

Diana Mousina, Deputy Chief Economist at AMP;

Damien Boey, portfolio strategist at Wilson Asset Management; and

Roy Keenan, co-head of Australian Fixed Income of Yarra Capital.

Please note this panel was filmed 22nd September, one week prior to the RBA's September board meeting announcement.

Timecodes:

00:00 - Introduction & Market Complexity Poll

01:05 - Is the RBA Risking Over-Tightening Rates?

03:04 - Inflation Persistence vs. Consumer Resilience

05:09 - What the Bond Market Signals for RBA Policy

06:52 - Predictions for the Upcoming September RBA Meeting

08:51 - Housing Market Outlook & Correction Risks

11:26 - Banking Buffers & Equity Valuations

15:18 - Government Debt, Deficits & Central Bank Independence

21:22 - Asset Allocation in a High-Deficit Environment

23:05 - The Impact of AI, Data Infrastructure & Global Trade

28:11 - Rethinking US Exceptionalism & Australian Opportunities

34:16 - Q&A: Corporate Balance Sheets, Rate Cut Calls & Credit Markets

General Advice Warning

Livewire gives readers access to information and educational content provided by financial services professionals and companies (”Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.