130 - Protecting Your Wealth in a Volatile Market with Terry Tran

Speaker A: G' day everybody, and welcome back to the Scale HQ podcast. It has been a hot minute. Uh, I have been. If you're wondering where the hell Sean Steele has been, I'm doing stuff. I've got something coming ready to launch for you in the next couple of months and it's been taking most of my time. So I will be getting back to regular, uh, recording, but, um, not just yet. However, I really wanted to have this conversation today with Terry Tran. If you have been listening for a while, you might remember Terry Tran, because we talked, we had a bit of a philosophical discussion about sort of, you know, shares versus property. And ultimately, as a business owner, this is not a scaling episode, but this is about wealth building. And ultimately, uh, if you're in business, there's a strong part of you that is, um, part of that building of the business as a creative endeavor. You're trying to have impact. You're trying to do something that you love and something that you think you're capable of. And of course, in the background, if that builds some, you know, some wealth to support a better future for you and your family, that's completely natural and reasonable. Now, part of that is. So we're not talking about the business of profitability today, uh, and uh, building the business, but actually what do you do with that money? And the reason we're having the conversation today. So our last conversation was a bit about, well, where could you put that? Would you put it in shares? Would you put it in property?

Speaker B: Why?

Speaker A: What are the different kinds of returns? We talked with Terry about what he does and how he helps people around that. But, um, very recently we're, uh, recording this in March 2026. Um, there's a lot going on in the world. Uh, there are a lot of, um, there's probably a, um, I guess Terry's going to be telling us a bit about it today, but there's a pretty significant change in the market dynamics and we wanted to have this conversation today. Terry reached out to me and said, hey, there's a few things going on that I think might be of interest to your listener. And he was 100% right. Um, as I did more deep diving, uh, I was correlating all the things that Terry had sort of said to me, even offline, but we haven't had the conversation yet today. So today is about what's actually going on, Terry, how does it affect people's wealth building strategy? What should they be doing about it? What's actually happening in real time? Because for those who, when you're listening back to this in the future. It's not that long ago that a uh, serious war uh, is happening in the Middle east, which I happen to be quite uh, close to. Uh, there's a lot of things going on in tech stocks. But uh, I really want to unpack this with uh, Terry today. So sorry for long int. But it gives a bit of context to uh, where we're going. How are you, Terry?

Speaker B: Very well, Sean, and great to be back. And uh, yeah, just want to see how I can help as much as I can.

Speaker A: 100% mate. Well look, we um, for those people who didn't hear the last episode, it'd be good for you to give ah, just a quick insight into what it is that you actually do and what's freedom trader, uh, and what role you play. And then let's talk about what's actually going on and what it means for people.

Speaker B: Sure. So, uh, my background is I have been a uh, hedge fund manager, uh, been in the game, financial game for almost pretty much 30 years now, uh, managing other people's money, uh, learn from one, you know, a lot of the world's best that manage big funds. And over the last 10 years is actually my 11th year of teaching. So just helping business owners that you know, do well in their business and they, they start to build wealth and how to actually take that wealth and scale it even further. That is off business, nothing to do with the business. That's where, where your forte is, Sean. But on the other side that in the background things are bubbling along where they're compounding their wealth that they've created from business to make sure they don't squander it or just sits there in a bank account just waiting for a uh, day which a lot of business owners do do. But it's just a waste of that compounding opportunity. So my job is to share with people and teach them not to uh, what I don't do now these days is I don't invest for them, but I want to teach, teach them how to fish, teach them how to plant, plant that seed and do it in a safe manner. Um, and therefore it's growing. You can not worry so much about it and, but doing in a much more safer way than what most people think as well.

Speaker A: And um, maybe just a couple of quick notes uh, from you Terry, on like how you do that. So just people that get a bit of context. It's like what relationship you typically have with the investors that you're guiding. So they kind of know how that plays out.

Speaker B: Yeah, we've got two parts. Our part one is what I call teach a man how to fish. Basically teach you how to actually do the thing. So what I used to do as a fund manager, I want to pass on that skill. So down a track. Nobody actually relies on Terry or relies on anybody else, including if you've got an advisor or an accountant, you actually don't even have to rely on them. So then in actual fact, after about six, seven weeks, you actually know even more compared to most of the advisors that's out there. That's why we've got about a hundred advisors as our students. Um, and then part two is then I. To give you the confidence, I then show you literally my own portfolios and what I'm doing. And you literally will build your portfolio over the next six months, 12 months with me. So literally, when I'm buying something, I, uh, say Microsoft or Apple or things that are undervalued, you will see that, you'll understand why I'm buying that, because I've explained how in the part one. And then we will literally buy the same stocks together and we build our portfolio together, because unlike property, where there's the one property, and I can't share that property around with shares, as you know, Sean, and everybody knows, we can all buy the same shares together, and it makes, uh. And basically we build wealth together in the end.

Speaker A: Yeah. And just for the sake of the audience, I mean, that's obviously why I was attracted. Uh, that's why Terry and I have built a relationship, because I think that is an entirely unique proposition. There's a lot of people out there who are trying to tell you how to make a million dollars in five minutes, which is not. Terry's strategy is far more concern. Um, conservative. But, um, he's investing alongside you. He's showing you his investments. You're doing it together. So he's absolutely tied to the hip to and accountable for his performance, to his people and to the people in his community. So I just think that's really, um. It's pretty cool. And I've seen some of the, uh. And maybe that'll probably be a place for us to kick off. Terry is some, um, people say, yeah, but if I just get a kind of broad basket of kind of ETFs or whatever, I can ride the market. Um, and, you know, I'm always thinking, and I think, you know, in our last conversation, uh, you gave. Gave me some really interesting data points. That was the proof in the pudding of when in Particular, actively managing your portfolio is super important, which is particularly in down cycles. Um, because when you got a whole bunch of tailwinds, you can probably without maybe the greatest level of, uh, financial intelligence, ride a fair bit of that. And so maybe if you're a bit more active, you might outpace it a bit. But the big question in my mind is how do you not lose money? Because if you lose 30% of your portfolio, you've got to get 60% growth before you get back to the same number. And that's super hard. Takes a bloody long time. So if you're in your 40s or your 50s and you're thinking it's different when you're in your 20s and you're like, oh, it's cool, I got 40 years to kind of figure this out. Long, uh, time, it's pretty different if you're in your mid-50s. This is your only business. You're kind of, you got eyes on the prize. Retirement wise, um, you don't want to be losing significant sums of money. So do you want to just talk about maybe the kinds of performance that your, um, portfolios have delivered in comparison to the market, let's say over the last three years? But then why, why are we having this conversation now? And why, you know, why do you think markets potentially have shifted in a. That makes active management even more important right now?

Speaker B: Yeah, no, great, uh, question, Sean. And yeah, so over the last few years, five years, as many have known post Covid, the market has done extremely well. And, uh, you know, there's that tailwind that's pushing everything up. So if you had an index fund, you'd be doing quite well. But long term, m wise though, I say if you don't want to learn and you don't want to actively be involved in your own portfolio, then it's then index funds, they're a great. At least you're doing something, you're going to get that 6 or 7% return over a long period of time. I'm talking to 10 years plus. And that compounds over time. However, if you don't mind putting a bit of effort. And I'm not talking about a lot of effort, I'm talking about once you know what to do. Uh, I'm seriously talking about maybe an hour a week, an hour and a half a week. If you're long term, just passive investing, or maybe if you're more active, and I'm not talking about active trading as in being day trading, maybe just actively looking at the portfolio and seeing opportunities, maybe you know, 20, 30 minutes a day. And that literally can triple the return from that six or seven up to about 15, 20, 25%. And if I look back over the last few years, we have, despite the tail, we've actually also beat the market. So last year we were in 2025, we were with the market at about 17%, but the year prior, uh, the return, if I recall, was about 27%. The market did about 23. So we still outperformed market, but not a lot. Uh, the year before, uh, we did 32%. The market, I believe, did about 24, 25. And but the. What the biggest thing is when markets are down, which I actually love, and they see the process at work, which is going to be happening now too, is the market actually dropped by about 20% and we were actually up by about 12%. So we outperformed the market by 32%. And that's. That part is huge. People go, you only got 12%, but the market dropped by 20%. So these are the periods where if things go well, everyone makes money and everybody's happy. It's when things go bad, that's when, you know, a process or a system actually works. And I always say that some people think that they're what I call. They think they're geniuses when they're investing because it was just a tailwind, bring them along. But in, uh, actual fact, it was just luck at play because the markets did well. Everybody made money. Yeah.

Speaker A: So, yeah, that's a rising tide lifting all ships.

Speaker B: Exactly. Yeah. And then we're in this period right now where another unique situation where, you know, um, obviously over the last few years, not just so many things have happened. And last time when we spoke, there were already things happening, like Russia, Ukraine, of course, Covid already passed tariffs were in play. But now, since we last spoke, six, seven months ago now there's, you know, Venezuela had had the issue, uh, where the, um, prison was, of course, you know, invaded and pulled out of the country. And then now of course the Middle east crisis as well. And of course, even on top of that, the US domestic policy, while everything is just going to extremely wrong in a way, in a bad way, um, and things are shifting dramatically as well. Um, and even the US is standing on a global stage since, uh, the Davos, um, the meeting they had in Switzerland a couple of months ago as well. So that's really shifting the market. And I've just been warning people where the markets have been too good for too long. And when I look on the not just the market itself. I'm also looking at the individual sectors, individual stocks, all the talk of AI technology, that's just overvalued a lot of sectors, especially in the tech, for a long time. And yes, we've made a lot of money, but however, it's time to also take money off the table. Especially if those shares, individual companies are now way overvalued and they just can't outperform, uh, the market anymore. Why are you still there in a big way? Take some money off the table and make sure that you're cashed up. So when downturns eventually happen, which we are seeing now, you're cashed up and you're ready to go. Because I always say that crises is an opportunity to make really good, like really boost up the returns, but at the same time taking hardly any risk. Because when things fall by 40, 50%, they're at half price sales. So they are. Not only will those companies, you know, the ones that, that survive, they'll become stronger, but they're also going to give you the returns you want as well with a very low risk.

Speaker A: 100%. Yeah. I remember watching the banks, um, come out of the uh, uh, I think it was the GFC that I was first sort of starting to really get, um, stuck into modeling and Warren Buffett's kind of models. And I remember I built this big spreadsheet and I'd kind of analyzed all the P and LS and balance sheets. I was, you know, I was kind of like trying to get right into it and I was a bit nervous about actually making the real bet. So I built this spreadsheet and I tracked it over the next five years and I sort of said, I was like, okay, is what he's suggesting is going to happen going to happen? And if it does, then I'll convince myself that actually next time that comes around I should do the same thing. And what was really interesting was how fast the financial, uh, like good banks and stuff, uh, came running out of there, kind of leading the pack. And I was like, ah, I missed it. But at least I proved that the point was right. And I think your point is right. Quality companies will come out the other side and they will grow again. But there's a natural correction when things are overflow. So are you seeing, do you see the kind of AI? Um, I mean it feels, obviously it is a material and transformational shift. It feels as big as a kind of iPhone type event or you know, like kind of that total shift of mobile or something. Equally as big. But on the flip side it feels also a bit sort of dot com boomy. Like there's a lot of hype going on around it. Is that what you're seeing? Is that what makes you a bit nervous around those tech stuff?

Speaker B: Yeah, for sure. Uh, look definitely different to dot com because back in 2000.com, uh, most, I'd say 99, 95% of the companies actually did not make a cent. They made no money. They were just startups and add in a dot com name and everyone just thought that that was an aspects thing. And yes, the Internet as we recall has shifted the world like that. That whole technology shift onto the online world was a big thing. But most of those companies are no longer around and the few that survive, like the Amazon stuff, they've now dominated the, you know, the um, pretty much that the world, the planet. And our job really in the end is to find out which ones actually will come out not only alive but will actually be even stronger over time. And there is a bit, a profound difference because there are a lot of the big end of town that are actually okay. So even though they've, they've put in you know, hundreds of billions and I'm talking about the metas, the Googles, they are investing a lot. However, they are already very profitable. So despite them uh, giving it a go and having that crack, they will, they will definitely profoundly change at the way we do business and we, we interacted with the world however they can afford to. So even if it goes wrong, it's okay with those guys. What you're more concerned about are the ones who, small, medium sized ones that are literally no profitability and they're, they're just getting funded by you know, new investments, et cetera and raising capital. And if they don't have a proper business model, where is the money going to come from when the turn, when the tide turns. And you are going to see a lot of them also drop off. So they are the ones that you really want to make sure that you don't get involved in with uh, capital.

Speaker A: I saw a very interesting article uh, on that recently actually around how um, no one really knows how to value an AI business at the moment because you know, valuations in a SaaS business make a lot of sense because actually the, the cogs ultimately, you know, the cost of delivery of that SaaS model is very well known. So you know, you charge a price. Okay, yes, it might cost you more to acquire the customer than um, than you get immediately, but you can estimate the lifetime value, you can know what the cogs are going to be to serve that customer. But in AI, people are pricing it like a SaaS model. So they might be pricing 20 bucks a month or 50 bucks a month or whatever it is, but the AI cost is not consistent, it's not locked in, it goes up and down with the usage. So like the ability even to value it, value the model is like totally is not something that's right in place right now. People don't know how to value these business. So the commercial model is not yet understood. We're all kind of hoping it'll flush out in some way, shape or form and the way that it gets priced will be different. But you can imagine in circumstances where you've raised a whole bunch of money, you don't have the same padding as a, ah, gigantic company with billions. If you don't get that model right, there's going to be a lot of failures for sure. Terry.

Speaker B: Sean, just to add to that number as well, uh, the recent figure that I recently just saw is this year alone the estimation is about $2.5 trillion going to AI models to improve the, including infrastructure. And do I firmly believe that that 2.5 trillion, are they going to get their money back? No, they will not. Uh, they eventually probably will. Uh, however it will be years down the track and a lot of that 2.5 is also going to be including the ones who definitely will fail, uh, and the ones who survive that thing, uh, then they're okay. And that's why we are still on our side. We're still staying on the big end of town as well, making sure that they're already profitable.

Speaker A: So let me ask you a question, Terry, because I guess what we're saying is there's a bunch of macro things going on which have. I always feel like it's kind of like a pendulum, right? Like, you know, there's, or a, um, what's the word? Like a, let's just call it a pendulum for now. And on the one hand there's potentially sort of asymmetric upside. Like, you know, the chance of getting growth is higher and more probable, um, and maybe in a bigger way than actually the risk of downside. So there's always people, you know, crying about downside risk. I mean if you think about the Australian property market, I don't think there was a single year in the Australian property market where there weren't some like really loud commentators. This is the year it's going to drop by 30% it's going to drop by 40% it's all going to come crashing down. And you know, and it kind of never happened. But in the stock market it feels like um, obviously not only do things move much faster but um, when, like when there's a crash, but it feels like the shift has maybe moved the balance of probability of like okay, could there be some further upside? Okay, maybe. But the chance of it and the quantum of it seems significantly lower than the risk of the downside. Both the chance of it and the quantum of it feels like it's heavily weighted to the downside at the moment. Do you feel like. Because we're at the 9th of March having this conversation and I was just looking at the S&P 500, um, and just kind of some of the indexes and so on, I can see that The S&P 500 has already moved about 4% um, down just in the last month, um, and half of that in the last five days.

Speaker B: Do you.

Speaker A: And um, okay, I'm only looking at one index but do you feel like we're already in the slide? Do you feel like we're in hard. Like it's probably hard to know. Right. But do you feel like this is already occurring and therefore the level of urgency of attention.

Speaker B: Oh yeah.

Speaker A: You feel like arena.

Speaker B: Yeah, yeah. I was. We've got about 2,000 odd students, um, that uh, I've been warning that because we've done very well as a whole group. However, I just said that you can see over the last few months that the, and let's go back to the S and P and it was basically bouncing up to that 7,000 mark and every time it almost gets there, it comes back down. So it was yo yoing between 6,800, 7,000 mark literally for multiple months. And that it's, it's. You can tell that the upside that you talk about asymmetric, the upside of asymmetric is no longer there. However, the downside is massive because as an overall forget about the individual companies but overall the M. The index itself is very already overvalued and they're also very top heavy. Where uh, the, the. I'd say that the top five or ten companies that the um, the apples, the Googles, the, the metas, they dominated pretty much the index itself. And every time uh, they, they move it a tad, the index moves up, but when they move down they also move down a lot as well. So the, in other words, downside risk is way, way higher than the upside risk. And that's just on the tech. But however, having said that, where there is value too, because there are some indexes too and there's some industries that it's been unloved and we, you want to go there. So even though the index itself is very overvalued, where you want to see is that avoid those ones. But then look at the ones that have been on sale and there are so many stocks that have already dropped 30, 40% already. Uh, and they're the ones that you want to go to. And some of the, you know, that you mentioned SaaS, some of those companies are in the SaaS in the SaaS area, but they've already dropped 40%. So for them and they're, and they are profitable. So for them to actually drop further, they could. But the downsides already been been factored in. So money has to flow somewhere. Once they get out of the overvalued companies, that money has to flow somewhere and they'll go back into the unloved sectors because fund managers, they need to move money. They can't hold any cash. It's just that their mandate, most of them need to be 90% invested and therefore that money flows back into the unleavened love sectors and they will push those ones back up.

Speaker A: Well, I'm keen to talk about what are some of those basically, what are some of the sectors or company types that tend to do well in this kind of shitstorm? Uh, for want of a better word. Um, but before we go there, if you think more maybe like on a macro kind of portfolio basis, like if somebody's in a super fund or they're, you know, like they've just thinking kind of allocation between like cash and fixed interest and growth equities and so on. Is there a balance that, you know, maybe six months ago might have made sense, but like, what are you moving to now? What kind of guidance are you giving to people to now? Like, how much are being cash? How much should be sort of defensive ultimately? Um, how are you thinking about that?

Speaker B: Yeah, uh, we've moved into cash in a big way. So we've been able to lock in a lot of our tech companies. Uh, the TSMCs, uh, am I saying that they're bad companies? No, they're not. Like tsmc, for those who don't know, they pretty much develop, uh, Taiwan Semiconductor. They are the ones who develop about 80% of the world's supply of the most advanced chips on, uh, the planet. They, uh, are based in Taiwan, but they are now because of geopolitical Risk they're trying to expand globally. Uh, having um, investments and factories or foundries now in United States, Germany, Japan, but that will take years to actually build out and move across. And they know that in 2027 there's that political risk of you know, China wanting to un unite with Taiwan. So that's that risk that right there. So we saw that. Don't get too greedy. We had, that was actually our biggest position. However, having between 3 to 500% in about 2 and a half years return from that company alone, it's enough. So we had to lie down. That company still is still okay. However we have lying down. So we have moved a lot of that, that the tech sector money, um, not some of them we've sold out completely. Like Apple, we sold out a couple of months ago because one, we saw Warren Buffett also selling at about 75% of Apple.

Speaker A: Yeah.

Speaker B: And it was at 38 times, almost 40 times earnings. So we can see the valuation was really stretched and people were just expecting more, you know, more sales of iPhones which was not happening. The revenue was actually flatlining for about two years now. So we let go of Apple completely so took money out of there. Uh, so in terms of cash wise, going back to your question, I've got two different portfolios. On the trading front I'm almost 60 odd percent in cash. On the long term investing I'm just over 40 odd percent in cash as well. When I spoke to you back then we only had about 20% cash. We actually didn't have that much cash. Uh, so it was already overvalued at that time, but it was still okay. But now we were just selling down and speeding up our cash cycle. Uh, and I don't want to lock away like say a term deposit because I know for a fact that that cash is going to be used and I want that cash sitting there ready to go. Because we can see the opportunities that actually starting to arise now as well.

Speaker A: Yeah, yeah. Okay, makes sense. So why don't we talk about then, where are some of these opportunities? Like I was just thinking about this in the last week or so or uh, last couple of weeks around. All right, well when uh, obviously it's not like a generalized. Okay. When the market goes bad, these things go well because ultimately what is actually going bad or what causing the problem? Like I think, okay, well when there's a war, well we've got a war in the Middle east, which means, you know, obviously the price of oil is going through the roof. People tend to sort of seem to rush to gold when there's war, uh, or kind of geopolitical risk. I imagine if there's a protracted war, then maybe, I don't know, defense contracting or something. Well, like, based on what you can see at the moment, what sectors, perhaps even less so than companies, do you think, uh, are more likely in the short term? So let's just say you went to you a fair bit of cash to kind of protect your downside, but you're going to keep some small amount invested in something that you think maybe even the short term, in the next, I don't know, three, six, nine months might actually do quite well in this environment. What are those?

Speaker B: Uh, you mentioned defense. So definitely the defense would either protracted war, they would do well. However, it was also depending on price because not all military stocks are equal. So it depends on the ones that, uh, we want to go to the ones who. That are already quite profitable and they've been profitable for years, not just because of this, this protracted war. So we've got that as a, as a foundation, a protracted wall makes them even more profitable down a track. You don't want to go to the ones that have been even without, you know, without, um, geopolitical wars, that they've been struggling for years. And they just rely on this because we don't know how long this will go. So what, uh, you want to do though, is because those stocks have already spiked up, what you want to. Don't want to do is rush into those ones just because of that, that, of that thought that there may be a protracted war. If there is a big pullback and dip you want, you definitely don't mind going there. Uh, the other thing too is I would say pharmaceutical. Six months ago, I actually did talk about pharmaceuticals. A, uh, lot of the big giants like the Mercs, it was unloved. I actually don't know why. It's just that everyone took the money from there and they took that money, and I'm talking about the big fund managers, and they moved across to the tech AI that spiked those stocks up. Now they're overvalued, but now they're coming down much faster. Whereas on the Merck side, those stocks have now gone up by 40 to 50, 50% six months ago when we bought in, they've actually spiked back up. So, uh, every industry will always have. It's what I call sector rotation. So where I'm still seeing some value is still definitely pharmaceuticals. That's one. The other one is, um, very Profitable retailers. They've, they were unloved again six months ago and I'm talking about the Lululemon's, ah, the uh, the Deckers which produce Hocker shoes, Ugg boots, et cetera. They were unloved six months ago. They have spiked again uh, 30, 40% in the last six months. So if there is a pullback they are very still very profitable companies and their numbers are actually great. So what's most important I think is not just the overall sector but within the sector, what stocks are uh, uh, fundamentally strong but also fundamentally profitable year after year consistently over the last five years plus that's where you want to go. What I probably uh, suggest even better is maybe the ones that are, whenever there's a downturn in the economy that will definitely be affected most. And that's the, and you mentioned about the banks. That's definitely the financial sector. So and I'm talking about the big banks because as we know if there is a recession, people and businesses just don't have that capacity to borrow anymore and, and they'll have rising bad debts so they'll probably have to write off some bad debts as well. So those financial shares which have actually been stretched, they will definitely pull back in a big way. And today we can see that um, as of the 9th today of March, a lot of our bank shares, stocks actually got pulled back uh, because of that expectation that something's really not going right now. And rba, ah, last month when they increased the interest rates with um, petrol prices now per barrel are going over a hundred dollars per barrel. That's going to definitely spike up the inflation. And RBA was taught, was, is now really heavily looking at the inflation and deciding in the next month, this month, next month, the next coming months, are they going to do another increase. And because of this the inflation's been

Speaker A: riding pretty high in Australia, hasn't it's like still in around three and a half percent or something or 3.5%.

Speaker B: And it's going to, because of this recent uh, spike as well of petrol price, it's going to definitely spike up that inflation figure even further and RBA will have no choice but to increase it further. And then what that means now is that if that happens, bad debts and default debts of people who are stretched because of the property and, and, and over borrowing, uh, or housing now, you know, especially the ones who are doing 90, 95% lending, they're going to be quite stretched with these, with the current housing prices. So what does that mean? It just means that the financial sector is going to be, is definitely going to potentially suffer for the next couple of, maybe couple of years. Will it be. Are they going to have a um, a, a GFC style problem? I don't think so, but it's more of they, their prices were at a, at a certain point they were stretched. Now they're just going to pull back to where they should be, that's all. Yeah, yeah.

Speaker A: I was just looking at um, Anz's uh, stock price whilst you were talking and I can see that they're down 7.3% in the last five days. Yeah, uh, that's a, that's a big drop.

Speaker B: A big drop. Yeah. And our Aussie banks across the globe, they're actually one of the most expensive banks on the planet. It. So I know yes they have dividend yield but I always say to people, don't, don't get fixated on getting a 4 or 5% dividend yield because there's no point getting a 5, 4, 5% dividend yield when your stock drops by, drops by 20% and there's a risk that, so now you got to wait four or five years just to get your money back just on that yield. And you're, you know, um, if you're not going to average down and buy some more on a cheap price, you're, you're now having to hold that, that stock price, overvalued stock for a number of years just to, for that recovery.

Speaker A: So if we imagine that we've got some people listening that might be quite active in their portfolio. Some might have a manager of that portfolio, some might just be um, uh, fully invested through industry super funds are too focused on their business. They're just trying to keep things really simple and they've got stuff in industry super funds. What would be your advice right now for people who've got industry super funds? Because ultimately I'm assuming I'm in Australia, I've got still Australian super ones, um, in Australia and it's actually exceptionally easy to go in and change the allocations and they get done within 24 hours. And it's like you just go and make your decisions about what goes into cash, what goes into fixed interest, what goes into balanced growth, yada yada. M. What would be your. Because obviously we've talked. Okay, well you're on the one hand, um, you know, sector is not enough because obviously there are different companies within sectors so you're not going to get the best opportunities unless you're talking specific companies. But if you've got you know a fair bit of exposure in an industry super fund. What would be your advice to people um, at the moment with yeah definitely.

Speaker B: Uh, and I'm sure just want to make clear too obviously I can't so I don't know the you know the listeners are uh, not financial advice. Yeah. However uh, from my, from my point of view is if you had a self managed super, of course you've got control where you can individually select sectors stocks but I know uh, there are going to be some listeners here that don't have that and they've got the you know the ones who are managed by either an advisor or not just advisor but the advisor of course will have put them into um, different funds like industry super Host plus things like that. So if I go on that what you do want is you definitely want a much uh, higher percentage in cash because cash doesn't uh, mean that you're going to stay there forever because the last thing you want to do is stay there for a long period of time. It doesn't earn much so but what it does do though it will hedge yourself against the fall, further fall. And if you are looking at, if you are close towards retirement that is very important because the last thing you want to do is knowing that the market's going to have this big fall and you're going retire next year and you're expecting a certain amount to retire off and all of a sudden that fund dips by 20, 30% and all of a sudden you'll feel devastated. So what I'd probably suggest is that firstly uh, check firstly and I know a lot of people don't even do this. They, they don't even know what they have. So firstly definitely check, get out your statements, find out what type of funds you actually have. Are you in growth? Growth just means that you're probably heavy. Heavily uh, that fund heavily invests in maybe 70, 80% easily in stocks and the rest in fixed interest and property. So it's very stock focused. But then you might be in a balanced fund where maybe 60% are in stocks. So balance fund just does have a lower risk profile from that point of view. And there might be super conservative funds where a lot of is actually held in fixed interest property, uh cash as well. Uh, so firstly definitely find out what fund it is. Secondly I would say check your performance over the last three to five years long term for the fund, even 10 years if you've been in it for a long time. Because the last thing you want to do is think that it'll be right. And yet when you look at the figures, and like I said, the last few years the market has been good. But yet if the market's done, say 15, 20% and the fund's only done six or seven, something's really amiss. Either the fees are too high or, you know, visors are charging too much and you're not getting the returns you expected. So that's the other part. And I would say part three is if you are uh, somehow in a heavily know, growth orientated fund with a lot of shares, a lot of stocks in that fund, then find out, like you said Sean, on your one, you know that it's quite easy to switch. Find out how do you switch? Is there a form you need to fill out or do you need to go online? Uh, what's the process, the logistics? So definitely know that because at least you're prepared. And if you need to do a switch, you can not sort of deer stuck in headlights when it happens and it's like, oh no, what do I do? And you do nothing and then you just see your, your fund drop dramatically. Yeah. So definitely find out the logistics.

Speaker A: So let's assume then that people take some defensive action at the moment, get themselves in a better kind of more protected position. How do you think about like what are the signs that say because, you know, no one can ever predict the bottom. Right. Like, you know, I guess probably there's a bunch of things that you're looking for to go. I don't know, are we at the bottom? Are you sure? You can never really be sure, but there might be signs that you're, you know, you're particularly looking for. Like what, what are the things that you'd look for? Let's just say someone sets themselves up defensively and in three months or six months or nine months or whatever, we' so we've had some decline and we're looking for these signals. One of the things to be looking for to go, okay, maybe we're in this sort of pullback phase. It's time to kind of switch back and get back into um, uh, more of an aggressive growth sort of, you know, mindset and allocation.

Speaker B: Yeah. So what I tend to look at is also uh, what's happening on the streets as in the general public. So I always say. And as I say, you know, um, I think it was from Warren Buffett or Benjamin Graham. Like, uh, you know, be, uh, fearful when others, uh, panicking and then, sorry, be fearful when others are greedy and greedy when others are Fearful. So it's almost a reverse psychology and contrarian thinking. So when you times where you should be scared is when the Uber driver or taxi driver tells you that what stocks to buy and what, you know, what different assets like crypto and things you to get into, that's when you know that oh, it's topping the market, vice versa, when everybody's complaining about how bad things are, that's also a sign that wow, the public is now so scared that nobody wants stocks, nobody wants certain asset classes. And that is sort of a sign that, that oh, maybe it is bottoming out. So that's the emotional level uh, of the general public. But there is a tool, Sean, that that is actually free. And uh, it's called the VIX or VIX index, which I do teach in the masterclass that we do run. So the VIX index generally when they subside, uh, at the moment, um, last week it actually spiked above 30. And that's actually my sign. When it goes up 30 and above, that is when we start pulling back where he talks about the volatility of the market. And 30 and above is a sign that things can get potentially get worse. And you'll uh, if you go back literally a hundred years, that's how I studied it over a century of its data. Uh, is that generally when it's above 25 and especially 30, something bad is going to happen further, there's a big chance. And you can look at the GFC COVID 19, every single thing, even Russia, Ukraine, anything man made will get picked up by that VIX index. And it's actually a free tool. So that's one of five tools we use. But that's one that is very visually accurate. Uh, and how wide is it actually

Speaker A: an index, um, on the exchange or is it just a tool called vix? Because I can see kind uh, of vix, um, like a CBOE volatility index.

Speaker B: It's run by that Sean. So it's that cboe there is an Australian version, but because the United States is a bigger market, you want to use the VIX index over the S&P 500. So make sure it's right. Index that is uh, CBOD, Chicago Board of Exchange. They're the ones who created and they're based on, on basically option prices, volatility. So they have a calculation and every single day there is a reading for that and you just have to look at the chart to know that, that, that those levels are above 25, 30, uh, 25 to 30, you start getting cautious above 30 really buckle down because something in a, in a couple of weeks, bad could happen. And it's a very high probability chance right now. Yeah. And then now vice versa. Sean, answering your question is when it actually subsides and it goes from 30 back down below 25, that's when you know that everything is now calming down. And our, you know, our big super funds, the. The big fund managers around the planet, they're also looking at this as well. So we're not the only ones. I'm just teaching what I used to managing money. So that's what they do too, because I manage money for so long that I know these guys. Look at that. So now when they. It, uh, subsides, these guys are now going big and they're the ones who support the market, not the moms and dads. It's these guys with billions of funds that are now. Yep. Okay, it's time. Uh, there's undervalued stocks that they do the same calculations as us, fundamental investing, and they're looking for the best companies that are now sold at half price. And they. And when you see them shifting money across, they will be the support of the overall market in the end.

Speaker A: So if the. So just to put that in context for, um, the listeners at home, I am, I've jumped online and I'm looking at the chart, um, all the way back to 1991. And I'm kind of looking at the different points in time where we know the markets had some serious issues, like the gfc, like Covid. And you can see these spikes that go well north of this line, um, of 30 that you were talking.

Speaker B: Oh, yeah, sorry.

Speaker A: In 2008, it blew out to about 44. Uh, during COVID it, uh, blew all the way out to 53.54. And right now it's sitting at 35. So. So, you know, if 30 is kind of the threshold or actually, you know, it's time to pull back where obviously we've crossed that for now and so do you. When it comes back down and it kind of crosses back through 30, is that when you think about time perhaps to switch gears?

Speaker B: Not yet at 30, it's still too high. I generally want to see it below the 25 is the number.

Speaker A: Okay.

Speaker B: Yeah, yeah. And Sean, the one that you might be looking at might be the Australian one, because I know the. During, uh, GFC, the American 1s and P500, it blew out to about 85, 90. Uh, and also the, uh, during COVID it went up to about 90 as well. And that's a better gauge because the US market as, you know, uh, when America catches a cold. Yeah. So just check.

Speaker A: Yeah. Okay. That's very interesting. So, um, I guess what I'm hearing today, Terry, is that we've hit a point. And, you know, obviously this index is, uh. This index is, um, some key evidence there.

Speaker B: Oh, yeah, yeah, yeah.

Speaker A: We've hit a point where the balance of probabilities of a downside risk have increased beyond, you know, potential upside gain. So potentially, time to be cautious. Risks are kind of outweighing potential, uh, upsides. And if you're anywhere near, uh. Yeah, I just always think, uh, back to. I don't know if it's Warren Buffett's sort of principle, um, or it was, um, uh, Ray Dalio's around, like, number one principle, don't lose money. Like, that's the most important thing because it takes you twice as much effort to get back to the same place. So you do actually have to not have your eyes. And, you know, I imagine also for young people, um, like, I think about my son, who's probably only. Who's, you know. Like, I remember young people who have never seen interest rates kind of, you know, for a home loan kind of climb up. They're like. They thought like, 2 and 3% was normal when it was down around there. And you're like, this is not. This is not a normal money.

Speaker B: I grew up with my mum having it. I think she was on her home loan rate when the house we lived in was 17. Uh, 18%.

Speaker A: 17%, yeah, exactly. That generation knows that that's, uh. That stuff happens. And same now, like, if they've been in the stock market for only the last three, four, uh, five years since COVID they're thinking, this is amazing. Everything just keeps going up. So you just keep playing. My money just goes up forever. But now they realize there's some. Doesn't always work like that. So, um. So what I'm hearing from you is that it's probably time to get defensive. It's also time to maybe get a bit smarter about how you start to look for signals that might indicate to you, um, that it's time to get back in. And of course, it's always about this. This is not financial advice. We don't know your personal. I'm clearly no. Significantly less than Terry, uh, Tran on the other line. Um, but, uh, also, Terry doesn't have your personal information. So what in sort of, um, being able to kind of summarise and wrap up the most important Things you think people need to take away from this term. Um, how would you kind of synopsise where we've got to today?

Speaker B: Yeah, I think the most important is uh, don't take what we had or the returns you've seen across different asset classes from property to share. Like I know we're talking about shares but property too and even property two. Sean, the reason that I guess property has done well especially in Australia, is because uh, besides property does get affected by interest rates, et cetera. But what we do have which is a good tailwind is that we uh, just don't have enough supply. So demand is still outspreading, stripping supply. So therefore there was that, that sort of baseline that's holding things up. If there was plenty of supply you would see the property prices also really zigzag and also you know, potentially plummet um as well. And that's the only thing really holding the difference between property versus shares where shares is very different. Nobody, it's not like it's a home that someone needs a roof over the head. So it's a little bit different. So I would say that if you've experienced the big upside over uh, the last few years, years don't take that for granted because now the downside is happening uh, and it's not you know, if but when and how bad. I personally do not know what we. However I also want to say that if you're prepared also don't panic because if you're prepared I would say that this, these are the, I won't say generational but these are the five 10 year cycles that one people like myself we wait for. So they are the ones that, that if you're prepared that would be your next.

Speaker A: So make the real money 30m 40,

Speaker B: 50% years over the next few more years that will give you that foundation to build wealth at a much faster clip but also at the same time having half the risk that you would have normally taken as well. Yeah. So don't be fearful of that. Just take on board the message that knowing um, you know what, what, what is coming but also how to prepare for that, the logistics. And when it does come you just don't get surprised because at least you've heard this message.

Speaker A: Yeah, I reckon the worst feeling is that you've stayed fully invested, you've hung on too long, now you're in the bottom, you've sucked up the entire kind of market Correction, you're down 20 or 30%, you got no cash because you're fully invested and all Of a sudden, you know, there's buying opportunities right in front of you. Looking at all these things that are undervalued, going like, it sucks. Geez, I really need to have cash, but I can't. I'm fully invested, so I've sucked up all the worst parts, and I don't get to participate on the upside. There are times where you got to, um, get back to cash, so you got some powder dry to be able to take advantage of those things.

Speaker B: Otherwise, I would say, yeah, don't be the spectator. Like, don't just, uh, be on the sidelines, just seeing it all happen. Like, be prepared for it. So then you can be part of the action and use the opportunity to actually take advantage of it as well, uh, and not panic with the world because you're seeing your own portfolio drop too.

Speaker A: Terry Tran, thank you so much for today. I think that's been really, uh, certainly been really helpful for me, and I know I'll be, um, already have, uh, and we'll be continuing to focus on this from, uh, my own personal family level, uh, and myself and our kids and so on. And, um, we've already moved, uh, the majority back to cash, uh, with a small amount, you know, heavily defensive, ready for things to change. Uh, and, um, I absolutely am aligned with you. I think this is always a major opportunity. And if you listen to any great investor over any period of time, they all say the same thing around, you know, that that's when they made their real money. They made their real money when shit had gone. They stayed liquid, they were ready to pounce. They pounced when it was down. They made big upsides, and that's how they built real wealth. So time, um, in the market is good, but also not losing money is probably better.

Speaker B: Yeah, definitely.

Speaker A: Being ready to pounce. That's fabulous. Um, Terry, uh, if people want to learn more or want to be exposed to the sort of Terry Tran model of the world, perhaps want to follow along with your investing strategy or be part of your community. Where would you send them to?

Speaker B: Uh, we're actually running a, um, masterclass coming up soon as well. 24th, I think the next one, uh, March 24th. And then two weeks, we might have another one as well, depending on, you know, how many people want to. Want to see this. So we run for a proper teaching session where things like the VIX and had actually not just the VIX alone of how to look at the bigger picture, but also at the same time how to even select the stocks that we mentioned, like how do you know when something is, uh, is of, of um, of strength, of fundamental quality, that you want to buy those stocks and not accidentally buy the wrong ones? So we do run that math class and, and teach over a two hour period. So you will learn quite a lot about that. So yes, we'll leave a link, I guess in the post. And I wanted to also give the reason, a gift to business owners. If you're a business owner, like what can you, what are things that you need to look at out as a business owner for the investing front as well. A free resource there too.

Speaker A: Okay, great. And how do they, where do they find the free resource, Terry?

Speaker B: Uh, uh, what I'll do, Sean, is I'll send that over to you. It's a PDF and they can just download that.

Speaker A: Okay. So, um, we'll create a link for that in the show notes so everybody can get access to those. Have a look in the show notes. You should be able to pick that up from today. And uh, thanks again very much, Terry. Very uh, instructive, informative and I appreciate the service ultimately that you are doing to um, Australian business owners and families to help them protect their wealth, uh, because it makes a big, uh, huge difference to the quality of their life and what they can do with it.

Speaker B: No, very welcome, Sean, and always glad to be here and be of service as well.

Speaker A: Thanks so much, Terry. Cheers.

Speaker B: Cheers.