What to expect from Amazon in Australia. Could Trump Kick-off a trader war? (You bet he could). What’s wrong at Harvey Norman?

This week James Kirby and Eli Greenbank discuss the following:
  • Alan’s out this week, but Eli’s in!
  • Should we be worried about a Trump trade war?
  • The ASX slacks off on policing the ASX.
  • Amazon: a shock to the system or an improvement?
  • Noni B is soaring in a market that’s smashing many midweight retailers.
  • Harvey Norman’s underrated war chest.
  • What happens when Amazon’s shareholders want a slice of the company’s growth.
  • Could Myer go to 0?


Hello, I’m James Kirby, Wealth Editor at The Australian.

And I’m Eli Greenblat, Senior Business Reporter for The Australian, and we are The Money Café.

And we are The Money Café.  We are The Money Café this week folks, Alan Kohler is unfortunately not able to be with us this week, he’ll be back with us very soon.  But, I’m very fortunate on The Money Café this time around to get back a guest we had last year when Alan was on holidays.  Eli Greenblat is a retail reporter and journalist on The Australian.  When we had him on last year he was one of the more popular of the guests that we had during the year, and he covers this fabulous area of retail which runs from groceries to Amazon to clothing.  It’s a marvellous area and we have lots of questions on the area this week.  But, before we get to the questions what we’re hoping to run across for you obviously the big story of the week is this tariff attempt, I suppose, to reintroduce tariffs.  The question is how many of them and in what sort of fashion in the US, some issues on the ASX, the return, if you don’t mind, barely weeks after we thought they were gone of interest only loans and of course all sorts of issues on retailing.  Eli, I know you are nominally the new retail reporter but I also see you on Twitter commenting on a multitude of subjects.  I don’t know if you commented on the tariffs but were you surprised that it actually happened?

I think a lot of people were surprised but apparently Trump had campaigned on tariffs all through his campaign, so really he is talking to his base, talking those blue collar workers in places like Pennsylvania and Michigan, and middle America who have lost their jobs.

Would you be worried about the world we know if tariffs took off, if it became a tariff war and every country started putting up tariffs and we were back to the 1930s and all that happened there which is the sort of nightmare scenario, are you worried about it?

Well, I think we should be worried, a trade war is bad for everyone.  Already Europe and Canada have hit back suggesting what they may try and put tariffs on and it was kind of interesting.  The European Union, they came out and of all things they said well if these tariffs take place on Steel and aluminium what they’ll target is Harley Davidson motorbikes and Levi blue jeans.  I don’t know why that is, why they’ve chosen those two.

Iconic American goods really.

Yeah, so they’ve opted for that.  So, no one wins and Australia, as usual, is stuck in the middle.

I know it’s early days but in this first week did the issue of tariffs, did any of the sort of retailing leaders have anything to say?

Not yet.  I mean if you’re a retailer you’ve got so many problems, you’ve got so many issues being thrown at you probably tariffs are quite down the bottom.

You’ve got so many problems you needn’t worry about them.

But, for so many of them it would be an input cost.  Think of all the beer companies that have those cans, think of Coca Cola with their cans, think of any of the big oil companies with their pipelines, they all use aluminium, they all use steel, it’s an input cost.  So, that would be a big worry for them.  Again, no one wins in a trade war usually.

Well, that’s right.  So, the issue is how does it unfold and one of the things I’ve been thinking of is how perhaps ultimately Trump here is playing a game, a dangerous game, but an attempt to put America back in the driver seat.  Many years ago when I worked in Hong Kong the South China Morning Post, at that period in the 1990s America had what they called most favoured nation status, and it still had that sort of power and it still had that imperialist attitude.  What it did was the whole thing about the most favoured nation status was it granted it to all these countries and then it bullied and played games around whether they revoke it or not.  They were always threatening to revoke it on China which had most favoured nation status.  So, it just shows you how far things have come.  But it is, I expect, a return to that but whatever way you add it up it’s bad news to see tariffs on the global agenda I think for anyone who’s an investor at least.

I also looked this week at the ASX and these really appalling stories of the two tech companies that have turned out to be sort of mascots for all that’s wrong with ASX small cap investing.  GetSwift is one of them and the other one is called Big Un, you may have heard of it folks.  The issue that came up really, one of the technology leaders were saying that the issue is that these guys – it’s not that they are troublesome in themselves, it’s that they give the whole stock market a bad name.

They do.  Why are they there in the first place, why is the ASX allowing these companies to list, to trade, and James you saw all of the shenanigans that were pulled in terms of contracts that were announced as revenues.

Yes, they were pre-revenues.

Pre-revenues, what is that, I don’t know what that is.

I don’t know.

What’s pre-revenues?

Pre-salary increase is the position.

If a BHP, or a CBA, or AMP – if they were to pull these kind of games in terms of announcements they would be hauled over the coals.  They wouldn’t dare, so why are they doing it?

They couldn’t do it, that’s right, so why are they allowed.  That’s a really good point.  In contrast to that I’m always careful that it’s a wonderful market that we have, 2,500 stocks, you can list just about anything, it is a very lively market with surprisingly good liquidity for the size of the country so you don’t want to clamp our market.  But it is a point that there should be – really, it’s an issue of governance, an issue of policing of the ASX itself and perhaps one of the big issues of course is that the ASX itself is on the ASX, it’s a privatised listed company and it also plays the role of a regulator.  Again, this is one of those times where you might have a second look at that.  The other thing before we talk about retail, the wonderful world of retail, is about the interest only loans.  Did you see what happened to interest only loans this week?

Yeah, so I read in your column that they’re back again, are they?  They’re more attractive and get in with your ears pinned back and start buying property that maybe you can’t afford.

Well, yeah, more or less.  Even I think it was two weeks ago here Alan and I were talking about interest only loans, how the banks were basically dishing them out at an incredible rate this time last year to the point that the regulator had to jump in and put a cap on how much they could offer, what percentage they could offer and what percentage of their book, being 30%, was going to be the cap.  Now, what’s happened is they overdid it, that is they cut back so severely, the banks in their interest only lending, that it went back to about 14%-15%.  Now they’ve said to themselves well actually we’re below the cap and they’re back in the market.  Commonwealth Bank for instance cut its rate during the week so I don’t know how you regulate that.

How do you regulate it?  But on the positive side, if there is a positive side, for so many younger people or even middle-aged people or older, interest only loan is the only way to get into the property market because they can’t afford the property in the first place, they can’t afford the mortgage payments.

But would you recommend it to a couple that were buying their first house?

Well, if it gets them a foot in the door, a foot in the property market, if they’ve done their budget and they’ve done their worst-case scenario interest only is the only way they can afford that property in the first place.

That’s really interesting you say that.

So, what do they do?

For what it’s worth 20% of mortgages are interest only, that is owner/occupier mortgages at the peak last year were interest only.  I don’t know, I’m unsure about that one.  I think it all sounds fine on an individual basis but what if everybody was on interest only loans?  Which is the natural consequence, the ultimate consequence of what you mention there.

It’s very similar to a credit card where you pay all the interest.

Yeah, the debt to income ratio would just go out the door and of course prices, I think, would go up on the back of it.  But, let’s talk about retail because the questions – we have a bag of questions, quite a few, but one theme that runs through virtually all the questions, Eli, was about Amazon.  I ask you, you’re on this area every day, is it the biggest thing to happen in Australia in retailing for a generation?

I think it could be in terms of disruption, in terms of the possibility, in terms of the potential of what Amazon could be.  Yes, I think it must be considered the biggest shock to the system or the biggest improvement of the system, if you’re a fan of Amazon, that we’ve ever seen because of what Amazon does in America that we don’t even have yet, Amazon Prime, Amazon Echo…

Sorry, explain what they are, Amazon Prime and Amazon Echo.

Amazon Prime, for example, is this great service where you may pay this reduced fee of about $99 a year.  Now, for that $99 a year in America…

Like a club membership is it, like a subscription?

A membership, yeah.  So, for $99 a year you would get unlimited space on the cloud to store all your photos, all your documents, you would get unlimited downloads of TV and movies, that’s mostly of course the Amazon produced shows which are doing very well by the way.  You would get unlimited download of music.  You would get unlimited access to the Kindle library and this is the kicker, you would get free shipping when you shop on Amazon.  That’s the idea.  You sign up to Amazon Prime and that is a conduit, that’s a push, to get you onto Amazon shopping.

And that’s not here yet?

That’s not here yet.

And what’s Amazon Echo?

Amazon Echo and Amazon Tap is another one, these are little nifty gadgets where you may have a little button on your fridge or a button on your dishwasher or on your washing machine, and if you run out of milk or if you run out of dishwashing liquid you tap this little button that’s about the size of a mobile phone or smaller, you tap it and it automatically puts in the system an order for you of washing tablets or milk.  It’s very handy, it’s very nifty…

Like a smart house, smart home…

Yeah, smart home.  The fun little twist is that recently Amazon bought this technology company which specialises in doorbells, if you can believe it, it’s a doorbell technology company which would allow conceivably – so, Amazon bought this company, Amazon could go to your house using digital and using tech could go to your doorbell, they could let themselves into your house then they could stack all your goods in your fridge or in your cupboard.  So, how nifty is that, that’s the future.

Right.  Well, one of the things I found interesting this results season was I had an eye out for the companies, the retail companies that shined, the ones that actually – let’s say that this might be as hard as it gets.  There was a consumer spending strike virtually at one stage last year, there’s the revival of Amazon, there’s a lack of wage growth, etcetera.  Still we saw some retailers doing really well.  Noni B did very well and they’re just a standard four by nine fashion retailer but they mustn’t be to do well, did you look at them, what they did differently?

Yeah, I think Noni B were actually high flyers five or six years ago, owned by a family, pretty much controlled by a family but listed on the ASX, but kind of run as a private company almost.  They got into big trouble and their shares collapsed.  They were bought out mostly by private equity who control them.  They’re still listed but very tightly held by private equity.

I see, okay.

So, they very thinly traded.  They made a few acquisitions but they’re kind of that middle of the road fashion retailer which is doing okay.

Yeah, which are the ones you think are doomed but they’re okay.

But they’re actually doing okay, they know the market really well, they know their customers really well and the shares have come back and they’ve paid a dividend for the first time in many years.  But, for a long time they were looking very sick, but they’re going well.

Anyone else catch your eye?

Well, I think JB Hi-Fi did very well especially in this market and especially with Amazon snapping at their heals so they did quite well.  Woolworths did well, they’re back in town.  Coles, not so well but still doing okay.

And Harvey Norman and JB Hi-Fi, they really went their separate ways this year.  I mean you say JB Hi-Fi did quite well and it was a good result and good stock price action, Harvey Norman got belted didn’t it?

They did.  They had their biggest fall, their share price fall, in about 25 years because of the result.  The result was down significantly and they had for some reason a very poor outlook for January and February, the sales plummeted to almost zero having had a really good Christmas, did very well.  There’s some seasonal factors there.

But, why don’t JB Hi-Fi have those factors, they’re selling the same stuff, a lot of it.

Well, yes and no.  Harvey Norman is very exposed to things like air conditioners and those kind of things which may do well or they don’t do well depending on the weather.

Okay, so they are very seasonal.

Yeah, but actually it’s interesting you say that.  JB Hi-Fi on their electronic side does very well but actually JB Hi-Fi owns, of course, the Good Guys which is very similar to Harvey Norman but the Good Guys did quite badly.  But, also the problem with Harvey Norman, or this could be a benefit as well depending on your kind of view and your outlook, Harvey Norman own most of their properties.  Now, last year they had property revaluations positive of about $75 million which goes right to the bottom line.  This half the property revaluations were only $25 million, so there’s a $50 million hole in their butt.

Wouldn’t you think the analysts don’t like that, well I think they don’t like them holding property.

They don’t.

Because they like pure books, don’t they?

They do.  Well, they like to make money because they want them to sell those properties and get a fee for it.

He’ll never do that.

He’ll never do it but I think it’s interesting.  If you want to finish on Harvey Norman it’s an interesting kind of old world/new world look, a lot of entrepreneurs when they came out to Australia in post World War II Australia, they started their businesses, these are the factories in Melbourne, Sydney, some of the families that we know today, the Gandels and the Besens, and the ones who did really well, they owned their properties because they saw value in property.  They always owned their own property.  It came a time decades later where those properties all of a sudden were in fashionable trendy neighbourhoods which turned into apartment blocks.  It’s good to have that property on the books, it’s a security for you.

Then just to pick up what you were saying Solomon Lew and Premier Investments.

Yes, he owns property.

He does, is it in the stock price then?

I’m not sure it is but recently Premier Investments bought their head office.  Now, that’s very rare.

Okay, so Solomon Lew doesn’t agree with the analysts either.

Well, he’s old world as well, he is also of that generation.

Yes, he is.

Like Gerry Harvey.  They see value – and I interviewed Gerry Harvey the day that his share price collapsed that week and he said…

That would have been fun, expletives left, right and centre.

Yes, and Gerry said, and I think there’s some value in this, he said well there are companies out there like Kmart, Big W, Target, Myer, who would love to have what he has, they would love to have those properties and they don’t.  Interesting little sidenote, Spotlight which is one of the most successful retailers this country has ever seen actually, owned by the Fried family, they own the properties.

I see, but they’re private?

They’re private family owned by the Frieds, they own those properties.  There’s an old world thinking in that but when the proverbial hits the fan you want those properties.  The analysts hate it because they’re all about having clean books but old world entrepreneurs, they love to own the properties.

Very interesting, yeah it is interesting isn’t it, and whether there’s a – I’ve got to say I would tend to side with Solomon Lew if you asked me.

Yeah, he’s done well, hasn’t he, over the years.

He has done well, he’s got the track record that beats most of them.

Myer had their properties but they sold them, private equity sold them.

Yeah, they were corporate of course as opposed to a company that’s run by a family or one person, or owned by one person dominantly on the share register.  Okay, let’s have a look at some of the questions.  You know, I think that the first three or four questions are nearly all retail.  Why don’t you actually read them out there.  The first one is from Vincent Turner.

Yeah, so Vincent asks what impact will Amazon have on small retailers, especially those with a mix of online and offline?  It’s interesting Amazon really, it could be a great thing for your business or it could ruin your business.  A lot of retailers are actually on the Amazon market place.  So, last week I interviewed Jack Gance who’s the Chairman and Co-Founder of Chemist’s Warehouse which is just a juggernaut of a retailer and is doing so well.

It’s incredibly successful.

Yeah, they compete with Amazon because Amazon sells a lot of health and beauty products but they’re on Amazon as well.

They’re on Amazon market place.

Yeah, so they could do well for you.

So, a company that scale goes on, so it’s not just little retailers.

Yeah.

Okay, and I suppose the nature of Vincent’s question is quite wide, the other questions at least come in and zone in on some of the issues he’s brought up there at the start.  Next question is from Adrian and it mentions Kogan, what does that question say?

Yeah, and Kogan interestingly has now got a bigger market cap than Myer, that tells you just how well Kogan is doing and how bad Myer is doing.  Adrian asks about our take on the prospects for Australian based online retailers in the wake of Amazon, how do you think companies like Kogan, Iconic, Catch of the Day will fare?  I mean Catch of the Day did so well.

Can we just explain to everybody now that Kogan is listed, right?

Kogan is now listed.

And is actually on fire as a stock.

They’re doing very well.

The Iconic is a dominant fashion retailer but that’s unlisted, am I right?

Yes, they’re unlisted, they’re owned by private equity out of the UK and Scandinavia.  They’re doing quite well but they’re very quiet in terms of they’re making a profit.  They were making a loss for a long time.  I think they now claim they’re making a profit…

So was Amazon.

Yeah, we’re yet to see the results there.  Catch of the Day, they did really well with those coupons and Scoopons and those sort of one day deals.

This again is private?

They’re also private.  Those do well at the kind of bottom end but I wonder what the future is going to be for them with Amazon just doing so well where everyone these days when they’re searching for a retail offer they search on Amazon.  It’s interesting that nowadays you would use Google to do a search to find something, you would never use Yahoo or whatever else, these days when people are shopping they use Amazon as a search engine.  Now, of course that gives you Amazon results but Amazon is now becoming quickly the de facto search engine.

It isolates Catch of the Day.

It isolates everyone else.

What about The Iconic which is big fashion, right?

Yeah, I think they’re doing quite well, The Iconic, because they’ve got their very loyal followers who like what they offer and Iconic were very good in having kind of same day delivery.  So, you could order in the morning and be at your desk at work in the afternoon.

And Kogan bought Dick Smith, is that right, was that a good buy for them?

I think it did well for them, they bought kind of the membership consumer lists for Dick Smith for nothing.

They bought the online…

Yeah, for like 100 grand or something, so it was nothing for them.  It seems to have done well for them.

Do they still use the brand?

I think only online and very rarely but that’s kind of dying out, I think.  It’s really the Kogan brand and now we’re seeing Kogan do branding deals with Medibank and they’re going into health insurance, they’re going into so many other things.

Is this what’s given them the real lift in share price?

Yeah.  I think it’s doing well.

I see, that promise that they could sell everything.

Yeah, but also remember Kogan is tightly held by the founders and that’s going to help the share price go higher too.

Yeah, just like Noni B you mentioned earlier.

Yeah.

Okay.  What else have we got here.  Has there been a company like Amazon – I’ll read it out because I know you’ve actually done a bit of homework on this one.  This question is from Lachlan Quick, thanks for the question Lachlan.  Actually, on this issue I think when we’re talking about Amazon and the whole nature of e-tailing and retailing, and it has to be our Mega Trend for the week and our Mega Trend is sponsored by BT, and I would think our BT Mega Trend this week beyond a doubt is online retailing and where is it going.  Interesting to find companies like Kogan expanding not just to sell you online gadgets but to sell you medical insurance, isn’t that fascinating, we’ll see where all that goes.  Now, Lachlan’s question is has there been a company like Amazon before in terms of scale and appetite for other companies, if so who and how did it all transpire.  A quick answer might be Standard Oil once upon a time when they were buying all the oil companies that nobody remembers now.  But, tell me as a retailing expert, Eli, has there been anything like Amazon?

No, we’ve never seen anything like this before and I’ve got some stats around three areas I think will interest you and our listeners around employee numbers working for Amazon, revenue and share price.  When you look at those it shows the scale, the size, the massive growth that we’ve never really seen before in our lifetime.  I think you have to go back to Standard Oil, maybe even back to the East India Company, that’s how big it is.  So, in terms of the staff in 1999 Amazon had 7,500 staff.  Go to 2010, 33,700.  Go through to 2015, 230,000.  Last year staff numbers at Amazon, 341,000, can you believe, working for Amazon.

Wow, so they’re bigger than Coles obviously.

Well, Wesfarmers are the biggest employer in Australia and they’ve got 200,000, maybe more.  So, it’s 341,000 plus add all the stuff from Wholefoods which they bought, that’s massive.  Now, in terms of revenue we’ve never seen anything like it in terms of the fast paced revenue jump especially when you look at the crossover going from $100 billion US in annual revenue to $200 billion US in annual revenue.  Now, the fastest company to date ever was Exxon but that’s only because they bought Mobil in 1998 which instantly got them to $200 billion.

Yes, so it became the biggest company in the world.

So, I think it’s fair to exclude that.  Next year Amazon will cross that line of $200 billion US in revenue and that took them three years to get there.

And excluding the Wholefoods deal it’s organic growth.

It’s all organic, took them three years.  It took Apple five years to go from $100 to $200 billion, it took Walmart six years, it took Berkshire Hathaway seven years to get that.

It’s very interesting, yeah.

The last one is share price.  If you’re kicking yourself over Bitcoin, as am I, in 1997 you could have bought Amazon for $1.50, last night Amazon shares went up $14 in one night to $1,537.  But, here’s the kicker, James, and this is the twist on all that.  As fast as Amazon has grown, as quick as they have grown, no company has ever grown as fast, as quick, on such thin profits.  No one has ever done that before.  Amazon’s profit, and think about this, Amazon’s market cap is almost 1 trillion, their profit is wafer thin.  Their profit last year was $3 billion US.  That’s a bit ahead of Wesfarmers, probably ranks alongside our big four banks.

So, it’s grown the fastest of any company we’ve ever seen on the thinnest profit which is a little…

Never happened before.

Yeah, and interesting but not the most reassuring thing for the investor, especially today.

Yes, and I spoke to Roger Corbett last year when Amazon were arriving here, Roger Corbett as you know was the ex-boss, very successful boss, of Woolworths.  He then went on the Walmart board in the US for a few years so he fought Amazon really in America and Roger said to me at some stage Amazon shareholders are going to demand a return on their investment, not just capital returns but demand a return.  What does that do to the Amazon model, when do they start paying dividends, because 1 trillion market cap and a 3 billion profit, that’s nothing.

Yeah, it’s going to be a big issue for them.  I think we’ll see if we can just briefly get through some of the other questions of the week that aren’t retail which came in also.  They are quite scattergun as you could imagine, folks, but I’ll quickly run through them because I know it’s part of the show that the listeners really enjoy.  We have a question from Scott Argood who asks looking to invest in Platinum Investments, looking for your opinion regarding the company, the ETF or the managed fund.  That’s a great question and it’s something that comes up all the time, Scott.  It depends on the risk you wish to take.  The ETF will get you whatever the market gets you and the managed fund will have risk in it, it might do better or worse than the market.  The company itself, sometimes that works, the company behind the company that issues the actual managed funds but it’s pretty much horses for courses. 

Kerr Neilson’s departure is very important there and the stock price did drop, of course, after that but they may well have a life beyond Kerr Neilson.  Certainly, we have seen other companies motor on without a larger than life leading character.  We talked last week about CSL, Brian McNamee.  At the time Brian McNamee finished up a lot of people would have said well that’s enough, I’ll get out of CSL, and I’m sure they regret it now.  A question from Keaghan Hussey.  Hi, Alan and James, I’ve been a big fan of the podcast.  I’ve got a general question, I’m 19 living at home and earning a decent wage.  Good for you, Keaghan.  Do you have any tips for getting on the property ladder, savings and the like, and moving forward.  Thanks for creating this podcast.  In brackets, James should be able to pronounce my name.  Yes, I am Keaghan, I hope I’m doing it right but I think I am.  Actually, the only thing I would say – we don’t give individual advice of course, but one very interesting slice of general advice is what Eli mentioned earlier.  The actual prospect on an individual basis which can make sense is interest only owner/occupier loans, which I fell off my chair when I realised were 20% of all home loans a year ago, but they are.  In terms of trying to find a new way into the property market it is a new way.

Maybe he could ask his parents for loan and then get him out of the house.

Yeah, but that’s not a new way that’s an old way, I’m thinking of new ways.  Okay, now what else have we got.  Patrick, hi guys, love the podcast.  I recently bought Myer shares – this is for you Eli.

Yeah.

I recently bought Myer shares as a contrarian mean reversion type, you are indeed, and fully aware of the risks.  He says the question is do you think Myer is a big fat zero or prime for a turnaround?  Gee, it’s got to be worth something.

You’d hope so.  I can’t give advice but yes, it could go to zero and many retailers have.

Eli, they don’t own their property of course, so you don’t have that balance.

No, and worse than that they’ve got an impairment coming down the pipeline for their intangibles, on the balance sheet of Myer there’s about a $1 billion of intangibles.

That could knock them out, that could actually wipe them out?

It could wipe them out and they’ll be in the hands of the bankers.

Right.

And if you’re the shareholder you know you’re the last in line for creditors and you’ll probably get nothing.

I’m sure Patrick knew all that.

Yeah, will the bankers put them under?  Most receivership experts believe it’s unlikely these days that a banker will put a company like Myer under, they would actually just try to manage them through and try to work it out.

Yeah, well we haven’t had a good example of that for a while, have we, we haven’t had a bank made receivership that really matters, like Ansett or something, it’s been a long time.

Channel Ten, they were put under, weren’t they?

They were put under, yes, that’s right.  Personally, I would say nothing’s sacred, and I would say they wouldn’t bat an eyelid, myself, on putting Myer under even if it is an iconic company.  Just a few more questions.  Andrew says I aim to take the US Dollar as it is today and wait for buying opportunities, is it best to open an American bank account or trade online brokers.  I would say online brokers here would do just about everything you need to do on that one, Andrew, you don’t have to take such elaborate course anymore. 

Ben Bowring, hi Alan and James, love the podcast.  I work four days a week and it’s great to listen to you guys as I drive home on the weekend on a Thursday afternoon.  Isn’t that nice, driving home for the weekend on a Thursday.  I’d like to do that some time.  I have a question about social impact investing.  He asks lots of funds have sprung up that enable you to buy social impact companies, unfortunately the only ones I can find have a minimum investment of 500,000.  Briefly on that, it’s a great area, impact investing, you don’t have to go as far as 500,000 that’s for sure but I do think something like 50,000 is typical of the impact funds themselves.  They’re often for sophisticated investors.  There is some new funds out there, there’s even some ethical ETFs in recent times, admittedly that’s not social impact investing.  One thing that we might come back to another day is that whole area.  Social impact is very precise, the idea is that it’s actively engaged in an investment which actively seeks to make the world better basically for what it’s worth, Ben.  Ethical investing on the other hand primarily is a screen, it doesn’t do things, it doesn’t buy guns or it doesn’t buy something else.  But, that’s not quite the same as trying to actively make a difference.  So, that’s the main difference between social impact and ethical.

Okay, last question.  Daniel, I enjoy the show, I’m 38 and I have property and shares.  Good for you.

He’s doing well.

And he’s looking to diversify.  My question, at my age – he’s 38 – is I still have debt and whether I should pay this debt off quick as possible or invest a component in a bonds ETF.  Okay, that’s a very specific question.  I would only say two things, and generally the sort of textbook advice always would be to pay off debt when you can, there is an issue that debt is very cheap at the moment, exceptionally so, and if you have a loan at 3.9% or 4% and you’re making 5%, 6% or 7% then perhaps the textbook recommendation of clearing debt isn’t as it used to be.  The other thing is about bonds and bond ETFs.  I’m afraid there’s no easy way into the bond market, there’s a lot of issues around it and I would say to you, Daniel, take a second look at the bond ETFs and read more about them.  I wish they were as simple as a proxy for the bond market, they’re not.  A lot depends on what’s in there and they can be quite different and perform differently. 

Okay, I think we have to leave it there for today.  Don’t forget you can subscribe to The Money Café on Apple Podcasts or an app of your choice, and when you’re here it’s super helpful if you could leave a review or rating.  It helps listeners find the show.  Also, send in a question and we’ll answer it, of course, like we did this week.  Great response this week, very good to pick up a theme for a change and actually run it like we did with retail, and we’ll do that again in the future.  Until next week, I’m James Kirby.

And I’m Eli Greenblat.

And we’ll be back with you next week, talk to you soon.

Bye.