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Fear & Greed, Fear and Greed

Australian equity investors are shifting from an active to passive approach, according to share trading platform Stake. But with so many investors on the platform, it’s worth looking at where the money has been going over the last year – and what other trends we might see emerge.

Stake co-founder and CEO Matt Leibowitz talks to Sean Aylmer about the US and Australian stocks investors have been buying.

Stake is a supporter of Fear and Greed. This interview contains general information only – you should seek professional advice before making investment decisions.

Find out more: https://fearandgreed.com.au

See omnystudio.com/listener for privacy information.

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Sean Aylmer: Welcome to the Fear and Greed daily interview. I’m Sean Aylmer. There’s

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Sean Aylmer: a shift happening among equity investors at the moment. According

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Sean Aylmer: to share trading platform Stake, more people are moving from

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Sean Aylmer: active to passive investing, or at least including index funds

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Sean Aylmer: in their portfolios. Let’s take a look at what else

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Sean Aylmer: investors are buying, both here and in the US, and

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Sean Aylmer: what trends we might expect from the next 12 months.

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Sean Aylmer: Remember, this is general information only and you should seek

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Sean Aylmer: professional advice before making investment decisions. Matthew Leibowitz is the co-

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Sean Aylmer: founder and CEO of Stake, which is a great supporter of

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Sean Aylmer: this podcast. Matt, welcome back to Fear and Greed.

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Matthew Leibowitz: Cheers, Sean. Thanks for having me.

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Sean Aylmer: Passive investing, that sort of surprises me to be honest

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Sean Aylmer: at the moment.

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Matthew Leibowitz: Yeah, I think so. But look, I guess what happens over

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Matthew Leibowitz: the last sort of two years with the markets, I

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Matthew Leibowitz: think people have become engaged with it and now are

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Matthew Leibowitz: sort of seeing that it’s not always a bull market,

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Matthew Leibowitz: so you’ve got to sort of adjust your strategy and

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Matthew Leibowitz: people are starting to do that. I think there’s always people

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Matthew Leibowitz: out there that are sort of picking the eyes out

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Matthew Leibowitz: of particular stocks, but there’s also a bit of a

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Matthew Leibowitz: movement more towards sort of recurring investments and just keeping

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Matthew Leibowitz: a very simple strategy that sort of rides the rollercoaster

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Matthew Leibowitz: a little bit more smoothly.

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Sean Aylmer: Okay. So when we talk about passive and active investing,

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Sean Aylmer: we’re talking about sticking to a benchmark, it might be

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Sean Aylmer: the S& P 200 or top 20 stocks, and that’s

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Sean Aylmer: kind of what you’re buying. Active is more kind of

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Sean Aylmer: trying to beat the market, shall we say, that’s in

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Sean Aylmer: very layman’s terms, Matt. Is it because there’s this uncertainty

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Sean Aylmer: around the place at the moment, that many investors are thinking, ”

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Sean Aylmer: Oh, let’s just do what the market does?”

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Matthew Leibowitz: I don’t really know. I mean, everyone’s really different and

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Matthew Leibowitz: everyone’s got their own strategies as to what they do.

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Matthew Leibowitz: I think what we’ve seen, at least in Australia particularly,

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Matthew Leibowitz: is the fact that property is so hard to reach,

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Matthew Leibowitz: equities have become a new platform for people to grow

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Matthew Leibowitz: their wealth. And it can get… There’s a lot of

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Matthew Leibowitz: stocks to pick and you’ve got 2000 or 500 names in Australia, you’ve got the

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Matthew Leibowitz: six to 15,000 in the US if you go all the

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Matthew Leibowitz: way down the OTC chain. So it can get pretty

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Matthew Leibowitz: difficult. So people just try to keep it simple. And

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Matthew Leibowitz: a recurring simple way to stay in the market, stay

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Matthew Leibowitz: invested and treat it like a savings plan, has become

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Matthew Leibowitz: pretty popular.

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Sean Aylmer: Okay. So in terms of how people are engaging with

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Sean Aylmer: the market at the moment, given the turmoil we’ve seen,

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Sean Aylmer: certainly in 2022 and then it bounced earlier in the

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Sean Aylmer: year, then it’s come back a bit, are people more

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Sean Aylmer: or less engaged than normal, would you say, at the moment?

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Matthew Leibowitz: Yeah, I think people are… Well, I mean think obviously, we had a real

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Matthew Leibowitz: big spike during Covid. I don’t think we’re going to

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Matthew Leibowitz: see those, that sort of level of engagement again, just

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Matthew Leibowitz: because people are sort of back at work and back

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Matthew Leibowitz: living their lives outside their own four walls at home.

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Matthew Leibowitz: But people are still naturally engaged. I think that was

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Matthew Leibowitz: a bit of a watershed moment for self- directed investors,

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Matthew Leibowitz: that you can do it yourself, it is accessible. And

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Matthew Leibowitz: that there are a lot of people out there that

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Matthew Leibowitz: manage their own money ultimately.
So we’re still seeing at

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Matthew Leibowitz: Stake levels of engagement that are higher and people’s strategies

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Matthew Leibowitz: are shifting. And obviously, with interest rates moving a bit,

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Matthew Leibowitz: people’s appetite to invest changes a little bit, and how

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Matthew Leibowitz: they invest has changed. But people still want to be

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Matthew Leibowitz: in the market, they’re still really hungry for information. And you’ve always

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Matthew Leibowitz: got people that really like stock picking, that’s something they

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Matthew Leibowitz: enjoy, they like doing the analysis. There are other people

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Matthew Leibowitz: that, as we’ve spoken about, want to invest more passively.

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Matthew Leibowitz: Some people invest passively in stocks they know, they choose

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Matthew Leibowitz: Amazon or Tesla or Facebook or something they understand and just want

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Matthew Leibowitz: to be in the market. So people are still going

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Matthew Leibowitz: to invest. I think that’s a thematic we’re going to

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Matthew Leibowitz: see continue. Whereas Covid was sort of a thing that sort

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Matthew Leibowitz: of pushed people over the line and showed them how

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Matthew Leibowitz: to do it.

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Sean Aylmer: Okay. So let’s talk about some specific stocks that people

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Sean Aylmer: are trading at. We talk plenty about artificial intelligence on

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Sean Aylmer: Fear and Greed. Nvidia of course is the chipmaker, which

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Sean Aylmer: has high- end chips, which are often used in AI

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Sean Aylmer: mechanics. Nvidia, what is it, the fifth- largest stock on

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Sean Aylmer: Wall Street. They’re not quite the household name of Alphabet

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Sean Aylmer: and Apple and Microsoft. Are people buying Nvidia?

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Matthew Leibowitz: Yeah, it’s been a major pickup across the AI names

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Matthew Leibowitz: and the chip companies. They’ve also been playing that thematic

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Matthew Leibowitz: through some of the ETFs. You can actually buy ETFs

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Matthew Leibowitz: on semiconductors, for example.

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Sean Aylmer: Right, right. Yeah.

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Matthew Leibowitz: There’s an ETF, I think it’s called BOTZ, B- O- T- Z as well, which has

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Matthew Leibowitz: a really big increase, and I think it’s up like 42%

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Matthew Leibowitz: in six months. So names like Nvidia, Microsoft’s also been

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Matthew Leibowitz: on a bit of a tear and people sort of

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Matthew Leibowitz: understand those companies. Nvidia, I guess, I wouldn’t call it…

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Matthew Leibowitz: I don’t know if it’s safe or not, that’s the

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Matthew Leibowitz: individual investors to make up, but it’s a very large

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Matthew Leibowitz: cap company that’s been around for a while and it

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Matthew Leibowitz: gives you exposure to something that you may want to

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Matthew Leibowitz: be part of. So that and Microsoft have been the

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Matthew Leibowitz: sort of two names that people have really gone to

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Matthew Leibowitz: and if they want the leverage exposure, they’ll go to the ETF.

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Sean Aylmer: Okay. And what about locally? Are there any stocks here

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Sean Aylmer: riding that AI wave?

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Matthew Leibowitz: I think WiseTech’s probably the one. Really, it’s been a

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Matthew Leibowitz: name on the ASX for a while, that’s sort of

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Matthew Leibowitz: been an attractive tech name, and that’s up 125% over

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Matthew Leibowitz: a year. That’s the biggest beneficiary really. I don’t really

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Matthew Leibowitz: know the ins and outs of that business, so I

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Matthew Leibowitz: can’t comment, but it’s been the one that seems to

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Matthew Leibowitz: be attractive to investors that want that exposure.

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Sean Aylmer: I did notice Appen the other day, talking about potentially riding

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Sean Aylmer: the AI wave. And Appen, I mean, the way I

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Sean Aylmer: think about Appen is they human test all the stuff

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Sean Aylmer: that eventually is done mechanically. Is that a fair description

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Sean Aylmer: of Appen? I’m not sure that’s a fair description of Appen or not,

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Sean Aylmer: but they’re certainly talking up AI.

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Matthew Leibowitz: Yeah, I think that probably suits their agenda. If you

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Matthew Leibowitz: actually look at the stock, it hasn’t really moved much

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Matthew Leibowitz: in the last year, so maybe they’re trying to move

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Matthew Leibowitz: into that space. Investors haven’t bought into it, necessarily. It’s

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Matthew Leibowitz: had a bit of a run over the last few months, but given

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Matthew Leibowitz: a bit back. But I don’t think it’s the name

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Matthew Leibowitz: that people rush to in Australia for AI exposure. It

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Matthew Leibowitz: may just be a strategic thing they’re looking at doing.

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Sean Aylmer: Stay with me, Matt. We’ll be back in a minute.

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Sean Aylmer: I’m speaking to Matt Leibowitz, co- founder and chief executive officer

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Sean Aylmer: of Stake. Okay. What about the banks? I mean the big four

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Sean Aylmer: here in Macquarie are such major parts of our index.

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Sean Aylmer: Are they popular in Australia at the moment?

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Matthew Leibowitz: Yeah, I think what you saw, I mean if you

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Matthew Leibowitz: actually look at tech, it actually started coming off about

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Matthew Leibowitz: two years ago, 19, 24 months ago. So what’s been happening

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Matthew Leibowitz: is people actually have been starting to look for yield, a little bit more

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Matthew Leibowitz: safety and banks pay a dividend. Obviously, when rates move,

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Matthew Leibowitz: banks are actually generally in a better position except obviously

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Matthew Leibowitz: in the US with credit exposure. But Australian banks have

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Matthew Leibowitz: got, seems to be, reasonable credit exposure.
But I think bigger

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Matthew Leibowitz: and boring is more beautiful sometimes when the market gets

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Matthew Leibowitz: tough and that seems to be a thematic and people

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Matthew Leibowitz: want the yield. It’s like they want the fixed income

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Matthew Leibowitz: in a way. They want to know that they’re getting a regular return

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Matthew Leibowitz: on their investment and the banks offer that. So there’s

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Matthew Leibowitz: obviously been a bit of a rush to safety to some

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Matthew Leibowitz: extent. And the Aussie banks are well capitalized. They’ve been

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Matthew Leibowitz: around for a long time and people see them as

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Matthew Leibowitz: a safer bet.

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Sean Aylmer: Do Australian investors invest in US banks?

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Matthew Leibowitz: I think a few do. I mean obviously you had

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Matthew Leibowitz: the Silicon Valley Bank situation and then all the sort

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Matthew Leibowitz: of provincial and smaller regional banks that had all sorts

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Matthew Leibowitz: of issues. So there was a little bit of activity

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Matthew Leibowitz: then, but we haven’t sort of seen the same run

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Matthew Leibowitz: to banks. You can get similar exposure in Australia unless

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Matthew Leibowitz: you really want to make a more volatile play in

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Matthew Leibowitz: the US. So I don’t think there’s any major demand

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Matthew Leibowitz: for US banks from Australia. And investors, if they’re going

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Matthew Leibowitz: to invest overseas, it’s going to be in names and

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Matthew Leibowitz: exposure they can’t normally get access to here in Australia.

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Sean Aylmer: Okay. So I mean presumably Tesla’s one of those guys?

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Matthew Leibowitz: Yeah, Tesla’s always a popular name, although it’s drifted back

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Matthew Leibowitz: a little bit. I think the Twitter, Elon Musk situation

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Matthew Leibowitz: has sort of taken a little bit of shine off

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Matthew Leibowitz: it, plus the stock prices move the other way. I

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Matthew Leibowitz: think it’s moving more into that artificial intelligence we spoke

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Matthew Leibowitz: about before, that sort of exposure. Even some boring names

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Matthew Leibowitz: that have really done really well, as I said before,

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Matthew Leibowitz: that boring is beautiful. Again, the auto retailers like O’Reilly’s

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Matthew Leibowitz: and AutoZone, they’re up 50% the last year. Boring, steady,

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Matthew Leibowitz: low growth, but well run businesses have sort of been

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Matthew Leibowitz: where the money’s been moving to. People just have gone, ”

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Matthew Leibowitz: I want exposure to good quality companies.” They don’t need

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Matthew Leibowitz: the massive growth that we saw in ’19 and ’20.

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Sean Aylmer: Right, okay. What about the battery, metal stocks and the

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Sean Aylmer: lithium companies and those? We talk lots about them and

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Sean Aylmer: you hear lots about them. Are they popular among investors?

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Matthew Leibowitz: Yeah. I mean there’s sort of two schools there. There’s

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Matthew Leibowitz: the investors and the traders. With a brokerage platform you

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Matthew Leibowitz: see a bit of everything. Those are the ones that

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Matthew Leibowitz: move the most. They can move pretty sharply. Australian miners

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Matthew Leibowitz: offer some great access to lithium explorers or producers. So

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Matthew Leibowitz: we see a lot of that. You’ve obviously got Pilbara,

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Matthew Leibowitz: Sayona, and Lake, and Core Lithium. In one time is

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Matthew Leibowitz: GRE Green Tech, which is, I think it’s up maybe

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Matthew Leibowitz: two, 300% in the last week, which have seen a sort of rush

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Matthew Leibowitz: of trading as well. That’s GRE as the stock code.
So there’s

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Matthew Leibowitz: always something moving in the Aussie market. You’ve got some…

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Matthew Leibowitz: I think before that moved, it had a $ 4 million

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Matthew Leibowitz: market cap. I think it’s like at 20 now, today, it’s GRE.

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Matthew Leibowitz: So a lot of interest in some of the small

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Matthew Leibowitz: caps that offer really big exposure, but that’s more for

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Matthew Leibowitz: the traders and the investors. But people may see a long-

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Matthew Leibowitz: term horizon for those and may say, actually this is

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Matthew Leibowitz: still a good entry point and put it in their

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Matthew Leibowitz: back pocket for the next couple of years and see what happens.

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Sean Aylmer: So Matthew Leibowitz, co- founder and CEO of Stake, what

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Sean Aylmer: is the next big trend? Do you think of AI… A simple question.

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Sean Aylmer: Do you think AI will still some way to play

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Sean Aylmer: out? What do you think?

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Matthew Leibowitz: Yeah, I don’t really know enough and I don’t have

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Matthew Leibowitz: a crystal ball, nor would I ever want to speculate

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Matthew Leibowitz: as to what’s going to happen. I think, look, these

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Matthew Leibowitz: things, we saw it with marijuana stocks way back when we first

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Matthew Leibowitz: started Stake, they were the hot thing and they sort

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Matthew Leibowitz: of went nowhere. I mean this stuff, there’s always going to be one

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Matthew Leibowitz: or two winners from each category. It obviously depends on

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Matthew Leibowitz: the industry, but AI is, I use ChatGPT, it’s absolutely

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Matthew Leibowitz: very powerful and where that goes, it’s pretty scary. Is

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Matthew Leibowitz: it the next thing? I don’t know. I think, is it already here? Maybe. I can’t

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Matthew Leibowitz: really answer that.
Lithium, I think, driving electric cars around

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Matthew Leibowitz: and you see the (inaudible) in the US and I

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Matthew Leibowitz: saw some of that just how big it is over

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Matthew Leibowitz: there, that it really is the future of automotive and

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Matthew Leibowitz: travel. So look, you’ve got to think there’s still something

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Matthew Leibowitz: there, but as I said, I don’t know where the

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Matthew Leibowitz: future goes. How much is it really priced in is

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Matthew Leibowitz: another thing. You can be right on the thematic, you can

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Matthew Leibowitz: be wrong on the price. So each company is different.

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Matthew Leibowitz: How well it’s run, where its strategy is, where you

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Matthew Leibowitz: buy it, where you sell it, that’s going to make

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Matthew Leibowitz: the biggest difference to your portfolio rather than actually guessing

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Matthew Leibowitz: the theme right.

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Sean Aylmer: And just before we finish up, what about just taking

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Sean Aylmer: a step back, the macroeconomic outlook. Interest rates, is that

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Sean Aylmer: still something that people are worried about or investors are

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Sean Aylmer: worried about?

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Matthew Leibowitz: Yeah, I mean I think you can’t run away from it

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Matthew Leibowitz: here in Australia with the way that we’re structured with

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Matthew Leibowitz: people’s mortgages. The way it’s played out with, there’s the whole

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Matthew Leibowitz: fix to variable that’s sort of playing out over the next

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Matthew Leibowitz: couple of years. So people are nervous. We generally hear

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Matthew Leibowitz: that. We’ve actually seen that a lot in terms of

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Matthew Leibowitz: the exposure people want, how much they’re investing and what

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Matthew Leibowitz: they’re investing in. They’re sort of battening down their hatches

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Matthew Leibowitz: a bit.
But the S& P’s still up. I think

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Matthew Leibowitz: they’re around 10% for the year. It’s funny how the

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Matthew Leibowitz: market is always ahead of the next move. As I

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Matthew Leibowitz: said two years ago, tech stocks really started to come

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Matthew Leibowitz: off maybe a little bit less than two years ago.

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Matthew Leibowitz: So the market’s generally ahead of the sentiment. So what’s

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Matthew Leibowitz: that great Buffett saying? It’s, ” Be fearful when others are

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Matthew Leibowitz: greedy and greedy when others are fearful.” I think that’s a bit of

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Matthew Leibowitz: a moment now to consider that.

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Sean Aylmer: I’ve got to ask you, Matt, how is Stake going?

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Sean Aylmer: We spoke, I think, it was a couple of years.

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Sean Aylmer: It was 2021 I think when we last spoke. How is

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Sean Aylmer: Stake going?

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Matthew Leibowitz: Yeah, it’s great. I mean, it’s obviously a journey, building

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Matthew Leibowitz: any business and a lot of respect to any entrepreneurs

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Matthew Leibowitz: or people that run their own businesses out there. It’s

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Matthew Leibowitz: not a straightforward thing to do, but absolutely loving it.

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Matthew Leibowitz: We’ve really just focused on our customers. I think the

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Matthew Leibowitz: last two years have showed us how much demand there

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Matthew Leibowitz: is for people to directly invest or invest directly in

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Matthew Leibowitz: the market, and that’s who we serve. So we’re just

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Matthew Leibowitz: sticking at it and we’re really happy with where things

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Matthew Leibowitz: are at and a lot more to come.

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Sean Aylmer: Matt, thank you for talking to Fear and Greed.

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Matthew Leibowitz: Cheers. Thanks for having me.

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Sean Aylmer: That was Matthew Leibowitz, co- founder and CEO of Stake,

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Sean Aylmer: which of course is a great supporter of this podcast.

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Sean Aylmer: This is the Fear and Greed daily interview. Remember, you

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Sean Aylmer: should get professional advice before making any investment decisions. Join

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Sean Aylmer: us every morning for the full episode of Fear and

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Sean Aylmer: Greed, Australia’s most popular business podcast. I’m Sean Aylmer. Enjoy

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Sean Aylmer: your day.