Luke: 0:09

Welcome to the curiosity crisis, we challenge ourselves to explore the world of business, tech investing and science. Get curious and be part of our journey as we discussed challenge and learn. Kush, welcome.

Khush: 0:21

Thank you. Very, very excited to be here. It's gonna be fun.

Luke: 0:25

It should be a good one. So today, we're talking about portfolio management. Specifically, cush is going to run us through some of his portfolio management that he's developed personally, he's had a fair bit of experience with this. Some of that was at uni managing a portfolio that came from a grant at a club as well as working at a boutique fund manager, and they focused on private equity and small cap ASX stocks. So we're gonna get into that today and should be really good. But as always, before we begin, what's been keeping you curious?

Khush: 0:57

Yeah, always love this. So at the moment, I'm reading shoo dog. I think I might have mentioned it in an old episode. I've just started it. But yeah, going a bit further into it. And absolutely loving it. I reckon you would, too. So Phil Knight, the creator of Naik rights, and he's just so it's poetic, almost. And it is a history buff. It's really just a page turner, it's really entertaining to read. And, you know, probably not too dissimilar to us. You know, he's 2025 26 at the side of the book, and it's set in years. So it takes us through like the years of development of Nike and where he had his crazy idea and all that sort of stuff. So, you know, for a couple of ambitious young bucks like us, it's probably it's a good read, and I'm thoroughly enjoying it right now. So yeah, I would recommend,

Luke: 1:43

is there any single thing that stood out to you so far? Just the fact

Khush: 1:47

that, like, so at the moment of the book, he's like, 2026, or something, he he's very, very honest about, you know, himself, his fears, his shortcomings, his aspirations, and all that sort of stuff. So it's very, very personable. I feel like I'm it's made, like I'm on the journey with him. So yeah, very excited to hear that the journey, the whole night thing. And then, obviously, you know, love my sports. So hearing about Jordan and Kobe and all that we Yeah, great.

Luke: 2:12

Nice. Where are you? Mine, I have been listening to a lot of interviews with the CEO of Nvidia. And I've just kind of really deep dived into architecture of chip manufacturing, and like, the problems around like throughput and memory management and all these interesting things. And I it's, it's been keeping me curious, but I'll tell you why it's been keeping me busy to, like, there's so much to understand. And I mean, you know, I understand some of the fundamentals from just computer science and stuff, but you only focus on architecture to a certain extent. And then you might understand, you know, a bit more from low level languages, but you don't need to know, I guess, modern techniques on like, you know, fabrication and like, all these other things. And anyway, it's super interesting. So I've been getting into that. But yeah, that's me. Is

Khush: 3:07

that part of broader research? Like you're looking at that space in terms of investments or just interest? Or what do you what do you think? Yeah,

Luke: 3:14

well, I hinted at it in, I think it was episode two that I'd be looking into chip manufacturing a bit more, and I am doing it and yeah, I mean, no spoilers, but it could pop off in a future episode. So there you go. Oh,

Khush: 3:28

you will make I'm always keen to hear your thesis. So we'll see how we go. Yeah.

Luke: 3:34

Well, I guess we should get straight into it. And what's going on with your portfolio? What's, what's a bit of an overview for us? Yeah,

Khush: 3:42

I think I might have mentioned a bit in episode one where I was just talking about more my investment philosophy and stuff like that, but I thought it'd be worthwhile to literally break it down and just go through what I do day to day. And, you know, while some of the principles have come from my experience in clubs, and this net, the other, mostly it's just been refined over the years of vessel investing, reading, listening to podcasts, upskilling, losing money, leaving money on the table. So basically, what, and I'm being honest. That's good. So basically, what I've landed on at the moment, it's a pretty common term, probably in investing. It's like a core and satellite portfolio construction. So I'm not gonna go too much into it and probably bore you to death. But essentially, your core portfolio is you know, your son, so it's just steady, ongoing. It's everything that you know, can be gravitated around. It's the base of your portfolio, the fundamentals of Foundation, and the satellite is these the more exciting you know, we hunt for higher returns top part of your portfolio, and you try and be a bit more aggressive. So obviously, the split between the two reflects your risk tolerance and investing. But for me at the moment, it's about 40 to 45% core features 60% satellite, and it's skewing more towards the satellite High Risk High Return in investments because obviously, you know, I'm young, and I'm going to chase as bigger returns.

Luke: 5:05

Yes. Wait. So you said that you have a 4060 split. So you have 60% in the satellite, which is what you're looking to get the most benefit out of, and then 40% in the core. So as core mostly like ETFs, low risk, and as the satellite, you know, higher risk, is that basically how that works? Yeah,

Khush: 5:23

yeah, yep. So the core is, yeah, like you said, ETFs. It's more broad based, it's diversified, I can actually go through, I might as well go through like our on that. And sorry, the satellite is more individual stock picks, the companies that have high conviction, I've done lots of research on and I'm backing to give me great returns over the long term. And I'll go through examples of both. But so the core itself, I've tried to, so far, set it up to be pretty like automated, sort of front loads of research. And I've actually landed on for ETFs. I've written a blog about this before, so having to share it I pretty much once per month. So it's called dollar cost averaging, I just invested a set some so after I get paid, I just chuck like a set sum into one of these ETFs in rotation. So I've gotten a call like these are always listed. Qual Mote, MC, Cl, and w MI. And like basically, each one gets bought each month and like digit rotates, which one and it's it's set and forget sort of thing. But the whole principle of it is sort of like it's dollar cost averaging. And the strength is really in the discipline and consistency. So it's just always putting him in. And the reason I sort of do that is this principle that I've actually got explained by my mom and my brother who run a business called Profit First principle. And basically, it's for, you know, business profitability and stuff like that. But basically, it just says, profit does not equal or should not equal revenue, less expenses. Rather, it should be revenue, less the profit that you take equals expenses, so what you live off, or what your business operates off. So, you know, I try and run my portfolio as if it was as if it were a business. And Adam, I pay essentially, I take a cut, which is the profit, and I invest that so I reinvest the profits into the fund into the business. And that's sort of like the principle around it. And it only works if you're disciplined and consistent. But um, yeah, I actually absolutely love that. And it works my strengths pretty well.

Luke: 7:31

So you mentioned for specific ETFs as part of the the core portfolio, like how did you get to that conclusion? Like, do you have kind of a bit of a, like a research philosophy or like method? Or are you looking at like the coverage of these, like, what led you to those four specifically? Yeah, actually,

Khush: 7:51

that's a that's a bloody good question. And I probably hadn't thought about that, until now in preparation for this episode, but I do. Trust me, I've done a lot, a lot of thinking and a lot of research around framing that. So basically, it's evolved over time. And I've landed over these for about the last 12 months, because essentially, it gives me the geographic diversity that I want. So in terms of diversification, it gives me exposures that I want. So in terms of certain markets, or certain types of companies, for example, one of them is Ozzy smallcaps, one of them is NCCL is a fund, which is based on finding, you know, winners in the climate transition. So obviously, that's something I'm particularly interested in. And then the other two are more broad based, but I've sort of filtered them in terms of the ETF investing universe that we have here in Australia. And honestly, just the best performers, by far, they're based on they just rules based screening of bigger indexes. So qual is just a screen of the MSCI World Index. And it's outperformed that index by about 2% per annum for the whole life of the ETF. So it's just super basic, but I did a lot of research upfront. And then when I was comfortable with them, and I've written about these, and I've run the numbers, essentially, yeah, got all the graphs and check their performance. And then I got comfortable, and then it was just more set and forget getting.

Luke: 9:18

So what's your kind of that answered the question around the ETFs? But what about your buying principles in general, you know, what do you what do you have that really is an indicator for you that Yep, I'm gonna buy this because of these reasons.

Khush: 9:32

Yeah, so this now sort of moves more into the satellite portfolio. And obviously, this is where my love for investing is really. So I went over a lot of my investing principles in episode one. But a recap is essentially buying for long only so I don't over participate in short selling or I try not have a short term view at all. I have a very high conviction on the company know exactly how it makes money. And the most important thing is having a full written thesis as to why It gets good investment and why I think it'll do well in the future. So, summarize, you know, why do I think it will be making substantially more money in five years compared to now. So you know, a growth investor, and that's why I buy things, I can give an example. But essentially, I always like so I'm, I'm sort of always reading and researching and developing these theses to a point where I found like a set of, you know, maybe five or five to 10 companies that I have very high conviction on that I really love. And I would love to have in my portfolio, and then I just wait until they become attractive on price, I literally have probably seven to 10 companies that I'm happy to own. And as long as I'm the prices right enough for me to buy, I just sit there patiently and then keep my satellite fund in cash. And then the second they become a buying opportunity, like opportunities present themselves, and then I'll buy the company. So

Luke: 10:56

yeah, that's something Yeah, something I really agree with in terms of like, if you're going to buy a house, you want to buy it, when you understand the market, right? Like, no one just goes to a new place and buys a house because you don't necessarily know like, is it a good price? Is it in the right area, you know, all these things that contribute? And I think it's the same with like a market in if you're going to buy a stock or something, you need to understand like, what the landscape is like, and if you only just looking at that, more recently, you don't fully grasp it. So the longer you look at it, you're like, Yeah, this is a good price. And, you know, the ideal scenario is, there's a drop in price, but it doesn't affect, you know, the core philosophy as to why you're investing in it in the first place. It's just like a market reaction to something. And essentially, you know, to you, it's on sale. And that's like the ideal. So I guess a bit of a question for that, then is, do you just let you're just trying to save up cash? And then wait for a moment like that and buy it all? Or do you like you'd rather just like DCA into things, if it's going for too long a period of time during like a bull market or something?

Khush: 12:03

If the answer to that is sort of both, so I definitely DCA, like I'm always investing in the core portfolio. So that when I'm not because it's so diversified, and it's just so there's a lot of companies in those ETFs I'll, I'll drip into them every month. So that's why I feel confident that I'm always sort of invested in the market. But with these satellite ones, just exactly like you said, I loved loved how you sort of sum that up by looking at a company. And if you you sort of follow up for a long time you have high conviction, you have reasons why you love it, you know why you think it'll do well over the long term, by following it for a while, whether you own it or not, or whether it's on your close watch list, you get pretty intimate with it. So you sort of see its ebbs and flows, you see how the market reacts to different news, you see, and you start to understand, you know, what is material for the company, what's not, and what very importantly, breaks your thesis or what doesn't. And then when opportunities present themselves, for example, you know, there's just like a reaction to some news about the Reserve Bank, raising interest rates, and if that doesn't materially impact the company. So it's not, like higher interest rates aren't going to affect its earning capacity. And the whole market goes down and the stock that you've been following goes down five, 10%, then it's like, Alright, cool. I'm ready to buy. So yeah, that's definitely part of it. But in terms of holding cash, like I try not to build up too much, you know, the good thing is the market I, you know, is very, very inefficient. So there's always sort of opportunities. Yeah, so I'll be dripping in into the Select holdings that I want to be. But I don't have a set like DCA strategy for individual stocks in the satellite portfolio.

Luke: 13:39

Yeah. Cool. So I guess we've talked a fair bit about buying, but what affects your portfolio? And what do you think about selling? You know, do you have like a bit of a strategy for taking profits when you can? Or do you have Yeah, do you have like, some indicators as to Alright, I'm going to get rid of this, like, what makes you sell?

Khush: 13:57

Yeah, so this is a really, really hard one. I think every investor probably struggles with a little bit. Like, look, someone much smarter than me, once told me that the mark of a good investor is literally how they enter and exit the market. Because that essentially defines your returns, you know, when you enter, it's just a classic buy low sell high principle. It's easy. Easy to say, yeah. But um, that also contradicts, you know, obviously, the famous Warren Buffett's, like, quote, my favorite holding time for outstanding businesses without sounding management's is forever. And obviously, the, the aim is to own outstanding businesses. So do you just buy and let it do its thing and let it accumulate? You know, I also heard something from I forget his name, but the guy that wrote 100 baggers, it's a book about all the stocks that have in history that have 100 bags, so yeah, 100x the buy price and and he said, it'd be basically the outtake of that was like yes, you know, stocks can do this. And you know, the goal is always to find them but they Take 25 3040 years to do it. You know what I mean? Yeah. And that return is ridiculous year on year. But so sorry, to answer your question, I really have only a few reasons why I would sell that I've sort of landed on. And the first and the most important, is essentially just don't sell anymore. So the thesis that you wrote, when you bought the stock, or the investment has changed, it's fundamentally different now. And it doesn't align with why you bought the company. So the hard thing is when the companies you know, that you've bought is 40, to 60%, down or something, and, you know, the thesis has changed, you gotta sell because like, at that point, then that you have no reason to hold the stock, which is really, really tricky. And then there's a few other reasons which I can go into, but actually, you know, I really want to get your perspective on it as well, you've got a very different portfolio to me, like, what's your what's your number one reason for selling?

Luke: 15:54

Yeah, I definitely think it's, if you no longer agree, you know, you don't see the potential there anymore, for whatever change whether it's, you know, a new CEO, or you change your direction for the company, or the landscape significantly change because of competitors or something like that. I think that's definitely the biggest reason is you're like, Okay, I'm out. But I also see, like, if you think something's overvalued, you might sell a classic example right now is Nvidia has just absolutely taken off this year. And I think their P E ratio is like, close to 100. It's like 98. And you might be like, I this has to be overvalued, and so maybe you would sell, you know, it's something that you'd have to consider. But I think that's, that's another thing is where the price of a stock significantly is significantly higher than than the revenue of the company. And that's, that's yet another situation where you might say, I think this might be overvalued, I'm gonna sell. But yeah, yeah,

Khush: 16:51

well, a couple of the other ones that I have is more around again, like the portfolio management type picture, it's more like, maybe you need to sell because you're rebalancing so you've, maybe you've had one stock that's absolutely shot the lights out. So, like aligned with your risk tolerance, if you want more in the core less than the satellite, or vice versa, you might sell some and rebalance those funds across your sometimes you might, you might want the profit. So absolutely what you said if something's overvalued to you, you'd rather use that money for a different opportunity, which you think can do that, again, like can do 345 x or another company, but the one that you have that has, you know generated all your profits you think from now, there's not much room to grow? Or it's it's hit whatever you you targeted initially when you bought the company and the other the other two is you want the money. So like you want that money to do something else in your life. Like ideally, obviously, you're never investing money that like personal finances, you shouldn't be investing money that you can't afford to lose. But um, maybe I don't know, have you played the game cashflow by Robert Kiyosaki the guy that wrote Rich Dad Poor Dad,

Luke: 18:02

I haven't played the game. I know that it exists. And I know who Robert is. But yeah, yeah.

Khush: 18:07

So in that game, it's all about like your your cashflow, your investing all that sort of stuff. And you get sometimes you land on squares that are like big opportunity. So there's small opportunity and big opportunity. So maybe you've been building up your investing over a few years, and then like a big opportunity to maybe invest in like a real asset or buy a house or buy like some other sort of bigger, some of the investment that requires more capital, so you can take it out there. But yeah, I have a question for you actually. How do you know when you're being ruthless on yourself? And I've definitely been guilty of getting this wrong. How do you know when you're just huddling? Like when you when you're just holding on hoping something goes back up? Did it hoping that it fulfills your thesis?

Luke: 18:53

Yeah, I think it's it's a little bit of cut your losses short and let your winners run, isn't it true, if you're holding on something that's clearly not going anywhere? I think it's it's a really hard thing to answer. But I mean, in general, unlike, I think that the big question, which isn't always something that you want to answer, but are you just holding this because you're down, you know, if you're if you're down on something, are you is the only reason you're holding it because you're down and you just want it to bounce. And if that's the case, it's probably not a great philosophy Holding, holding a stock, you know, that's not it's not necessarily going somewhere just because you're down so well, I think that's that's a good place to start.

Khush: 19:40

Okay, on the flip side of that, and I have some thoughts on this as well but keen to get yours. You know, we've talked about a bit about like you having high conviction in what you're buying and contrarian investing, I suppose, not not contrarian for the sake of being contrarian. But you know, if you have a view I suppose there's lots of quotes and stuff like this from the fund managers, but you know, you Are you going to make excess returns? If you always agree with the market? Because then you're just gonna get the markets returns? How do you maybe not on the selling side of things, how do you balance it with? Say, like, you know, for example I was telling you about in another episode and I think we can go through an example if you want, but I bought a stock pretty recently that was on the like ASICs most most shorted list, just because I thought my around what my my goals and stuff and timeframe with investing was, you know, the thesis will play out of five, 710 years, and I think the short sell it short sellers had it wrong at the moment, but like, how do you go about rationalizing a buy decision when the company is like, significantly, currently underperforming? You know, the market? Yeah,

Luke: 20:46

I think that's where it comes down to the the high conviction philosophy, where you need to put in the research, you need to be confident in that thesis. And then you really shouldn't pay attention to those outside factors, there might be an initial consideration on like, a purchase timing, for example, where he like, oh, it's being shorted so much, it must be the whole market thinks that it's going to go down. Okay. Why is that? Because, yeah, they're waiting on an earnings report, that's probably going to be lower, or, you know, like, what, what's the reason there, but in terms of purchasing it, overall, something like that, in my opinion, shouldn't affect it. Because if you believe that, in future, you know, this company's gonna do really well, then looking at the, you know, the highest, the most shorted list is not going to add to your confidence, but it's also not changing the philosophy. So, yeah, that I guess that's my opinion on it. Yeah. Did you do have any thoughts?

Khush: 21:38

I know, but he pretty much the same. I reckon there's just so much like, the whole thing is, like, in my opinion, markets completely irrational, because at the end of the day, the people on the end of the decisions to buy and sell and interact with the market are people and humans. We're all innately you know, emotional, and can be irrational. And, you know, don't think perfectly logically. So if you're not going to be perfectly logical, how is the market going to be efficient? And pricing everything exactly as it should be? So I just yeah, it's always something you told me is like, you know, what, um, yeah, when you seeing a stock absolutely getting pummeled, or like the whole market going down, it's so natural to be like, Oh, God, you want to stay out of it. There's something going on here. A bit of cigars happening. Yeah. But But, again, it's all about, like, just trusting that intuition, trusting your gut. And at the end of the day, obviously trusting your research and backing the work you've done. Yeah, I can. I mean, to put this all into context, if we have a couple of minutes. We've got a couple minutes left. Okay. Yeah. Okay. I'll give a quick example. And obviously, you know, investing episode, this is never furniture advice, is just purely for entertainment. But the latest one that I bought is Saira resources, which is a graphite miner, and graphite, along with every other, or a lot of the other critical minerals in batteries have been prices have been suppressed over the last, you know, I think six, six to nine months sort of thing because Evie demand at the moment is a little bit lower than forecasts. However, you know, everything's come down. So I think it's just that trend of jumping on the bandwagon and pushing down prices. So this along with every lithium miner that I could tell was on, you know, the most shorted lists and stuff like that. But you know, following the thesis that EVs batteries, all these sorts of green technologies that require these materials are going to need uptake in the next 30 years, if we're ever going to get to close to net zero, does sort of the backing on the thesis. And obviously there was a lot of other factors in terms of the company and the style of being a producer that I went through. But it was very hard to buy that because it was getting absolutely slammed on the shortlist. But it was very convincing in terms of a broader thesis and broader thinking space. So that it was just one that I went back and forth on but it was literally putting all these principles into into action. And at the end of the day, I was like, Well, I gotta back it because I'm not looking over a two month, six month time period, I'm looking over a five 710 year time period.

Luke: 24:09

Yeah, you're looking at a much broader time horizon. So I guess that that helps with an overall thesis for sure. Now, we've only got about a minute left. So I'll be quick. How do you manage your watch list? So you know, as an investor, you're always gonna have your eye on a bunch of things. But how do you manage yours? How do you stop it from getting hundreds of companies long? You know, how do you how do you rein that in? I guess and how do you prioritize it? Make

Khush: 24:35

it's literally exactly what you said in your curious what what are you curious about you there's no chance that you can have a watch list of companies that you are as intimate as you are with chipmakers and in video because you're literally learning how chipmaking architecture affects you know, the production and all that sort of thing. The reason the reason why I'm naturally says small the watch list is because I try and understand obviously the more Most important thing for me is like the the company fundamentally. So like, how does it make money? How is it growing? Why do I see that is got a long runway, but then also the industry around it, what it does what its competitors are doing. So I just really try and understand a particular business and then the industry that's like sort of surrounding it. And the other way that I keep the watch short is because everything that's on my close watch list that's ready to buy has to have a thesis, which which is written out all the reasons why I like it, why I think it's going to do well, why I think it's going to overcome the risks and potentially why I think markets wrong. And the amount of work that goes into producing that means that there is no chance I'm going to have a watch list of 100 companies. Yeah,

Luke: 25:40

yeah, by nature, it's going to be short. I got one more question. And then we'll get into a bit of a conclusion. But um, yeah, how, how heavy does fundamental analysis way for you. So if we have a listener who has no idea that never invested any money in anything before, and then want to buy a company, and they see the financials, and they just get scared off? You know, how much does that weigh for you? And what do you look at? If you look at anything? Okay,

Khush: 26:05

I'm going to answer in with heavy weighting the first part of the question, which is like someone getting into the getting into the market, and I think I've talked about this in episode one. And it's around the principle that's written in one up on Wall Street by pillage, it's literally just look around the world around you. And what do you see that is your favorite? Like, what do you see is just a phenomenal product that you absolutely believe in and you think is outstanding? Chances are, you probably have 10 of those in your life, at least, and maybe five of them are listed, your you know, that company or that product really, really, really well. And probably even better than some, like, you know, Wall Street analysts because you interact with it every single day. And you can see that competitive advantage. So you already know a bit about that company, then going to do a deep, deep bit of research about the industry around its competitors, how its positioned, what its growth plans are. And if you're going to get how it makes money, and why you think it'll be making significantly more money in five years than it is now. That's what you need, I think no more, no less. And that's still what I do, mostly day to day. Yeah,

Luke: 27:12

awesome. So I guess the last thing is, if you're a listener, and you could just take one thing away from this, what's the what's the one thing about portfolio management that you'd have someone leave with?

Khush: 27:23

I'm really simply I suppose you don't really have to do that much work if you want to stay hands off. So if you just want 100% core portfolio, all you need to do is, is find something diversified that you're happy with, and just being invested is better than leaving your money under the bed or in the bank. So that's the first thing, but then understand your risk tolerance. And, yeah, keep it simple and keep growing from there. Because you'll be surprised as to how much you know, and how much you can actually understand about the investing world by just spending a bit of time doing a bit of thinking so yeah, yeah, the key takeaway? Yeah,

Luke: 27:58

I'd probably say something similar. If you're gonna do anything with your money, don't let it sit there. And maybe start with some, you know, diversified portfolio, you know, via ETFs, or index funds, and then move away from there once you have a bit of a better understanding, I'd say. But yeah, thanks for listening. Find this out the curiosity crisis.com and QFC crisis on Instagram. We're on all major streaming services so you can listen how you like and just a quick favor. If you got anything out of this at all. Please send this to a friend or recommend it. Thanks. And cheers cush. And we'll catch you guys in the next episode. Cheers. Thank

Khush: 28:32

you. Quick reminder, this is purely for your entertainment and education. This is not financial advice. This is just our opinions, but I hope you get something out of it. Enjoy