LUKE HALLARD | Bares All On X

In the latest episode of our podcast, we had the pleasure of speaking with Luke Hallard, a professional investor who has spent over two decades investing in companies committed to shaping a better future. This approach has yielded a 20.7% compound annual growth rate and enabled him to semi-retire in his forties to become a professional investor.

Over the next few months he will be exploring the standout qualities of many of these remarkable companies. He's sharing detailed insights into why they're in his portfolio — all for free on X.

One of the standout companies in Luke’s portfolio is Intuitive Surgical, a leader in robotic-assisted surgery. Their innovative da Vinci system has revolutionized minimally invasive surgical procedures, contributing to better patient outcomes and faster recovery times. Luke’s commitment to this company has been unwavering, as he has held onto his shares since 2006, watching them grow into a nearly 50-bagger investment.

Another fascinating company in Luke’s portfolio is Axon Enterprise, the world’s leading provider of public safety solutions. Known for inventing the Taser, Axon also offers a range of body cameras, in-car cameras, and the Axon Evidence platform, a cloud-based repository of digital public safety evidence. Luke believes that Axon’s technology not only helps law enforcement agencies operate more effectively but also promotes transparency and accountability, thereby fostering public trust.

Luke’s investment strategy is deeply rooted in identifying and capitalizing on emerging trends. For example, he was early to recognize the potential of cloud computing and AI, investing in companies like Nvidia and CrowdStrike long before they became household names. Despite some setbacks in other sectors, such as work-from-anywhere solutions, Luke’s diversified approach ensures that the gains from his successful investments far outweigh any losses.

Luke’s commitment to ethical investing is not just about avoiding companies with questionable practices; it’s about actively seeking out those that are making a positive impact on the world. He believes that companies with strong ethical foundations are better positioned for long-term success, as they tend to have more loyal customers, fewer regulatory issues, and a stronger brand reputation.

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EPISODE TRANSCRIPT

Chloe: Shares for beginners Phil Muscatello and Fin pods are authorised reps of Money Sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Luke Hallard: In terms of managing my own emotions, and I've become pretty adept at this over the decades. Main thing is have a plan for your investments like we talked about a bit earlier, rather than taking like a snap decision when Crowdstrike suddenly had a major incident that impacted to the whole world. Take a breath, make a plan, and then you can respond to events rather than just reacting to them.

Phil: G'day and welcome back to shares for beginners. I'm Phil Muscatello. How do expert investors find great companies that are also shaping a better future? And how do you manage such a portfolio as factors change over time? Joining me today is professional investor and podcast host and friend of this podcast, Luke Hallard. Hi Luke.

Luke Hallard: Hey Phil. It's, uh, great to be back on the show. Thanks for the invite.

Phil: For the past 21 years, Luke has been investing in world class companies committed to shaping a better future. This approach has yielded a, uh, 20.7% compound annual growth rate and enabled him to semi retire in his forties, to become a professional investor, and to keep up a very good tan, no matter what time of year it is. Over the next few months, he's going to be exploring the standout qualities of many of these remarkable companies, giving detailed insight into why they're in his portfolio, all for free on X, formally known as Twitter. And I don't know how long we're going to have to say formally known as Twitter for, but it's definitely X, isn't it?

Luke Hallard: I told my mom, like, my social account's growing quite nicely on X. I think she thinks I'm now, like on OnlyFans or something.

Phil: That's right. It has those kind of overtones, doesn't it? So we're going to show your full portfolio in the blog post, but tell us about some of your favourite companies in this portfolio that's led you to this point in your life.

Luke Hallard: Yeah, so look, I don't want to come across as this, like, holier than thou guy. Like, I'm invested in a ton of different things, but I really try to focus my investments not just on companies that are good investments. And I've had a ton of stinkers over the years, and maybe we'll talk about some of those today. But I want to really focus my investments not just on the good investments, but on the companies that are shaping a better tomorrow. And, I mean, maybe the most prototypical example of this in my portfolio is the very first company, individual company, I ever bought. I've been an investor for 21 years. The first couple of years were spent just sort of building some wealth using indexes and ETF's. The first actual individual company I bought, though, was 2006, and it was a firm called intuitive surgical ticker ISRG. And I'm proud to say I haven't touched that position to date. I haven't sold a share. I haven't had a chance to add to it because it's got so big in my own portfolio. It's nearly a 50 bagger over that time for me now. And why do I think intuitive surgical making the world a better place? Well, they're a leader in robotic assisted surgery and their innovative da Vinci system. It's the cutting edge way of doing minimally invasive surgical procedures. And they started out doing just a really narrow range of procedures, but now they've broadened out into general surgery. They're in hospitals all around the world. They're a fantastic investment, and they've just got a really strong moat. If nothing else, there are so many reasons to love this company. But if nothing else, they've got an enormous trained base of surgeons now coming through medical schools and now practitioners who know how to use this system. And I like, I mean, I'm not a surgeon, but I've got friends in the medical profession. They're pretty sticky. Once you're committed to a particular methodology or way of working or a specialism, you tend to stick with that for your career. That's really going to lock in intuitive surgical and build this significant barrier to entry for its competitors. So I love this one. It hits both of my targets. Great investment, and it's really helping the world.

Phil: And that's the machine that can be operated remotely as well, can't it?

Luke Hallard: Yeah. So today it's all about having the surgeon in the same room as the patient, but essentially having a bit of technology in between them and without going sort of super deep into what they do, because this is just a light touch on this company, that the robot mimics the surgeon's movements. So the robotic instruments are tiny, they go in through a keyhole surgery, and so it's minimally invasive, tiny incision in the patient, and then the surgeon has a 3d view inside the patient because there's essentially

00:05:00

Luke Hallard: like twin cameras on the arms of some of these instruments that are inside the body and then can access lots of different other surgical instruments for cutting and for suturing and doing investigations, taking biopsies, and can perform a wide range of procedures now. And this approach to surgery minimizes complications. The patient generally recovers quicker and has better surgical outcomes. So kind of a win win for the hospital and for the patient.

Phil: Has your commitment to, uh, being invested in this company been tested at any point over the last 18 years?

Luke Hallard: Not this one, no. They haven't really had a misstep and, um, they haven't really faced any significant challenges. But that's not to say that I haven't changed my mind on investments over the years. Certainly you do need to review your thesis regularly, even if, like me, you bought a company nearly 20 years ago and you didn't buy or sell a share. You've got to go and revalidate the thesis regularly just to make sure that do nothing is still the right course of action for you.

Phil: Can you give us a sneak preview about the first company that you're going to pitch on x? And that's Exxon Enterprise, and I'm assuming that's making the world a better place by fighting crime.

Luke Hallard: Yeah, pretty much. And yes, I'm working on a deep dive deck for this one right now. And what I'm intending to do with my new project on Twitter and on LinkedIn, by the way, and on our YouTube channel, is to really go deep on each of these companies that I truly love, uh, having in my portfolio, explain exactly what they do and how they operate, and explain why I feel they're a great investment and I'll be sharing the good and the bad. Like, clearly, there are significant risks when you invest in any company, so I'll be trying to shine a light on those two. But who are axon and what do they do? Well, they're the world's leading provider, uh, of public safety solutions. So they invented the taser. They have a huge range of body cameras, in car cameras, drone cameras, and then they augment all of that with something called Axon evidence, which is the world's largest cloud based repository of digital public safety evidence. So what does this really mean in practice? Well, you've got 18,000 law enforcement agencies in the US. All these thousands and thousands of separate police departments. Essentially, Axon partner with 17,000 of them, like nearly everybody, and they're providing them with tasers, cameras, and the Axon evidence platform. So when an officer's on scene, if they reach for their regular firearm, when they unholster, um, the firearm, all of the cameras activate. The police control room can see every officer's perspective on the incident, it gives them a better way to oversee and, um, manage an incident as it's unfolding. The latest version of the camera, the Axon body four, provides two way communication. So actually the officer essentially can be talking back to his control room and receiving instructions better to coordinate the event, maybe even just for perhaps getting a translator involved. If the officer doesn't speak the language of the person they're talking to, enables a translator to get involved in practice and help that. And then having cameras, although it's quite difficult for the police to adopt, initially, uh, culturally quite different, it has reduced incidences of complaints against the police. So if you're clearly there are some bad apples out there in any organization, and we've seen some really horrendous stories about poor policing outcomes all around the world. I mean, just recently, in the last few days in the UK, something pretty horrendous happened in Manchester airport. But having live video evidence which can be relied on in court, means that the police generally are, uh, behaving ethically. It means that their actions are transparent and their decisions are more traceable and transparent. And it means the public can develop a stronger trust in the police. And I just think this is really important for a well functioning society. It feels like something that makes the world a better place to me.

Phil: Yeah, because I was going to ask that you do believe that this is making the world a better place because some would say that this might be encouraging fascist tendencies, but you see that there's another side of it in terms of providing better social outcomes.

Luke Hallard: Clearly there's two sides to any technology, and particularly when you step into like policing or the military and technologies like that, these tools could be abused, obviously, but I feel like having technology is almost inevitable, like, uh, these capabilities will be rolled out. And I think it's better

00:10:00

Luke Hallard: that they're rolled out in public by public companies doing their R and D. And essentially in public, you know, they're releasing their tools and they're making them available not just to the police, but they're also creating the same capabilities in commercial environments. So for example, Axon have recently released a version of their body camera for retail workers. So that's potentially going to reduce not just shoplifting and things like that, but maybe instances of violence or abuse to restaurant workers and people who work in retail. So, yeah, like the genie is out of the bottle with some of these technologies. And I think it's better that we all understand what's there and how they're being used. And then if you want to mitigate some of the dark side of these technologies. That's really the job of governance and accountability, I think, and having a free and transparent press to make sure that sort of stuff happens.

Phil: As you've put together this portfolio, there's going to be certain financial metrics that you look for. Can you talk about what those metrics are? And I would presume that the metrics would change depending on the sector that the company is operating in.

Luke Hallard: Yeah, you bang on with that, Phil. And essentially there are a whole bunch of financial metrics and non financial metrics you could look at, but youre exactly right.

Phil: Its not one size fits all, is it?

Luke Hallard: Yeah, precisely. You wouldnt expect a young, rapidly growing company to have the same valuation multiple as a mature industry giant. And the metrics that you use to judge whether a company is financially healthy, they can change as the company moves through its lifecycle. But I think the overarching thing, other than for very, very young, very new companies, you're essentially looking for profitable growth. And if we think back to maybe four or five years ago, the market was all about growth at all costs and companies were spending a fortune on growing their customer base and expanding and growing revenues, but not doing that in a sustainable, profitable way. And that's turned around and bitten companies now that we're in an environment where Money is expensive again. So some of the metrics I look for, typically I will look for revenue growth. You want to see consistent, sustainable growth. That makes sense when you look at the company and its place in the industry and also look at its competitors. You dont want a company thats going to be outgrown by a competitor and then just get kind of squashed into obscurity. But ill be looking for profitable growth as well. Maybe one of the earliest places you'll see that on the balance sheet will be through the gross profit margin, which is essentially a measure of production efficiency. So if a company's got a positive gross profit margin and if that's increasing, it shows the company's got pricing power, which tends to suggest that it's in a strong place. And then in times like right now, where Money is actually fairly expensive, we're in a fairly high rate environment. Hopefully that's going to turn and rates will start coming down again as interest rates come down. But right now Money is expensive. So if companies have to lean on debt, then that debt is costing them more. So ideally, companies are financially self sustaining. And so the metric I tend to look for, there is a strong free cash flow margin, essentially how much of the money they make are they hanging onto? And does the board of the company have discretion over? Like, they've paid for all of the costs of goods sold and they've paid all their operating expenses? It's like, how much money do we have left that we have discretion over? And they might be able to spend that on reinvesting in something, maybe making a tactical acquisition, or maybe just paying a dividend or doing a share buyback. So if companies got free cash flow, they're in charge of their own destiny, as opposed to being indebted and potentially not having the flexibility to seize opportunities when they come up.

Phil: When money's expensive like it is now, as interest rates were going up, we'd hear about the problems that certain companies might find in terms of growing and using debt to grow. We're in a situation where some certain companies can fall by the wayside because they can't access cheap money, but then it leaves the stronger companies with stronger balance sheets standing.

Luke Hallard: Yes, that's exactly what has been happening. So we've seen consolidation in a number of industries where the bigger companies that are financially self sustaining and have a ton of cash on their balance sheet have been out gobbling up their smaller competitors. So, an interesting example, actually, just a week or two ago, where Google planned to acquire, I think they're called

00:15:00

Luke Hallard: Wiz, one of the cybersecurity firms. And cybersecurity is certainly a sector where we've seen quite a lot of consolidation. And surprisingly, Wiz turned down what was seen to be quite a lucrative acquisition offer, I think $23 billion. They've decided to go it alone. But, yeah, that probably bucks the trend. Typically, founders do have an exit plan, which is to ideally get acquired at a healthy multiple by one of the giants.

Phil: Why did you decide to do this right now? To lay your soul and your portfolio bare on x.

Luke Hallard: This is how I've always invested, and I think last time I, uh, joined shares for beginners, it was to do a podcast crossover with my podcast Wall street wildlife, which I do with my buddy Christoph. And on Wall street wildlife, we're trying to make investing simplified. We're trying to demystify some of the complexity of the stock market. So I really wanted to do another project as well, which was to actually take our principles we're using at Wall Street Wildlife and show how I apply them in actually selecting an investment for my own portfolio, or even in analyzing a company and determining it's actually not a great investment and casting it aside. So this project was all about doing the deep dives that I've always done, but doing them very publicly. So I think right now I've got about 25 page presentation deck for Axon, and I'm in the process of trying to pare that down just so it's not a three hour YouTube video. So I can walk subscribers to my ex account through, like, how I came to that investment decision myself.

Phil: It's pretty incredible these days where we can use these tools to discuss these matters and show them in a variety of fora so that you can see it, you can hear it, and people can interact and ask questions. And you're very active in answering questions as well.

Luke Hallard: I've noticed on x, hey, I do my best. I try and be transparent and accountable. And look, I really enjoy this stuff. I've tried creating a social media presence on a couple of other networks, and to be honest, like, you can't have. I apologize to any Instagram fans out there. Uh, you can't have a quality conversation on Instagram or on Facebook or really on LinkedIn for that matter. Like, people are there to either self promote or just kind of goggle at each other's photos. If I post something which I think is insightful to Twitter, to x, I generally get either pushback challenge or great questions. And it's those questions that really help me, developers, and investor myself. Like, if you do this stuff in a box and you don't seek other opinions, potentially you're closing yourself off to either great new investment ideas or to important parts of the bear thesis that you may not have thought about. And so I'm doing this for my followers on social media because I want to share some of the insights I've built up over 20 plus years. But I'm also, frankly, doing it for myself because I learn a ton of by putting my own due diligence out there and subjecting it to scrutiny from smarter guys than me.

Phil: So, obviously, you've made adjustments to the portfolio over the years, and you did mention that there are some dogs that have been in the portfolio which you've had to cull. Let's talk about the adjustments you've made, how you've made them, why you make them, um, and maybe some of the failures.

Luke Hallard: Yeah. And I'll pick on a particular mega trend to try and field this question, because I do generally invest around trends. Like, I. The fundamental part of my own investment thesis is looking at what are the trends and the factors shaping society, and, um, what are the things that we're all going to need more of either products or services in ten years time. And it just seems intuitive to me that if I can identify those needs years ahead and identify the companies that are, uh, best positioned to service those needs ahead of the market, well, if I can buy them, even almost at any price, I'm probably set up to do well if I buy a smart basket of stocks, because even if one of those prospers and becomes one of the leaders in that emerging trend, well, I'm going to do great. And so one of the trends that I've been tracking really, since, uh, the COVID pandemic in 2020 was work from anywhere. And it really seemed to me like if there was one good thing that was going to come out of the pandemic, it was the flexibility to keep the lights on, keep businesses running, that all companies had to embrace and create flexible working practices for their employees. And it seemed to me that it would be good for companies and also good for employees. So why wouldn't

00:20:00

Luke Hallard: that stick around? And so I made a bunch of investments in companies like Fiverr, Teladoc, uh, Docusign, Zoom, Airbnb. And unfortunately, that thesis doesn't really seem to have played out to the extent that I hoped. Companies in some areas are going back to hybrid, working partly on site, partly off site, which probably was where I hoped we would end up. But I can see many industries going back to just pre pandemic ways of working and, um, pretty much full time in the office. And so a number of my investments in that space just haven't played out. Fiverr was an absolute bomb, although you could also attribute its failure to the rise of AI. Teladoc. Pretty disastrous investment, albeit I got out of that one before it got too ugly for me. Docusign similarly, albeit they had some leadership challenges they've been trying to field, and Zoom was really the sort of pandemic darling stock. I did pretty well on that and I got out before it really fell apart. I made a little bit of money, but if you hang on to Zoom, you're really back to its pre Covid valuation, which is fine, but you've missed out on, um, a ton of cash by not getting out at the top.

Chloe: Super is one of the most important investments you'll ever make, but how do you know if you're in the best fund for your situation? Head to lifesherpa.com dot au to find out more. Life Sherpa, uh, Australia's most affordable online financial advice.

Phil: So are there any particular themes that have worked out for you, or can it be a little bit hit and miss.

Luke Hallard: So I've got about 15 or 16 investment themes that I've been tracking for the last decade or so, and that shaped my investment philosophy. I would say the one that has the most winners in it is probably cloud computing AI. And I think I was pretty early to this idea that increasingly, technology was going to automate and streamline ways of working for companies, um, create efficiencies. And so, for example, I was in Nvidia, really, ah, with my thesis focused on its data center segment, many years before it became the meme stock, almost that it is today. Also in a number of other controversial, perhaps, companies in that space. One of my very high conviction investments is CrowdStrike, the cybersecurity company. Particularly as an Australian, that have been all over your news because you guys got hit so badly by the woeful outage that they caused globally just a week ago. But there are a ton of other companies in the cybersecurity space that I'm also a big fan of, companies like Cloudflare and Zscaler, but also in this cloud computing AI space. I've also had my fair share of losing investments, too. I'm, um, a fairly recent investor to Zscaler, and I think it's going to take a little while for that thesis to play out. I've been invested in Datadog for some time, and actually, that's one that's almost on the chopping block for me now that I might be exiting. So, a little bit of a mixed bag across all of my sectors. But I would say the defining attribute of, uh, or a defining benefit of being an investor in growth companies is you don't always have to identify the winner. If you can buy two or three companies under each theme, if one of them does well, typically the gains on that one company are going to vastly outstrip the losses on maybe your next ten investments. And if I just took, say, intuitive surgical, we mentioned at the top of the episode, I've got a nearly 50 times return on that. So literally almost everything else in my portfolio could go to zero and I'd still be in the black, I'd still have a reasonable return. And I'm lucky, I suppose, over the last 21 years, that I've had probably more than my fair share, uh, of significant winners, companies like Netflix, Shopify, Alphabet, and many others.

Phil: I think it's worthwhile warning listeners, though, that trying to find a theme that will work can be incredibly difficult. I mean, I was at a, an event last night, and we were taking questions from the audience. And one member of the audience said, well, you know, if Trump's going to win the election, he hates Ev's, so I'm going to sell my Telstra stock. Do you see what I mean? You can have a very simple thesis that makes obvious sense, but then not putting in the work in, like someone like yourself would, can just

00:25:00

Phil: lead to danger.

Luke Hallard: Yeah, that exact factor. Most, uh, of my portfolio is us companies, albeit I try to find companies that have a global footprint and lots of international revenues. But, yes, I've been analyzing myself what would be the impact on my portfolio of a republican presidency come November this year. And I've identified a number of companies where I feel they probably won't prosper to the same extent under a Trump administration. And so I'm now thinking about perhaps reducing those. I'm not sure that Tesla is one of those, though. Elon and Donald do seem to be quite buddy buddy. And I don't know that the Biden administration perhaps publicly acknowledged what a leader Tesla was as a north american vehicle manufacturer, where many of the world's other car manufacturers are either european, german, or now coming out of Asia. So I think Tesla is probably one of those rare companies in that space that's likely to do well under either a Democrat or a republican administration.

Phil: Why is your largest holding cash?

Luke Hallard: For lots of reasons, but, so let me field this head on by saying, like, it might be easy to think about cash as just being dead money. Like, it's just sat, like, you know, bags of gold under the bed. And that is definitely not the case, particularly right now, when that cash, you can park it in short term government bonds, and you can get four or 5%. Like, if I can get 4.5% risk free, that's not to be overlooked. That's actually, that's quite a decent return, to be honest. But I have other reasons personally why I like to have a healthy cash balance. And for me personally, this won't apply to every investor. Like, I'm now semi Retire, I don't have an income, and so I'm using my cash allocation basically just to pay the bills. I withdraw money every month, and that covers my, uh, credit card debt and pays for the vacations. And it means also I don't have to be invested dividend paying stocks to pay me an income, because I just trim a little bit of money out of my cash allocation each month. But I think there's another good reason to have a cash allocation for any investor. And you could almost think about it like a risk dial in your portfolio. And if you think the market is expensive, as I felt it was at the end of 2021, then it's probably time to turn the risk dial down a bit and take some money off the table. So at the end of 2021, and my timing turned out to be very lucky, I trimmed a number of my investments. I sold a couple of companies that were perhaps on my chopping block, and I increased my cash up to about 25%. And the market did turn, um, quite hard against growth stocks in 2022. And look, I'll be honest, I got wiped out along with everybody else. But that cash allocation is really what kept me sane because I knew I had a couple of years expenses in cash, so I wouldn't have to be forced to take a sort of disastrous emergency fire sale of assets just to pay, uh, the credit card bill. But it also meant that by having some cash on the sidelines when I felt things were cheaper again, as they started to feel they were towards the end of 2022, into 2023, I could start turning the risk dial back up and reinvesting that cash, basically buying stocks that were on a fire sell because other investors were selling them and hopefully picking up some bargains. And I haven't quite seen all of the benefit from that yet, but certainly some of that Money I deployed through 2023 and earlier this year is now starting to show its benefit.

Phil: You're keeping your powder dry, so to speak.

Luke Hallard: Yeah, exactly. Exactly. And, you know, in a portfolio like mine, like I can't add, I'm not really adding new money. I don't have any income to add. So, like, the other benefit of that cash is it's giving me flexibility in my portfolio. Uh, because if I had no cash, if I want to buy, say, add to my Amazon position, well, that means I've got to figure out what am I going to sell so I can buy that because I've got no new money to add. And so I don't want to make two decisions if I only really need to make one decision. So having cash kind of detaches the buy and the sell decisions, and lets me just take the actions that I want to take.

Phil: Thats good. Its limiting your decisions. I love hearing about that. Theres one less decision to make

00:30:00

Phil: because theres so much to think about in a portfolio already.

Luke Hallard: Yeah, totally. And look, the most important thing an individual investor can do is just try to touch their portfolio as little as possible. Like the right decision 99% of the time is do nothing. So, you know, if you think it might be time to add, or if you're getting scared and you think you should trim, probably give yourself a couple of days just to dwell on that and think about it. And probably you're going to come to the conclusion, actually the right thing to do was to do nothing. A bit like Crowdstrike just last week, the company had this meltdown. Just last Friday, I think. And then across the market, I could see investors running for the hills and saying, sell, sell, sell. The stock had dropped ten or 15%, and then suddenly other investors were shouting, buy, buy, buy. In my mind, the best thing to do, and still to do today, is don't touch it. We're probably going to see some more downside as the legal claims come through. As we start to see potentially customer churn over the next couple of quarters, I'm happy just to let all that stabilize, let the dust settle, then I'll figure out where I am and decide whether it's. If the thesis is broken, I don't think it is. But if it were to be broken, it would be time to sell that position. And if I felt that the market had put it on sale because it had overreacted and panicked too hard and the dust had settled, then that'd be a buying opportunity.

Phil: Let's turn to the philosophical side of your portfolio. What's your definition of a better future? Um.

Luke Hallard: And it's gonna be different.

Phil: There's many, I think, by the looks of the portfolio.

Luke Hallard: Yeah, that's right. That's absolutely right. And I think everybody's definition is going to be different, but I think mine. If I tried to sum it up in one sentence, it would be a world where advancements in technology, governance and culture create a happier, healthier world for everybody. So what does that mean to me? Essentially like, environmental sustainability. We're not killing the planet, we're operating in sustainable ways. Social equity and inclusion, universal access to healthcare and education. Human rights are protected. We're all living longer, healthier lives, and global community and peace, they go feel like peace for the world. That's what I'm looking for.

Phil: It's a bit like John Lennon's song, isn't it?

Luke Hallard: Imagine, imagine. Just imagine and look, I'm not some crazy guy who thinks we're ever going to achieve these things, but I like companies that are striving just to take us one tiny step forwards towards that. Almost. I suppose I envisage it as this sort of Star Trek type culture and environment. Wherever, you know, we've dispensed with money, everybody's healthy and living several hundred years and we're all happy and feeling like we're living fulfilled lives.

Phil: Do you feel you might be missing out on great investment opportunities by only investing in this way?

Luke Hallard: Yeah, it's a good question, and I don't think I am. Like, clearly there will be some things that I pass on because I feel that they are ethically compromised, but they could still be incredible investments and make a ton of cash for investors. But there are so many places to create alpha, essentially to find companies that are going to beat the market that you don't need to chase after every single thing. In my mind, you might as well invest in the companies at least that are committed to driving some of those benefits for society. And if you do that, there's actually a number of benefits for you as an investor, if you're investing in, like, good companies. I'm just going to characterize everything I said above as good. Like, if companies are, uh, ethical and having a positive impact on the world, they've probably got a stronger reputation. And so that probably translates into a stronger brand. Better customer loyalty, which is at the bottom line, is like longer, um, term revenue streams. If they're operating responsibly, they're probably not going to get sanctioned with regulatory fines and reputational damage. If they're making a positive impact on the world, well, they're probably at the forefront of innovation, so they might be like, out R and D ing their competitors. The world is moving towards sustainable practices, so we're seeing things like the Inflation Reduction act and many other policies around the world which giving tax incentives to companies operating in some of these sectors. So you've got this economic boost and look, if nothing else, right? You want to feel good about your investments and if your conviction is wavering about something in your portfolio, well, it's just easier to hold on to that conviction if you really believe in and want to support the mission of the company. And actually, this came to

00:35:00

Luke Hallard: life for me just in my Twitter feed the other day because I posted my pinned post right now, talks about my new project and the types of companies I want to be discussing. And I got a comment from Brandon on Twitter who said, nice job. In my fund, I get around 20% doing hedged option structures, but I don't get to say investing in world class companies committed to shaping a better future. That's nice. So, yeah, thanks, Brandon. There's lots of ways to make a solid investment return. I really like the way I'm doing it.

Phil: It must be an empty feeling just moving money around to make more money, but nothing productive is coming from it.

Luke Hallard: Yeah.

Phil: Not to put Brandon down, and I noticed that comment as well. You got to make a living.

Luke Hallard: Yeah. No criticism of people who don't operate in the way I've described. Right. There's lots of different ways to make an investment return. And, hey, look, in my part time, if I'm not an investor, I'm a poker player. The game of poker is almost definitively like the zero sum game. If I walk away a winner, somebody, uh, else at the table have walked away a loser. So we're not really adding any value to society, apart from perhaps consuming a lot of beer and helping the alcohol manufacturers. So, you know, I'm not just this ethical guy all the time.

Phil: Another commenter I noticed asked about Lockheed Martin. Why Lockheed Martin? That's my question. Why Lockheed Martin?

Luke Hallard: I used to be quite ethically averse to the defence industry, and I think as I get a bit older, I don't know about wiser. Ah. But I'm starting to think, actually, that was a misguided opinion on my part. And so, again, I wouldn't judge anybody wherever they sat on this spectrum. But I think what we're seeing in Ukraine and what we're now seeing in Israel Palestine is just really shining a light at the importance of geopolitical security. And so I think it's right that in the west, we have strong technology, founded military capability to defend our ideals and our way of living. And alongside cybersecurity, cybersecurity is really just part of the cold war, essentially, between these nation states. And so I hold Lockheed Martin for a couple of reasons. One, because I'm starting to think, actually, like, if you can't protect your way of living, then you might have this fantastic culture and everyone's living longer, healthier lives, but it ain't going to matter if you get bombed into oblivion and, um, suddenly you lose that society you're living in. But also, I own it because it's a dividend paying stock and I don't have many, much of an income portfolio. So that's something I've been trying to grow within my portfolio. So, yeah, a couple of reasons, but I suppose it also almost fits into that category. You asked me earlier about companies or sectors that I've changed my mind on, and this is one I've changed my mind on. Um, to the positive, it's clear that.

Phil: You'Re able to manage the emotional side of investing. What are some tips you would give to new investors about this aspect and what to watch out for.

Luke Hallard: Yeah, something Christoph and I talk about extensively on the Wall street wildlife podcast. And I think when we did our, uh, podcast crossover with you a few months ago, we talked about a couple of our, uh, ten laws of the investing jungle in terms of managing my own emotions. And I've become pretty adept at this over the decades. Main thing is, have a plan for your investments like we talked about a bit earlier, rather than taking, like, a snap decision when crowd strike suddenly had a major incident that impacted the whole world. Take a breath, make a plan, and then you can respond to events rather than just reacting to them. And there's a couple of tactics you can employ to help you do that. So, one might be just to keep an investment diary. I write down every trade I make, buy or sell or trim or add in a big spreadsheet, and I add a little sentence alongside each one just to remind myself why I did the thing I did. So if nothing else, that forces me to at least acknowledge, uh, what's my decision making process? Why did I take that decision? But it's also helpful, because years later, as I do quite commonly, you can go back and you can analyze your own decisions and say, well, did I make the right decision there? What was my thinking? Was my thinking right and things just played out differently? Or was my thinking actually wrong? And if you don't write it down, we've got nothing you can look at. Another tactic you can employ is one we talked

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Luke Hallard: about a few minutes ago. Just act less frequently. I keep an investment to do list just in Google, keep one of my keep items. I've got about ten or 15 things on there, and it's ideas for things I might want to either research, consider adding or trimming, or maybe consider selling. And so I will try not to act on those straight away, but I'll put them on the to do list. And whenever I get a spare ten minutes, I'll have a look at that to do list and just maybe try and move my thinking forwards a little bit, have a conversation with somebody, do a little bit of research. Basically a, uh, very conscious step in slowing down my fiddling in my portfolio. And I feel like the temptation to fiddle with stuff can be and investors undoing. And then if you're just really struggling with your emotions, even after doing all those things, like, you can't really do this if you have an investing podcast, but otherwise just turn the thing off, stop looking at your portfolio, stop checking it. Like, volatility goes down if you only look at your portfolio once a month or once a quarter rather than every ten minutes. You won't see every swing up and down, and you'll be able to tune out the noise a little bit better.

Phil: So, Luke, tell us about how listeners can find out more and then hear about the podcast, your ex feed, which I believe is seven. Luke Hallard is that correct?

Luke Hallard: Yep. That's it at seven. Luke Hallard Yep.

Phil: So we'll put all these links in the episode notes and the blog post. So there's the YouTube channel, the podcast, and not Instagram.

Luke Hallard: We're on Instagram. So we are on Instagram as allstreetwildlife. And you'll also find us at Wall Street Wildlife on YouTube. Our Instagram game is pretty weak, I've got to be honest. It's just not working out there. But we'll keep plugging away and posting stuff. But definitely the best place to find me is Twitter. Uh, evanlukehallard. And if you're interested in the podcast Wall street wildlife at YouTube or on, um, all major podcast platforms, Luke Hallard.

Phil: It'S been a real pleasure speaking with you again, and we might revisit this journey that you're going on in a couple of months.

Luke Hallard: That'd be fantastic. Great talk with you again.

Chloe: Thanks for listening to shares for beginners. You can find more@sharesforbeginners.com if you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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