Transcript: A Look Back At 2013

 Lots of things didn’t happen in 2013: Europe didn’t blow up, the US didn’t default, and nobody waged war with Iran. But bad news for permabears and newspaper publishers was good news for the stock market, with indices around the world soaring as investors lost their fear. Owain Bennallack, Nate Weisshaar, and Mark Rogers look back on what actually mattered in 2013 – and what to look out for in 2014.

The following is an unedited transcript of this Fool podcast:

Owain Bennallack: Hello, and welcome to Money Talk, the investing roundtable from The Motley Fool. I’m Owain Bennallack, and seeing out the year with me today are two familiar voices from our Champion Shares Pro service: Santa’s little helper, Mark Rogers, and the Grinch who stole Christmas, Nate Weisshaar. Hello chaps.

Mark Rogers: Hello, Owain.

Nate Weisshaar: Bah, humbug.

Bennallack: Guys, Christmas 2013. More importantly, it’s the end of 2013. It’s the end of an era — the end of the 2013 era. What an era it was, eh?

Weisshaar: It was wonderful.

Bennallack: Now when I think back, there was a nice summer …

Rogers: What actually happened?

Bennallack: It was weird, wasn’t it? There were all these catastrophes that were going to afflict us, and for once they didn’t. After, say 2008-2009, when the doom mongers got their moment in the sun, it seemed like 2013 was more business as usual on the reality not living up to the hype stakes.

Weisshaar: Yeah, it was amazing. We had big headlines, exclamation points included, and really as I look back at the year, there’s very little that stands out as something that will be memorable.

Bennallack: Europe didn’t blow up.

Weisshaar: No.

Bennallack: The Fed didn’t cut off the easy money — tapering, in the lingo. Nobody waged war with Iran. The U.S. didn’t default. England didn’t smash the Australians in the ashes, Down Under. Perhaps it’s not surprising that the stock market is also up.

In this podcast, we’re going to consider the news events that did make a difference this year, and then we’ll look at what 2014 might have in store, both for the economy and for share prices. Finally, we’ll discuss three shares that we’re watching but, for a twist, we’ll each pick a share that we think could do particularly well in 2014.

You ready, guys?

Rogers: Yeah, sounds great.

Weisshaar: Yeah, let’s go.

Bennallack: OK, so 2013. How was it for you?

To me, as I say, it was neither a year to remember, but it really wasn’t any kind of annus horribilis, in the memorable words of Her Majesty; which, after some of the recent years has actually been a slap on the back, hasn’t it, Mark?

Rogers: It was weird, wasn’t it? I think at least a part of it is just in the last few years, if I said “2008” to you, you would instantly conjure up all these images of the banks and everything like that; “2009,” very similar. This year just wasn’t as distinctive, but I guess it shouldn’t really be surprising, considering. It’s not that much of a surprise; it’s only a 12-month arbitrary period.

Bennallack: Yeah. The mighty cycles that drive the economy, and also the share prices of our companies, they don’t really follow, necessarily, the petty calendar of us human beings.

Rogers: Exactly.

Bennallack: But history does tend to batch things into years, as you say. I guess we’re going to do future historians a favour by recapping the year, but let’s keep it brief, on the grounds that we think it’s a semi-quixotic task.

I think we should look at words that we think sum up the year. I’ll start us off with “Bitcoin.” Bitcoin is, as everyone knows now, a crypto-pseudo currency, of course. It was up, at one point, 100-fold in 2013, even thought nobody has any idea whatsoever what it’s worth.

I think that bitcoin is symbolic of the year, because even if it turns out to be a dud, I can’t really imagine that bitcoin would have risen to prominence like this without both the financial crisis — which obviously led to gold, which was kind of the old fashioned bitcoin, giving it a bit of a boost — and also the ultra-low interest rates.

If people thought that by buying bitcoins they were missing out on 5-6% interest — which obviously doesn’t compare to 100-fold appreciation, but there’s no downside to punting on these random things — then I think you do get these weird outliers.

Rogers: I wonder if it was two or three years late. If you remember, back during 2010-2011, when people were just grasping onto this theme, I just wonder what would have happened if it would have caught on maybe with less scepticism in the mainstream; maybe a bit more even, during that period.

Bennallack: Yeah, it’s hard to beat 100-fold, but of course you could always do 101-fold.

Rogers: Yeah, it might not have had three people like us sitting around, stroking our chins, thinking, “Oh my God, how did this happen,” if everything was doing that a couple of years ago.

Bennallack: No, it’s an interesting point. Next time, it’ll be ready.

Rogers: Yeah.

Bennallack: There was a bitcoin exchange that’s just raised, I think, $30 million — something like that — to do bitcoin exchanging. I saw someone saying that he wanted to buy some bitcoins, and he had to go to an old … he’d last been there as a student in New York, in a rock venue, and he had to go to the back of the hall and talk to some other guys in overcoats, and they all started swapping bitcoins on their phone. The new rock & roll, I think.

Rogers: I heard that Cher quite likes bitcoin. I don’t know if that’s just a vicious rumour.

Bennallack: This is where I’d like to have a Cher quote that I could pull up and amaze and delight our listeners. But Mark, I don’t listen to Cher, unlike you, and follow her every move.

Rogers: Of course, yeah.

Bennallack: I think you should crack on now with a couple of words that you think …

Rogers: Okay. I’m going to cheat; it’s not one word, but “government shutdown” is going to be my first phrase that sums up 2013. It’s one of these phrases like “fiscal cliff” and “eurozone crisis” last year that, if you tune into CNBC — and maybe even this show — you’ll hear repeated quite a lot, but fade away after the fact. That was obviously a big deal this year.

Bennallack: I have to say, it almost sounds a bit retro already, “government shutdown.” It sounds a bit like “peace and love,” or whatever. I’m trying to think of a Nirvana-era phrase. I think “Whatever” was a Nirvana … but it already sounds dated.

Rogers: “Debt limit,” as well. You remember, just these little phrases; the “rise above” thing on CNBC, do you remember that?

Bennallack: I think some of that will come back in the future.

Rogers: Possibly.

Bennallack: “Government shutdown,” I think they realise nobody got anywhere with that government shutdown. No one liked them for it; they are survivalists at the end of the day.

Rogers: I have a second one, and maybe one for the future as well, called “taper tantrum.” Remember that phrase, from back in September? Kind of interesting. I was in Las Vegas at the time, on holiday, and it was amazing. I was walking through the MGM Grand Hotel, through the casino floor, during the speech with Ben Bernanke.

Everyone was watching it; traders around the world, and it was on CNBC, about “are they going to start the taper?” It was just amazing to watch all these gamblers at the tables, stopping throwing the dice for a moment, stopping the roulette, just to stare at what Bernanke was going to say; kind of sums it up, right?

Bennallack: That does sum it up. It also conjures up, in my mind, a vision of Mark “The High Roller” Rogers, swinging his way through the casino with his entourage, looking at all the petty fools watching Bernanke.

Rogers: My $10 bet.

Bennallack: Yeah, while he lays down his $10. Interesting, Nate, that these are all American entries.

Weisshaar: Well, we do like to make a lot of noise.

Bennallack: Did you think that when you came to the U.K. that you were going to get away from some American politics for a bit?

Weisshaar: I had hope, but unfortunately they do tend to follow me around.

Bennallack: They do. You’re getting the international experience, by seeing how America is perceived. Now, Nate, what words have you got for us?

Weisshaar: Mine are related. It’s a phrase, “cartel bashing.” Nobody really likes cartels. The name has pretty bad connotations, especially in Mexico or Latin America, but I’m talking more specifically about the potash cartel.

You may not be familiar with these guys, but essentially there are five major global producers of potash, which is a very important fertiliser, necessary in all crop production. But the cartel that was based in Eastern Europe, between Belarus and a Russian company, Uralkali and Belaruskali were a team.

They were teamed up, and then something went wrong. Uralkali decided they were going to go off on their own and pursue a high-volume, low-cost model, which completely upsets the apple cart for this situation. Potash — which was once a very interesting industry because of its necessity for crop growing and the limited supply — took on a whole new meaning this year, which was very interesting.

Bennallack: I have to say, it does make me think of a kind of crazy version of The Godfather, where the heads of the potash families all come in. Maybe some of them are still a bit dirty from their time out in the mines and the like, but someone throws down a load of manure on the table and says, “That’s it. I’m going to take my boys …” Would it have ended like that? Was there a showdown?

Weisshaar: It did seem to end quite dramatically. The CEO of Uralkali was arrested on a trip to Belarus.

Bennallack: For breaking his own cartel?

Weisshaar: The charges were a bit trumped up, but he was also forced out of the company, and he’s now under house arrest back in Russia, and it looks like Vladimir Putin has pushed some people and pulled some strings, and is trying to get the cartel back together, so it’s not farfetched to call it a Godfather scenario.

Rogers: It does sound like that, doesn’t it?

Bennallack: It’s quite worrying for Russians, I would have thought, if the cartels are falling apart; it’s a terrible precedent. What’s your second word?

Weisshaar: The second one is OPEC.

Bennallack: Another cartel, some would say.

Weisshaar: Yes, which has also seen its sway weakened dramatically because of the record high oil production in the U.S. out of the shale oils and various other production. OPEC, obviously, would like to keep oil prices high; not too high, but high.

With the U.S. being one of the major oil consumers in the world, the fact that their oil production is hitting a 25-year high right now really puts a pinch on how much pricing power OPEC still has.

Bennallack: Is Iran a member of OPEC, actually?

Weisshaar: It is.

Bennallack: Okay. I am slightly disappointed, Nate, because I did think that you would mention the drones.

Weisshaar: Yes, but I don’t like to pander to the audience.

Bennallack: We were going to talk about them in the last podcast. It was my fault; I forgot them, the drones delivering the Amazon business. That sounds to me like it could be a big word for 2014.

Weisshaar: I think that would be more appropriate; 2014, the Year of the Drone. Ominous.

Bennallack: The Year of the Drone.

Rogers: That’s really terrifying.

Bennallack: Well, we are marching inevitably towards our robot futures and I, for one, welcome … they’re well joined. Thank you, Mark.

Okay, well, for those reasons and for others — possibly not for the PR stunt that was Amazon’s drones — the main developed world stock markets were in a pretty cheery mood this year.

In fact as we record this podcast, the U.K.’s FTSE 100 is up just a bit less than 10% for the year, if you don’t count dividends; pretty nice but no cigar because, as we speak, the German DAX index is nearly 20% higher, U.S. is up about 25%, Japan is up almost 50% if you happen to be buying it in yen terms. Unfortunately, we have to use our own money, so our returns won’t be quite so good, given that they’ve managed to devalue the yen. Even Italy; poor old Italy — more Godfather allusions, perhaps; was he from Italy?

Rogers: Sicily.

Bennallack: Sicily, yeah. That’s 13% higher.

On the other hand, emerging markets have had a terrible time; Brazil, Russia, many other emerging markets, they’re all down sharply.

Weisshaar: Yeah. They’ve fallen quite a bit too. Part of that — as you alluded to Japan weakening the yen — the emerging market currencies also weakened dramatically, so for a British investor it’s kind of a double whammy. The markets sold off, but the currency fell off a cliff to, so your Brazilian investment property probably isn’t quite as valuable as it was six months ago, Owain.

Bennallack: It is a shame, but it has got beautiful views. I think, also, it’s perhaps that some of the money that has left those emerging market territories was kind of “hot money” that can’t afford to ride out currency volatility because they’re reporting regularly to their investors.

Weisshaar: Well, and they’re always pursuing the next thing, so once the shine comes off of that penny, they’re moving on.

Bennallack: What does that tell the likes of us, as ordinary Joes? Doe this mean that it’s risky to put your money overseas, or is this in fact prima facie evidence that you should put it overseas, because by spreading it around the world you get some of the winners and ride out the losers, and vice versa in the future?

Weisshaar: Obviously by investing overseas you add at least one level of additional risk, and that’s currency risk. We’re seeing that play out now. But I think the bigger benefits provided by diversification and exposure to markets that are growing or have the potential to grow much more rapidly than, say, the U.K. over the next decade far outweigh the short-term swings that we can see in currencies.

Bennallack: Do you think that that’s something that the average investor should start? Analysing and reading geopolitical magazines and trying to figure out if Chile — Chilé, as you guys say — has the edge over Bangladesh; or should you just invest passively or with a fund manager?

Weisshaar: The fund manager is the safer way … or, not safer necessarily, but you’re outsourcing your analysis that needs to take place there to someone else, because it is a lot of work to figure out which economies are going to necessarily do well, one year to the next.

Bennallack: And of course you have to figure it out before everyone else, because if you go in too late, you pay a high price.

Weisshaar: Yeah, but to that point, you could also do it not just through fund managers, but finding London-listed companies that have broad exposure to these emerging markets.

Bennallack: That’s a good segue that you’ve fed me there, Nate, like the professional you are, because Mark, correct me if I’m wrong, but you’re mainly invested in what can only be described as a handful — and maybe a child’s hand at that — of U.K. shares, plus you’ve got some of Warren Buffet’s Berkshire Hathaway, of course; quite a lot, I believe.

I suppose you might argue that you know your companies better than you can judge the prospects for France, Indonesia, or even Colombia.

Rogers: Yeah, it’s funny. Like you say, the brunt of my holdings are actually across Berkshire Hathaway, which is a giant conglomerate, and another company called Dewhurst, which is a very tiny, $20-odd million market cap enterprise.

Despite them being vastly different opportunities, they actually both generate the majority of their revenues from overseas, so even an old-fashioned investor like myself can’t afford to just ignore what’s going on overseas. You do have to keep up with things that are going on there; whether or not Europe’s slowing down, China’s slowing down, whatever else. It is going to affect those businesses, whether they’re listed over here or in the States like Berkshire Hathaway.

Bennallack: You’re not tempted — and I speak here as the wise and scholarly older figure — you’re not tempted to see it as a free lunch, to put some of your money directly in a couple of other countries and get that diversification benefit, which we’re often told exists?

Rogers: Well, I don’t think it’s necessary to go after that. I do understand the argument there, but I think you can pick a diverse range of companies I the U.K., or in New York. There’s tens of thousands of companies out there that you can pick from and, like I say, they’re doing their business around the world, so it doesn’t really matter if they’re reporting here or their headquarters are there. If they’re doing business globally, then you can take advantage of these things.

Bennallack: I am tempted to keep arguing, because there’s Russian companies that are doing business around the world, and yet the Russian index is down a hell of a lot, so clearly you can still get swings and roundabouts.

Rogers: Oh yes, certainly. As well as that, I think the currency point is important as well. Let’s say you have particular worries about the purchasing power of the pound sterling. If you feel that it would benefit you to have multiple currencies — Berkshire Hathaway’s obviously denominated in dollars — there are currency aspects to it as well, of diversifying out of the pound.

Bennallack: Okay, well all this navel-gazing brings us to 2014 and what we think it might have in store. I’m afraid I’ll burst the fun balloon right away and say that research shows near zero correlation between returns in one calendar year and the next.

In the U.S., for example, going back to 1971 the correlation from one year’s returns to the next is negative — minus 0.07 — so basically it’s zero. I guess that’s no surprise, given that a 12-month year, as we said, is kind of arbitrary. But it is a useful reminder, given our animal instincts to think that strong returns in one year must mean that the market will go higher next year; or, depending on whether you see the glass half full or empty, it might crash. Perhaps it’s better that we might think about events in the economy in 2013, Mark.

Rogers: I’d point out, first off, that it is fairly futile to try and guess exactly what’s going to happen in the short term with markets. But that being said, an improving economy isn’t going to hurt corporate earnings or valuations. Forward-looking indicators, like the PMI surveys, are pointing towards a buoyant start to 2014, so you do have an extent to which there’s a positive economic momentum going into the next year, which again can’t harm corporate earnings and valuations, all else being equal.

Bennallack: Nate, what do you expect from 2014?

Weisshaar: I’m going to have to refer to one of the wisest men I’ve read recently; local boy done good, Dizzee Rascal. When asked how he was going to pursue his career as the music industry starts to struggle, he wisely said, “I’m just going to get on with it.” I think that’s pretty much what the stock market is going to do.

Bennallack: Can I just say, I don’t know if you’re familiar with all his work, but he rose to prominence, Mr. Rascal, with lyrics that went, “Some people say I’m bonkers,” so maybe you shouldn’t take every word he says as gospel.

Weisshaar: Well, that seems to be working for him, though, doesn’t it? I think we’re going to have headlines. European banks have not been sorted out. They’re doing another stress test this year, and that could cause some issues. The tapering will probably actually start to take place, and we’re going to have headlines like we have in the past year, but I think strong companies, and the companies that we’d like to be invested in, are going to just get on with it.

Bennallack: Okay, well I think that’s a good time for us to move on to the last part of the show, which is of course where we look at some of those companies that we think might do well.

We’re going to have a punt, and realistically it is a punt, because nobody really knows what shares are going to do, even on a 12-month basis, but we’re going to have a punt on shares that we think could do well in 2014.

Mark, what fine wares will you be touting today?

Rogers: Right, so 2014. The first thing that comes to mind is the World Cup in Brazil, coming up this coming summer. We also have the Commonwealth Games in Glasgow to look forward to, and the Winter Olympics as well, so I’m going to be giving a sporty choice as my 2014 pick.

Bennallack: Nice.

Rogers: The company is Sports Direct, founded by Newcastle United owner, Mike Ashley. Sports Direct is being really disruptive in sports retailing over the last few years. They’ve just announced results showing 20% growth in profits and sales, they’re expanding internationally, and it’s really surprising for a stack ’em high retailer. These guys are achieving margins of 9-10%, which is pretty impressive, and it’s trading at 19x forward earnings, after a recent sell-off in the shares.

I think it could potentially be an interesting entry point for a company that is a bit of a disruptor, and an interesting retailer.

Weisshaar: As you say, Sports Direct has been a bit of a disruptor, and perhaps too much so. They’ve apparently upset the folks at Adidas, who are refusing to allow them to sell Chelsea’s new kit.

Rogers: Yeah. I would point out there is kind of an underlying element here; I’m not saying this is related or anything, but Newcastle United — like I say Mike Ashley owns them and he owns 64% of this company — Newcastle United ditched Adidas to have Puma do their kits last year, and I think there’s an extent to which Adidas can’t really afford to annoy Sports Direct too much. It’s odd thinking about it; the relationship, flipping it on its head, but these guys are the biggest sellers of sports kits around the world, pretty much. They’re not to be trifled with, themselves.

Bennallack: There’s a weird sort of mafia air to this podcast. It’s kind of strange.

Mark, I have a question — which, feel free to say you don’t know the answer to — butit just occurred to me when you said they were a “pile ’em high” retailer doing margins of up to 10%. How are they doing that, is the obvious question?

Rogers: Like I say, they’re undercutting everyone else, but because they’ve become the leader in this field, so despite the fact they’re undercutting everyone, they’re still selling sports gear — they actually have a couple of their own brands over here; Slazenger and Dunlop in the U.K., I think it’s the license to exclusively for the U.K., so they’re actually doing a lot of proprietary stuff on their own that’s produced their margins a bit.

Bennallack: Okay, well let’s see if 2014 is another good year for Sports Direct to come back from its wobble, because it’s been a pretty good performer over the last few years.

Rogers: It’s been a real growth story, so you have to avoid anchoring too much on where prices come from, and have a look at the valuation.

Bennallack: Cool. We’ll come back in 2015 and, if it’s gone down …

Rogers: Don’t shoot me.

Bennallack: We’ll literally chop Mark’s head off. It’ll be on a podcast; you won’t have to see any of the blood.

Nate, what have you got for us at the bottom of your Christmas stocking?

Weisshaar: It’s one that’s fallen out of favour with the markets just recently. It’s oil and gas service company, Petrofac. They essentially help oil and gas companies build and maintain their massive rigs and refineries.

They’ve fallen off the market good list because of concerns about jobs being delayed and pushed back, and earnings next year are expected to be flat. That upset quite a few investors, but I think the real story is in 2015 they’ve got a whole bunch of projects that are going to start becoming cash flow positive.

We should see, through the first half of 2014, whether or not they can deliver on the job wins that they think they can get, so by June we should be able to tell if the company will be able to deliver on its five-year goal of doubling earnings from 2010 to 2015. They think they can; the market has big doubt, but we should be able to tell fairly early into 2014 if it happens.

Bennallack: You obviously think they have a reasonable chance.

Weisshaar: I think the management team has proven that they know what they’re doing, and they have significant ownership in the company, themselves. It’s really a jockey play here, and I think that the company’s culture is such that they can deliver on this.

Bennallack: I have a question. A wise person once said to me — maybe 12 minutes ago — that OPEC was …

Rogers: It wasn’t Dizzee Rascal, was it?

Bennallack: It wasn’t Dizzee. It was a wise person who said to me about 12 minutes ago that OPEC was in trouble because of a massive boost in supply in the U.S. of oil and gas. Does that not worry you, with Petrofac, that they’re not going to get so much work developing fields, given that you can just stick a spade in the ground in the U.S. and put a fancy new pipe down there, and out comes some oil?

Weisshaar: If only it was that easy. I mean, yes, that’s obviously a concern. Falling oil prices would delay projects.

Bennallack: Because it makes them less profitable.

Weisshaar: Yes, that’s a big risk for them, but I think that currently we’re looking at a lot of the major oil producing reserves right now are declining. They’re mature, they’re declining.

Petrofac itself has gotten a lot of jobs helping national oil companies (NOCs, in the industry terminology) in Mexico, in Malaysia. They work with these government-owned oil companies to help them prolong the lives of these mature fields. These national oil companies have a different motivation than some of the oil companies you may be thinking of — Shell, ExxonBP, that’s the other one. They don’t have shareholders to answer to, and they have more national interests and national security at mind, so they’re motivated differently, and they will probably keep the jobs flowing very well for Petrofac.

Bennallack: And in many cases they’re the one with the crappier infrastructure that needs to be upgraded.

Weisshaar: Yeah, because of the less competitive nature of their industry, when they own everything, they just lack the skill sets that you find at Shell and Exxon.

Bennallack: That’s a much better way of putting it than I just did. Mark raised his eyebrows at my … I was using the industry jargon.

Rogers: Of course, yeah.

Bennallack: I’m going to go to my share now. As is my wont, I’ve been rummaging about in the rubbish bins; the sectors that have been chucked out for the dogs to chew on, but that might just have some life in them, or even a bit of a resurgence.

I’m going to suggest an investment trust that I hold that is definitely high-risk, but potentially high-reward. It’s called City Natural Resources. This is an investment trust, not very big. It has a market cap including its debt … enterprise value, I guess you’d say; that’s not really how you’d put it. It’s got total assets, let’s put it that way, of $150 million; probably a bit less, actually, since this fact sheet that I’m quickly cribbing off was written, because the share price has kept going down. It’s plunged over the last couple of years, because it invests in small mining companies, small oil companies; companies like Ocean Ridge, Pacific Rubiales Energy — I can’t even pronounce these companies — Bonterra Energy.

Weisshaar: Household names.

Bennallack: Yeah; even your hardcore oil and gas nutter would struggle to name some of these. It was always amusing because it was called a high-yield trust, because it hailed from a time when you bought resource stocks partly for the yield, whereas in the last few years they’ve been these almost growth stocks, that people have just bought for the capital gains.

But now it has fallen so far that the yield has really come back. I’m pretty sure it’s yielding well north of 4% now. I’m being slightly vague because literally the share price is oscillating by 3 or 4% a day at the moment. As always with investment trusts, you have a discount as well to the net assets, so the price you pay may be much less than the actual assets that are there.

This is definitely a high risk one, but it tends to be very geared to the mining, the extraction cycle, so if you were to plot it on a chart against BHP Billiton, this one looks like it’s on steroids. It really goes up when the majors go up a bit, and then it plunges — as is happening now — when they go down. I think it’s an interesting way for a private investor to put a tiny bit of money in and maybe get an extra bang for their resource allocation buck.

Rogers: Is there a risk, Owain, that a lot of these smaller exploration companies etcetera, are actually loss making? Is there a risk that you’ll end up owning a very large basket that’s trading at a discount, of companies that are essentially destroying value over time, instead of compounding their wealth over time? Is there a risk of that?

Bennallack: Yeah, there’s definitely a risk of that. We saw it in 2008, when lots of hedge funds blew up, pretty much, because they owned small resource companies; an investment trust is slightly different, in that it can hold onto them. If people sell the investment trust, it doesn’t mean the manager has to sell these things; he can hang onto them.

The other thing is, because it’s a dividend-based trust, it’s theoretically gone out and looked for companies that are providing some kind of income, so there’s some kind of cash flow.

Rogers: Are they still finding those? Is it not the case that — I really don’t know; I haven’t looked at these guys closely — but is there a risk that … we’ve seen a lot of these companies come to the market, smaller resource companies that just plain haven’t been profitable, but because there’s been a real glut in, shall we say, investor demand for them in the last five years, they’re really popular with private investors?

Bennallack: Yeah, as I say, this is not called the City Natural Resources Capital Growth Trust.

Rogers: Right.

Bennallack: They have had to go out and at least have a nod towards companies that pay a dividend. If companies pay a dividend, legally, theoretically, they’ve got profits and cash flow. The one caveat to that is some of the income that they pay out comes from some preference shares, including in strange things like U.K. building societies, so it’s not all being derived from their portfolio of mining and resource stocks.

But I think if you’re going to look for a manager that has been biased towards companies that are making some kid of money — maybe not a lot at the moment — then these guys are probably a fair bet.

Rogers: It could be an interesting diversify bet on having a basket of these guys at a discount, as well. I think it’s interesting.

Bennallack: It’s really interesting, if you look at the resource mix. You get exposure to gold, palm oil is quite big in there; lots of things that are quite hard to access as a private investor, without making decisions and then being scared.

I was invested in commodities earlier in the year, and I find them really volatile. The nice thing about this trust is, you can have a trust that’s really volatile instead, but at least you get paid to wait for the income.

Okay, I think we’ll call it the end of the year here, officially. If you’re listening to this and there are still some days left until the end of 2013, stop! It’s all over! We’re calling the end. We’ll see you in 2014.

Rogers: Happy holidays, everyone.

Weisshaar: Happy holidays.

Bennallack: Happy Christmas and New Year. I’ll say it, old fashioned gent that I am. It’s the American influences getting to you, Mark.

Rogers: It’s politically correct.

Bennallack: I guess so. All right, see you guys.

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