The FAANG stocks; Apple goes from strength to strength; and the open question of Telstra’s future.

This week in The Money Café, Supratim Adhikari and I discuss:

• Have we seen “peak facebook”?
• The FAANGs must be viewed separately.
• Apple might pass the one trillion valuation mark, despite being overtaken as the world’s second-largest smartphone maker.
• Does Andy Penn now want to take Telstra back to the business of communications?

Hi, I’m Alan Kohler, Publisher of The Constant Investor.

Hi, I’m Supratim Adhikari, Technology Editor at The Australian.

And we are The Money Café.

The Money Café.

Yes, we are.  We have the special guest, Supratim Adhikari, as you just heard who is replacing James Kirby who is in his final week of leave in Ireland and other places like that.  Supratim used to work for me at Businesses Spectator and Technology Spectator, and is now El Supremo at The Australian in technology.

When it comes to technology I guess I’m El Supremo.

The IT Editor of The Australian is a big position so congratulations to you, Supratim, for having that.  It’s great to have you on The Money Café.

Thank you, Alan, it’s great to be here.

There’s a lot going on in your world at the moment so we need to get straight into it and I also need to note just briefly we were going to have Sue Neale, who is The Australian’s rural reporter, with us this week but in fact Sue is out there covering the drought in New South Wales which is terrible and she is very busy but there’s plenty for you and I to talk about. 

There certainly is.

Including the apparent meltdown of some of the technology stocks in the US.  I guess let’s start with Facebook, have we seen peak Facebook do you think?

Well if you look at how the share price has reacted of late you’d think that this is the beginning of the end for Facebook and the social media empire created by Mark Zuckerberg but I don’t think we’ve hit peak Facebook.  I think what we’ve seen, though, is a very distinct shift in how this company is going to be judged, how success is going to be measured at this company.  Essentially it is a company that is now striving to create more transparency around how it works and that is a good thing in the long run.

It’s going to cost money, right?

It’s going to cost money, it’s going to cost Zuckerberg a lot of money and it’s going to cost investors a bit of money but I think it is something that over time the market is going to factor in and I think as an investor if you’re a long term investor you would be looking to factor some of this in.  Any business that’s really driven around data right now, which is whether it’s data collection, data harvesting, and then trying to create an outcome for the public right now everyone is going to get this sort of rebalancing of what they need to do, what their responsibilities are and how they create the channels of consent between their users and the platform.  That’s going to be a rebalancing, it’s going to cost them money but it doesn’t mean that these businesses are on their way out.  If anything they may emerge stronger from this.

I know that every time Facebook shares have fallen in the past it’s been a buy because they’ve just gone up and beyond what they were previous peak.

I think for long term investors people will still be buying Facebook, year.  There is absolutely nothing that would say that you should not buy this business because of what’s happening because the fundamental pressure on Facebook now is that it needs to be more accountable, it’s business model needs to be more transparent, it needs to show more accountability to its customers and to regulators around the world and that’s essentially a good thing for a business.

The other thing is that the Facebook drop of 20% on that day when its results came out caused a bit of an earthquake right through the whole Nasdaq and the other technology stocks – I mean, Netflix was down a fair bit, Twitter I think has got its own problems and also it’s not really regarded as one of the FAANGs because it’s too small.

Yeah, Twitter is definitely not in that territory, Netflix certainly is although what’s really interesting is it’s really important that we sort of unpack the FAANGs to some extent and not see technology stocks as this one homogenous group.

A lot of people were investing in a FAANG index, they had ETFs just on the FAANGs which is Facebook, Apple, Amazon, Netflix and Google.  I think some people chucked in Microsoft.

A revitalised Microsoft is trying to, I guess, reassert itself within that space.  We know there are some clear winners who have got a very different trajectory to other businesses.  Facebook is on a certain trajectory, Amazon is on a completely different trajectory, Google and Netflix and even Twitter to some example or even Apple, they all have different dynamics and they’re all in a different stage of their business maturity and that’s what’s really important because the problem with Twitter and Netflix is they’re purely judged on one particular metric and that’s very much about continuous growth of their customer base or subscriber base.  If you make that the sole metric through which the health of a company or a technology company is judged well then you’re clearly going to run into turbulence because there are certain plateaus to how quickly you can grow your customer base or how long or where do you get your next customer base from.  For Netflix that is a big issue because it’s kind of made a big play to become a global international player, it’s in lots of countries right now but the benefits of that global expansion is still going to take some time to trickle in and that’s an issue. 

On top of that you’ve got a broader issue around Netflix’s competitors, the traditional media houses and the telecom companies in the US especially, cable TV, they’re lifting their game, they’re getting more powerful as well, they’re building new content, they’re building streaming platforms, they’re taking on Netflix.  With Disney being this incredible entity in the media world with the IP, the copyright that it holds to many popular franchises that creates a long term risk projection for Netflix because what happens when Disney comes into the market with the top notch streaming platform at a competitive price with all of the content that it has access to.  That creates a long term issue for Netflix.

Maybe Netflix is a sell, maybe we have seen peak Netflix.

It comes down to Netflix’s strategy to create its own content.

It’s pouring huge amounts of money into content.

A lot of it has very questionable merit but I don’t think that’s the point right now for Netflix, they’re just throwing everything at the wall and seeing what sticks.  It’s because they’re quite cognisant that over time they’re going to have to fine tune this machinery of creating content.  If you think about it it’s an incredible transition for a company that started off trying to sell DVDs in the mail.

I know, that’s right.

To take on video companies and your Video Ezys and your Blockbuster Video to where it is today.  It has a creative team, it has a conceptual team, it’s now a bona fide producer not just of content in Hollywood but across the globe and that’s an enormous challenge.

Just one more thing before we move off from this subject, what about Apple about to break a trillion USD market cap?  They’re up to 935 billion last night, they seem to be about to win the race to a trillion.

They are going to win the race, they’re within striking distance and what’s fantastic about it or what’s fascinating about it is it really shows you where Apple is as a company.  It’s actually a company that’s no longer tied to the core dynamics of whether its products actually sell or not and I think that’s an astounding thing for a company.

What do you mean?

Apple is selling less phones than it ever had in its history, it’s recently been outpaced globally by the Chinese phone maker Huawei.  Huawei obviously makes a lot of different things but it actually makes very high quality phones now and they’re selling like hotcakes across the world.  Apple actually sells less phones.  It’s always maintained very high margins for its phones so you sell less phones but when they’re priced at $1,000 a pop you’re still raking in a lot of money.  What’s really helped Apple, believe it or not, is Donald Trump and the Trump Administration’s tax policies.  The cut to corporate tax in the US has been very beneficial to Apple, the cut to the repatriation tax rate which is up at around 15.5% now has actually incentivised Apple to bring more work into the US, to pour more money into US through share buybacks and that’s brilliant, it’s working brilliantly for them.

Let’s talk about Telstra for a minute which had a management reshuffle.  I would be interested to know what your view is.  I noticed that John Durie, I think, called it a deck chairs on the Titanic or something approaching that.

I think it’s a little bit easy to characterise it and frame it in that way because I was personally quite interested in the fact that this is clearly Telstra’s CEO, Andy Penn, essentially reinforcing his presence at the top, he certainly wants to stay here at the top.  He has made it very clear that Telstra means business as part of its strategic change or the change or the change in direction that he wants to implement into the company and I think it’s one of the biggest sort of senior management overhaul for a company that hasn’t really been affected by any single particular point of failure, a regulatory or from a consumer perspective.  I think it buys Andrew Penn some time to go through his strategy of what Telstra needs to be and I think my personal view is I think Andrew Penn wants to take Telstra back to what it was which I know sounds kind of counter-intuitive to all the messaging Telstra has put out there over the last year and a half.

It can never be what it was because the NBN has got its network, it has to be something else.

It’s true, it won’t have the fixed monopoly, it can’t be the wholesale player and the mobile operator.  I think if you look at the messaging coming from Telstra right now it wants to go back into the business of being a communications company which is having an incredible mobile infrastructure, the spectrum, the kit and the reach to really become the company that gives Australians mobile connectivity.  The wholesale market, the fixed line market…

I think they’re dreaming to be honest.

We’ll have to wait and see.

I reckon they’re dreaming and I think that I’m in the deckchairs camp.

The mobile market right now we don’t really know what the mobile market is going to look like say by 2020.  I think from a regulatory perspective, from a business model perspective, you can untie the…

Isn’t it going to be 5G at some point?  I don’t even know what 5G is and what’s good about it.

Essentially 5G allows mobile networks to have incredibly higher amounts of capacity on them and that’s very important.  That’s the clear benefit from a consumer perspective, that’s a clear benefit which means the days of having your mobile data limits being 5 gigabits, 10 gigabits, 12 gigabits – it will all become irrelevant.  You will have 40 gigabits, 60 gigabits, 100 gigabits of data quotas.  Data will cost nothing so how does a telco make money from its services, how does it stand out from the competitor?  Only through the strength of its network.

But everyone is going to have a strong network.  It’s basically the ticket to entry, really.

The thing is Telstra still has its network footprint is still bigger than its competitors.  At the end of the day it won’t just be about the network footprint, it’s going to be about how do you tie your mobile infrastructure to the fibre back home that you have.  Telstra has the most amount of fibre running through this country than anybody else.  That really is going to matter in a world where data means nothing so I think this whole stuff about we’re going to be a technology company, we want to be a media company, I get a distinct sense that Andy Penn is trying to take all of that.

They gave up on being a media company long ago.  There was a time I remember when Ziggy Switkowski was running the business that he tried to persuade the board of Telstra to buy Fairfax and the board knocked him back.

What a world that would have been.

That’s right because I think that would have been 1998 maybe, I don’t know, it was a long time ago.

I think for Andrew Penn he has definitely bought himself some time now but by this time next year as we head into full year results for Telstra if there isn’t a marked improvement or a level of stability in the mix of Telstra’s earnings right now I think he won’t be around.  Who takes over from him is a different question altogether.

Apparently it’s going to be Robyn Denholm, the director of Tesla.

Maybe, maybe it could be CEO of the Year, Michael Ebeid, you never know.

Who?

The former SBS.

Him, yeah.

He has done an incredible job at SBS, I think he ticks all the boxes so there is that.  I think it’s nice to draw that comparison between Telstra and Tesla and whether Robyn Denholm is…

Well, Tesla is just missing a T.

It’s really interesting, I think Michael Ebeid’s move into Telstra has been very interesting.

Let’s move onto some questions because we’ve got tonnes of questions, everybody, so we’re going to get through them.  Pete says hi guys, love The Money Café podcast, are you in a real café or is that background noise layered in post?  No, it’s a real café, we can even tell you which one it is which is Saporito Café in Kavanagh Street, South Melbourne.  If you feel like popping in when we do it on a Thursday afternoon we’d love to see you.  We can do it live to a little audience of people, that’d be fun.  Real question is I noted in your Q&A last week you spoke about the potential downside of ETFs being the liquidity during a GFC type event, does this same concern extend to investing in LICs or is that concern diminished because of their closed end structure?  It is diminished, Pete. 

The thing about an ETF is that if someone sells shares in the ETF or buys shares in the ETF the assets have to rise or fall accordingly so what happens is that if someone sells they have to sell assets and if someone buys they buy assets with an LIC which stands for listed investment company.  They have the same amount of assets and the same amount of shares and the shares go into a premium or discount according to the demand for the shares.  If people buy or sell the shares they don’t have to go and buy or sell assets accordingly so that at least gets rid of that problem but it is the case that if people are selling the shares, the LIC shares, that the share price can go down, they can go down a lot, there’s no doubt about it, but it isn’t the same kind of liquidity event that an ETF presents.  I don’t know if that answers your question, do you reckon that does, did you get that Supratim?

You’re the finance guru.

The question is did I explain it correctly?

I think so, yes.

Okay, good.  I’m not sure if any of these questions are going to be in your – I don’t think anyone is asking about technology, Supratim.  Maybe you should ask the questions and I’ll answer them.  You go next, you go and ask the next question. 

Well, our next question is from Rob who is saying he really enjoys the shows every week and as he drives home on a Thursday night.  Rob’s question, Alan, is in the event of a significant correction on stock markets do fixed interest investments within super funds necessarily hold their value or can they drop in value at the same time possibly to a lesser extent?

Fixed interest investments are driven by entirely different things to share prices.  The price of shares are determined by the profits of the companies which in turn is determined by the amount of sales they make and also there’s a lot of emotion and sentiment around that so in the market there tends to be a lot of heard mentality.  With fixed interest investments the value of the investment is determined by interest rates.  For example, you’ve got an interest rate investment, say it’s a bond of some sort that has an interest rate on it of 5% and if interest rates generally rise then the interest rate on your fixed interest investments will also tend to rise as well which means that the price comes down.  In order for the interest rate or the yields on a fixed interest investment to rise the price has to come down.  For the yields or the market interest rate on that thing to decline, to go down, then the price has to go up.  Basically the interest rate on a fixed interest investment is the inverse of the price and vice versa, the price is the inverse of the interest rate. 

Fixed interest investments will go down in value if interest rates rise, not necessarily because there’s a recession in the economy or the economy declines or because there’s a fall on the share market, so that’s really got nothing to do with the value of fixed interest.  Sometimes they go down at the same time as share markets because interest rates go up, that drives share prices down and it drives the prices of fixed interest investments down as well but they’re not tied together.

Rob, I hope that answers your question.  Speaking of interest rates, Alan, do you see a possibility – I’m sure you’re asked this question quite a lot but do you see a potential of the RBA ever moving the interest rates from where they are right now.

Ever is a long time.  Of course, they’ll increase interest rates eventually.  My friend, Stephen Koukoulas, thinks they should cut interest rates now because house prices are falling, because unemployment is relatively high, employment in general is weak and wages are weak.  I think there is a case for cutting interest rates, I don’t think that’s going to happen, I reckon that interest rates are going to be 1.5%, the RBA cash rate is going to be 1.5% in a year’s time in my opinion.

The issue of employment, I want to dig into that a little bit because we tend to have a very set marker around what’s our employment and what’s our unemployment rate, but the one issue that often comes up, especially within Millennials or young professionals, is the issue of underemployment.  They are working but maybe not in the most strictest or the most traditional sense of the word.  Does the RBA take that into account, are we taking underemployment as an issue seriously when it comes to policy making?

I do think the RBA and central banks generally have been too slow to adjust their thinking about these things.  A lot of the practice of central banking, the machinery behind central banking, is based on the supposed direct link between the unemployment rate and the unemployment rate and the inflation rate.  As unemployment rises inflation comes down, as unemployment falls inflation goes up.  That’s really what it’s all about.  What they often try to do, and you see it in the past, they cause employment essentially to rise in order to get inflation to come down.  They don’t say that they’re doing that but by putting interest rates up what they’re doing is actually targeting unemployment.  That relationship between unemployment and inflation has broken down because of the reasons you’re talking about, because actually underemployment is more important than unemployment these days.  I actually think a lot of it has to do with what you would call the gig economy.

Yeah, I think technology has been a huge driver in that.

I think the idea of people getting a job and sitting in the job for years is finished to a large extent and people are kind of doing their own thing now, they’re working as contractors, they’re working as Uber drivers, they’re counted as employed but they want to work more or they need to.  Also because of that wages growth is very low.  I think a lot of the problem is to do with technology and the impact of technology on the economy, that the people who are running the economy don’t kind of sufficiently, in my view, take into account.

One thing I do wonder about is whether policy makers, whether business leaders, actually understand what it is that technology has done.  We’ve seen it as they have created new ways for us to buy things, new ways for us to pay our bills, but there is something deeper going on here and that’s a behavioural shift which is very profound.  I wonder whether we fully take that into account.  Some of the controversy we see around technology companies, whether they’re crossing their remit, whether they’re exploiting people’s data, some of that, I think, is an illustration of some of these anxieties now coming to the forefront.

Better move onto the next question, you can read it.

Alright.  Our next question, Alan, is from Carl whose question is the ASX’s regular trading period closes at 4:00pm, however from 4:00pm to approximately 12 minutes after 4:00 there is a further period of price matching between buyers and sellers which produces final closing prices that can be quite different from the 4:00pm closing prices.  I think we’ve all seen that as young budding business journalists.  Share prices remain static during this price matching period called the closing single price auction by the ASX, as no actual trades take place.  The final closing prices are only displayed on ASX screen after the end of the final price matching and closing trades are executed at these prices.  Carl’s question is in this age of near instantaneous electronic trading why do we need a closing single price auction instead of simply stopping normal trading and taking the closing prices as they stand at 4:00pm?

I couldn’t agree more, Carl.  It’s absolute rubbish, I don’t know what’s going on.  It’s a throwback, fair dinkum, they ought to just get on, it’s just ridiculous.  Part of the reason I’m hot about it is because I’m trying to put together my ABC news thing and I can’t settle on closing prices until 4:10 and I need to get to the pub, I don’t want to hang around waiting for them to much around.

Alan, is this a legacy from the old days of doing things or is it just something that’s…

Yeah, and I think Carl is onto something.  We have got instantaneous electronic trading, we’ve got hedge funds trading in the milliseconds, come on.  We don’t have an answer, Carl, we can just say we agree with you.

Yes, whole heartedly so.  Alan, the next question is from Robert who loves the podcast, he stumbled upon it searching for information for Australian super and his question is related to super.  He is 29 years old, has $27,000 in super with MTAA and really doesn’t know what to do with it or how to make it work for him.  I think that’s quite a common issue among a lot of people within that age group.  He finds it terribly hard to be informed.  Robert’s question, Alan, is could you share any advice or measures with handling superannuation, things like how to make sure it’s performing and why he should be making voluntary contributions or should he be making voluntary contributions?

Robert, we’re not in a position to give personal advice on this thing because we’ll get into trouble with ASIC.  We can give general advice.  In general when you’re 29 you’ve probably got another 30 years to go, maybe even 40 depending on when you finish.  We’re talking about this is the long term, Robert, you’re in this for the long term.  All that matters is the compound rate of return over that period and the difference over the long term of 30 to 35 years, the 1% difference in your return can make over that period is enormous.  If your super fund is producing a return that’s 1% less than someone else, another super fund, then you’re really missing out over the long term, over the short term it doesn’t matter so much.  The difference between 8% and 9% return over a long term is huge.  I think it is important for somebody who is under 30 or anybody really to focus on the return you’re getting, that’s what it’s about.

Alan, just picking up on Robert’s point though…

I was watching your brow knit there, your brow was knitting.

I think Robert does have a point though when it comes to opacity around this information.  We’re living in a world which is full of data and an incredibly data rich environment yet for someone like Robert to essentially be very honest about the fact that he doesn’t have the information that he needs.

The returns for June, the year to June, came out last week, I think, from two organisations, one called Chant West and another called Super Ratings.  They look at the returns of all the super funds.  The top super fund for the year just finished was Host Plus which is the hospitality industry super fund and their return was I think for the year from memory 12.5%.  They were also the top super fund over three, five, seven and ten years.  I think it’s reasonable to conclude that Host Plus is the best super fund in the country.  MTAA is the Motor Trader’s Association super fund, so I presume Robert works for a car dealer or something and I can’t remember whether they were in the top 10.  The thing is, Robert and everyone else really, you’re employing these people to manage your money, it’s your money, you can take control of it in some way.  What you should be doing is getting a super fun to look after your money, that’s true, it’s no good taking your money out, 27,000, you don’t want to run a self-managed super fund now even if you knew what you were doing, it’s not enough money. 

You need to have it in a super fund, the question is what’s the best one.  I think if you go onto the MTAA website you’ll see what their return is and has been, you’ll find their returns on the website.  If you then Google stories about Chant West and Super Ratings you’ll be able to find the other super funds’ returns and then you can make a decision whether it’s worth your while moving the money into another one, that’s really kind of it.

I think the message is, Robert, that you have to be empowered, you have to take control.

It is the case that past returns are not a reliable guide to future returns, that is true.  Just because Host Plus or anyone else has had a good return for the past year or 10 years doesn’t mean that’s going to happen in the future so that’s one thing you’ve really got to bare in mind.  However it is the case that past returns are all you’ve got.  You can’t know the future but you can know the past and somebody who’s had a good return for a long time knows what they’re doing.

Alan, it’s like with most things in life, there’s never a clear cut, there’s no guarantees in life.  I think the best you can do is keep your options open and be empowered and really I guess put in that legwork that you need to make the best decision that works for you.

Okay, next question.  Anthony says I was reading an article a few weeks ago that said mortgage holders’ repayments could almost double on the interest only loans, the graph showed an interest only loan switch to principal and interest, and four rate hikes would send monthly repayments from 1,900 to 3,450 based on a $500,000 loan.  With so many housing affordability issues coming to a head including this scenario I feel that a massive housing downturn is imminent.  What are your thoughts on where housing is going in the next two to three years?  I agree with you, Anthony, that house prices are going nowhere but down over the next two or three years.

Alan, as a new home owner that’s not what I want to hear but I think it’s hard to look past the fact that…

Yeah, but you’ve bought your new house not just for an investment over the next few years.

That’s true.

You’ve bought something to live in.

I have, I have indeed.  It does seem to be the trend right now, we saw some results come out yesterday to Core Logic as well which is showing this downward trajectory.  I guess the question, Alan, is this a correction because the market was so overheated or are we seeing truly all the ingredients for a structural downturn in housing prices because the impact of that will be profound.

The normal cycle for house prices ion Australia is that they go up shedloads and then come down about 10%.  So far we’ve seen Sydney prices fall by 5.5%, Melbourne prices have fallen by about 3% from the peak.  The fall in Melbourne is beginning to accelerate.  At this point you’d say okay, where in a normal cycle and we’re probably going to have 10% or 12% decline in house prices over the next couple of years.  However the one kind of caveat on that which Anthony alludes to is that debt is higher now than it’s ever been in the past.  The reason you get bigger house price falls than 10% or 12%, which by the way Australia hasn’t had since probably 1890, America had an average price fall of around 30% to 35% in 2007-08.  The reason that happened is because a lot of people had to sell their houses.  The question is is that going to happen here, will people have to sell houses?  It’s possible for the reason that Anthony alludes to which is that there’s quite a few interest only loans, not that many go to principal and interest over the next couple of years which will increase people’s repayments.  Maybe a few of those people won’t be able to afford them and have to sell their house, and they’ll put it on the market at a fire sale price which will cause prices to come down.

The reason I think that they’re reasonably optimistic is that the number of interest only loans is not that enormous, it isn’t like half the market is interest only.

Alan, what about the composition of the housing market.  I think that’s undergoing quite a distinct change as well, isn’t it?  I think compared to 10 years ago or 15 years ago to where the market is today I don’t think we have seen this kind of boom in apartment living, the kind of townhouses, so that very traditional sense of what an Australian home should be is undergoing a bit of a disruption and transformation as well.

Yeah, we’re getting a lot of units and apartments being built, that’s true.  A lot of the rise in house prices has been to do with immigration and the growth in population, we’ve been on about in this podcast for a while now talking about what an important factor in the economy population growth has been, particularly on house prices.  What that means is that at the lower end of the market cheaper houses aren’t falling much at all.  In fact, in Melbourne the bottom 25% of houses have not fallen.  All the falls in price are at the top end and at the top end you’re seeing big falls, like 20% and 30% falls.  It’s actually kind of invalid to talk about the market as one thing because there’s lots of different markets there and the top end of the market has already fallen a great deal and is not being supported by immigration because the immigrants don’t go to $5 million houses, they’re looking for $500,000 apartments.  It’s a whole different market.

The current pressure on house prices doesn’t necessarily mean housing affordability or the issues or concerns around that are going to be fixed any time soon.

The other thing is that I got a question the other day from somebody saying how come everyone regards falling house prices as bad, everyone goes how terrible it all is, actually it’s good.  We’re having a housing affordability problem in Australia and now it’s getting fixed.

Alan, one more thing about housing just with regards to not the actual purchase price or as a home owner what implications do you see of what’s happening in the housing market right now on rental affordability and the rental market?

Well, rents are holding up so I mean maybe there will be a delayed reaction I the rental market but at this stage rents are holding up.  Rents are coming down a bit in Melbourne and Sydney, I think.  I note that the rental yield in Darwin – I’m just trying to remember, it was 6% or 7% rental yield in Darwin but in Sydney and Melbourne it’s coming down.  They’re still holding up more than house prices.

Alright, I’ll move to our final question.

One more question.

It’s from Wendy who also loves the show.  Her question is around managing life insurance, obviously again a very important topic to many Australians.  Wendy is saying the industry funds have a standard $100,000, this won’t go close to covering a mortgage so she has increased hers to $300,000, her cover, and this means an increased contribution to her fund gets sucked up in premiums.  Wendy’s question, Alan, is if she should contribute more or get a policy outside of her fund or find a new fund?

You absolutely should maintain your contributions to super.  Yes, you should increase your life insurance, I think you’re absolutely right, Wendy.  $100,000 standard life insurance in a super fund is not enough, it may be for some people and it depends what you want your life insurance for but if you want your life insurance to cover the mortgage so that your family is okay, so your family doesn’t have to sell the house if you die – from my personal point of view that’s why I’ve got life insurance.  You’ve got to tailor your life insurance to the purpose that you have but then you don’t want to have the life insurance sucking up your superannuation contributions because that will bugger you when you retire.  You’ve got to maintain your contributions and regard life insurance as a separate thing, that’s a separate cost.  You can put life insurance through super for tax reasons and that’s probably a good idea because you’ll get some tax deductions, better tax deductions, if it goes through super but regard it as a separate thing to your superannuation.  Your superannuation you need to think about separately as a strategy for your retirement and you’ve got to make sure that you keep the maximum you can going into super and look at life insurance as something different.

Alright, Wendy, I hope that answers your questions there.

That’s where we’ll leave it today, Supratim.  It’s been an excellent session, great to talk to you.

It’s my pleasure, Alan.

Good to catch up with you again.  Now, everyone, Supratim is a chef actually.

In a previous life.

In a previous life when we hired Supratim he was a cook, or do I call you a cook or a chef?

Cook, I like to cook by the terminology, a cook.

But you were in a restaurant, you decided to be a journalist and I hope you don’t regret that decision, I don’t think you do.

I don’t think so, I think I learnt a lot in the kitchens, I was very fortunate to work with great people.

At least being a journalist you get to sit down. 

It’s good to be on the other side.

Yeah, because as a chef you have to stand up all the time, right.

Yeah, that’s true. 

You’ve got to have the knees for it.

That’s true.

I know you’re a big fan of Master Chef and now you haven’t been able to watch it lately.

I haven’t been able to watch it lately.

You didn’t watch Sashi win the other night which was terribly exciting?

No, I didn’t.  I know, I’d seen halfway through the show before I stopped watching.  Obviously it’s a great achievement for him.  I think the one thing that irks me a little bit about these shows, and I think that’s a little bit of my own prejudice as someone who has cooked in the real kitchens, is that I would love to see some of the alumni from Master Chef to actually get into the hard yards of being a cook and not really chase that cook book, because god knows there a plenty of cook books out there already.

That’s what they all end up doing, isn’t it?

That’s what they do.  I’ve got to say I still have a lot of friends in the professional world of cooking and it’s changed a lot now but to some it does seem like a bit of an infantilising or making this world of cooking fashionable.  To be a real cook or to work in a real kitchen environment it’s a lot more than the kind of hand holding that you’ll get within that environment.  It’s a rough world, you’ve got to really invest your time.

Master Chef is a TV show, that’s it.

That’s what it is, and a good one.

Don’t forget everyone you can subscribe to The Money Café on Apple Podcasts or your app of choice, while you’re there it’s helpful, as always, to leave a review or a rating.  Send a question in, we’ll answer it next week, e-mail the question to hello@theconstantinvestor.com.  Until next week, I’m Alan Kohler, Publisher of The Constant Investor.

I’m Supratim Adhikari, Technology Editor for The Australian.  Thank you for listening.