GYG IPO, Impact of US Elections & Terra SEC fine.

In this episode, Parth and Abdul discuss the biggest IPO in Australia since 2021 - Guzman Y Gomez. They also dive into the European IPO market, discuss the two candidates for the US elections, and last have their usual crypto chat.

Episode Transcript

(00:00):
Okay, welcome back to the InvestorsDerry podcast, where we help you work

(00:06):
smarter and harder by providing weekly orbi weekly market updates and insights. And
today's topics of interest are quite interestingones and that I've been reading about for
the last couple of weeks. Sowhy not let's start off with the upcoming
US elections that will be taking placein November of this year, and just

(00:29):
to dive right into it without toomuch holding back since we have it away
for quite a while. The twomain candidates, as we I think we
all predicted were an are Joe Bidenand Donald Trump. So I'll do I'll
just toss it over to you.Now, what do you do? Yeah?
So, I mean the angle we'regonna go at this is can we

(00:52):
predict how the markets are gonna moveif we have you know, Biden as
president or Trump as president? AndI think before we get there, I
think the point I want to makeis before you before we make any predictions,
it is very hard to predict howmarkets will respond to political changes.
And I think that the main reasonfor that is because markets It's not because

(01:15):
markets don't respond to politics. It'smainly because a lot of these things are
priced in way before it actually happens. And that's because you know, markets
are very smart about the economic consequencesof elections, you know, to the
dot. And the only time whenmarkets move when you have news is when
you know there are some genuine surprisesthat could have been or maybe near impossible

(01:40):
to predict, right or to anticipate. And when we look at the US
US presidential election, as you know, Parts said, we do have two
main front runners that you know,Trump and Biden, and it's pretty hard
to tell, you know, who'swinning. But I mean the general rule
from what I've read from you know, past history is you kind of look

(02:02):
at the polls in the swing states, right, and that's a good indicator.
And at the moment, Trump isahead, and he's ahead in all
these crucial swing states, and ifwe had to bet, it looks like
we are going to you know,just Trump is going to be the next

(02:23):
president. So Part I want toask, so then you know, back
to that question just some some youknow, some some intro before our discussion.
The question I think we're trying toanswer today is, you know,
can we trade elections? Right?Yeah, And that's a I mean That's
a tough one, right. Ido think that the sentiment on the street

(02:44):
is that Trump will win. Yeah, and the policies that he has been
announcing that he will implement have beenquite aggressive or interesting, to say the
least. I think one of theheadlines I recently read was that he was
going to remove all income time andmade make up for that deficit by increasing
tariffs, which sounds great on paper, but you just can't practically implement it,

(03:07):
right. It just and so thatthose are the kind of headlines that
I've been reading, which sounds greatto the average person who may not think
about it for more than a secondor just only read headlines, but when
you really dive deeper into it,you kind of understand that it's not going
to be functional or not at all, not at all. Yeah, I
think I think I touched. Yeah, I was just gonna say it.

(03:31):
But what else I found interesting aboutthe upcoming election cycle, moving a little
away from markets since we can't reallypredict who's gonna win, is how the
candidates have really changed their approach togetting voters attentions. Because, as I
think we've talked about it in acouple of hours before we have really entered

(03:51):
this creator or influencer economy where peopleare moving away from traditional sources of media,
and you know, influencers and creatorshave more influence and power over the
average person, Like just taking whywould much rot I do watch more YouTube
or Netflix or follow people on Twitter, and I value their opinion more than

(04:15):
a news reporter sometimes just because Ifeel like I know them more than I
know that the news reporter, right, right, And just a great example
of that was Donald Trump coming onLogan Paul's podcast on YouTube recently, where
he thought he made a few boldclaims without diving to it deeper into them.

(04:36):
He made statements such as how hestopped the pipeline from Russia into Europe
and how information wouldn't have happened ifhe was in the office and all those
claims, right, which are hardto really support because he wasn't in the

(04:57):
office, but also inflation probably wouldhave still taken place of being realistic.
Yeah, I think piggybacking. Andit's just been interesting how they're using influencers
and creators to really reach out tothe youth instead of going down the traditional
route. Yeah, and it's topiggyback off that I think. I think
that's very evident. I think,you know, with TikTok, I think

(05:18):
that's you know, you know,Biden's proposing to band TikTok because of you
know, the influence that has onthe younger generation, right, really has
huge inflance on you know, whatwe see. You know a lot of
things on the media's you know kindof uh is biased almost and you know,
the truth is exposed on TikTok andand with you know, influence the

(05:40):
platform, you know, uncensored platformswhere you know, they're free to speak
their mind. And like you said, you know, we connect more to
these creators than than a lot ofthese news reporters that are almost like puppets,
you know. But I think what'salso you know, hard to predict
is you know, Donald's Trump's behavioras well. I think you know,
he's said he was on the impulsive. You know, he is someone who

(06:03):
kind of I think follows the wayof public opinion very very you know,
very you know, I think itaffects him. Know, he's very public.
He's on social media. I thinkhe just opened a TikTok account at
the USC as well with Dana Wide. But it's hard to it's hard to
predict what he's gonna do on aday to day base, right, And

(06:25):
I think I think the general publicis almost kind of you know, losing
track on you know, whether ittake him serious but literally or you know,
literally but not serious. I thinkit's some of the policies he puts
out are kind of these stay blind, these these day blank destabilizing markets.
I think going back to let's sayhis policies, I think the biggest critic

(06:47):
or the critique that people are worryingare putting it forward, is a lot
of his policies are inflationary. Itwas kind of counter like, you know,
I think counter in true to sayingthat you know him in present,
you know him in the office,wouldn't have been inflationary. But going back
to what you said about him,you know, increasing tariffs right in theory,

(07:10):
you know this is inflationary. It'sjust to look at economics, you
know, something we studied in UNI, Right, it's all about the relationship
between supply and demand and prices.So tariffs, just to explain it for
the viewers, increase the cost ofimported goods basically, and the fact that
it leads to higher prices for consumers, right, And he also again wants

(07:33):
some tax cuts. But these taxcuts boost the spending power of individuals,
and what that does is it drivesof demand. So we have true types
of inflation, you know demand thatyou know, demand driven inflation, right,
And all this just increased levely theprices of price level in the economy.

(07:55):
And I think we can look backto back when he was in the
office. Do you remember when hehad that trade war with China where he
was imposed a lot of tires.I think it was a steel Not too
sure. But these are some ofthe things that he wants to implement again,
and history has shown these policies areinflationary. And I think looking back,

(08:16):
didn't he promise us a wall?He promised the US a wall,
right. I don't know how farhe went with that, but I'm you
know, in his in his campaigns, he's still very adamant on clamping down
on immigration, which would starve theUS of cheap sources of labor. And
I think this is huge because withBiden in presidency, immigration has been a

(08:39):
real big reason to why they've beenable to hold inflation down over the last
couple of years. And having youknow, big clamps on these immigration laws
would really starve you know, leadto label shortages, leading to higher wages,
and then that fallows to higher productioncosts, right, which means inflation.

(09:03):
So some of these are these aresome of the biggest policy changes and
things are he's putting forward which areinflationary. So that's something I think we
should take into consideration when you know, trying to gauge the markets and understand
where because the interest rates are tiedvery heavily to inflation. As we know,
interest rates really do move the markets. So these are all really interlinked.

(09:26):
And so yeah, I'm going tojump in here because like a pro
Trump podcast, which is no,no, no, why Trump would not
be great for the office. Butthat's not necessarily. I think we're in
the I think we're in the situationof the last of two evils for the
US electronically unfortunate for American citizens,I guess globally where you have to essentially

(09:52):
eighty year olds running for our officewhere we should really have one of dementia
possibly dementia, and the other youknow, who's a little erratic. But
just being like upfront out here,Donald Trump's claims. I don't think anyone
truly believes he will actually action ninetypercent of them, right, Like,

(10:13):
he's not going to eliminate income taxcompletely. He's not gonna Yeah, he's
not gonna complete building the wall.I think I saw one of his recent
policy ideas, which was every singlegraduate that graduates from an American university should
get a green card alongside his diplomaor her diploma. That's not gonna happen.

(10:33):
Let's be realistic. Yeah, that'stheir labor issues, just because of
how the how the country is structuredand how there how the university system works.
So it's not that Trump is goingto be bad, because I do
think that if Trump is elected,the markets will initially react positively. If

(10:56):
if we're going back to how thethe stock market will react, I think
it will be a general boost andsentiment at least for the first couple of
days if he'd win, and thenthe next couple of months will obviously depend
on how effective he is in implementingthe policy which he said he would,
which most likely he won't be thatsuccessful. I mean last time, last

(11:20):
time he won, I do rememberpeople saying it was horrible for markets and
that was very wrong, you know, So could it happened again this time
around? We will see. Butdo you want to jump to we had
a different sort of IPOs? Yeah, yeah, because ipils have been a

(11:41):
little dead for the lack of word, over the last couple of years.
We had COVID where there was notmuch capital market activity going on. And
then we had very high interest ratesfor the last well couple of years,
which also was not the best environmentfor companies to go public. And then
there were a couple of failed IPOsboth locally and by fail I mean there

(12:03):
wasn't much investor demand, valuations wererelatively low, and in a high interest
rate environment, most companies would likelyjust keep delaying their IPO, right and
as a founder, that makes themost sense to you. But locally,
just earlier this week, we hadone of the biggest IPO or not one
of these. We had the biggestIPO in Australia over the last three years,

(12:24):
which was the IPO of gyg OrGuzmani Goms, the Mexican fast food
chain which has nearly two hundred storesin Australia and a company Singapore or Japan
and a couple other countries in Asia. As well. Yeah, and I
I also before we dive into theirIPO details personal experience, I think last
year Gyg's food was relatively good,but I think their quality has gone down

(12:50):
in the last couple of months.Do you think I think for me,
I used to I used to befueled on GYG because it was literally just
two minutes from my apartment and endit was open twenty for seven. That's
like the biggest selling point for me, the GUG next to me. But
I mean, have I seen adecrease in quality. I've not been eating

(13:11):
GG as much, so I wouldn'tbe able to tell you. But yeah,
let's dive into the IPOs. Yeah. Their the iPod on Thursday earlier
this week at noon, and theyraised money at a two billion dollar valuation
from investors before going public at atwenty two dollars per share value, which,

(13:33):
by the way, I think marketconsensus around that was that the valuation
was relatively high, it was overvaluedcompared to what their earnings showed, and
it was relatively rich. But becauseGUG is a pretty well known brand in
terms of retail right like people inAustralia, no Gug. I think if
you live in Australia, you knowwhat GG is, and there was a

(13:58):
lot of retail hype and excitement aroundgyd Go in public because's like, oh,
it's like you know, it's theshop around the corner and there worth
two billion dollars and so on theday of listing, this was quite interesting
to watch since I was at theoffice watching the offer go live at noon.
The share price jumped from twenty twodollars which was the IPO price,

(14:20):
to thirty dollars straight away and itjust stayed there for the rest of the
day. I think it closed slightlyhigher than thirty and kind of aching.
What you said, it kind ofa surprise listening at twenty two because it
begin the company and forecasted a secondconsecutive loss net loss for twenty twenty four,

(14:41):
but then did forecast profits in twentytwenty five and outlined the plan to
match the current count Australian count ofMcDonald's stores. So that's something that's for
twenty twenty five. That's something tolook forward to. Well, what's telling
about about you know, this IPOlisting, As you know, reluse earlier,

(15:03):
the ip market has been relatively deadin Australia. And I think this
this, this listing does prove thatyou could list a bad company in in
in such conditions, right and perspective, Well, I wouldn't. I wouldn't
go as far as listen a badcompany because if it's a bad company,

(15:28):
right, like, the evaluation wasrich for what it was and the next
day so they listed on Thursday.On a Friday, the price did fall
down about five percent, but Ithink it closed around twenty seven twenty six
dollars, but still significantly higher thanthe the ip O price. But I
think whether or not it's sustains willwe'll only find it out realistically, yeah

(15:50):
or not. Personally, I'm ofthe opinion that it will see a decent
amount of short selling. Yeah.No, I didn't say bad. I
said it was a decent company inpretty dire situations. But I do I
do what's it called. I dothink it could could drop. But on
that there was another IPO that wasunsuccessful. So on the other side of

(16:12):
the table, the European IPOs GoldenGoose, it was a it's so it's
mass produce. What they do istheir selling point is a mass produce.
They mass produced worn out sneakers,and what they do is they get people
to wear them, stars to wearthem, and then sell them to public,
right, and this was going greatuntil the owner so they announced that

(16:37):
IPO and then kind of got coldfeet. And this is based in Europe's
Italian company. A lot of factorsto go into this. So when again,
IPO markets have been dead, Ithink globally, not just in Australia,
but just you know, due tointerest rates and also I think the
IPAL market in Europe, I thinkit's different. Culture is different, you
know, different markets have different youknow, risk appetite. So I think

(17:03):
Europe too, You're especially IPOs don'tdo too well in recent times and so
you so again accounting for you know, Golden Goose, there were a couple
of factors that kind of led tothe the kind of you know, the
them pulling out of launching IPO.You look at the luxury market for shoes

(17:23):
and clothing in general. Take Montclaire, they have been you know, as
another Italian company, right, andthey have been in too well, mainly
because a lot of you know,a lot of the market in China's disappeared
and so sales in China have youknow, gone that significantly, so a
lot of investors are not excited.And you look at so doc Martins is

(17:47):
another company, so it's a waybattery of it, so Permira. Permira
is a private equity company that ownsGolden Goose and owns other luxury and clothing
brands. They also owned Dark Martins, another company that they listed an IPO
for in twenty twenty one that didn'tgo too well for similar reasons, and
so this was pretty hyped. Ithink people were pretty excited in Europe,

(18:08):
especially for this IPO, but Ithink looking at what happened with their other
ipeo, Dark Martins, looking atyou know, the fashion brand industry,
luxury brand in industry, looking atthe IPO environment in Europe. But I
think it's also worth mentioning that justlooking at the political environment in Europe as
well. Right fact, I'm sureit played a huge factor, but also

(18:32):
just the fact that you know,the French president called surprises but action,
and I think there's also some onegoing election going on for the European Union.
Yeah and same for Yeah, samefor Richizuna. So all that has
recently caused a sellof in the luxurygoods stocks, LBMH, which is Louis

(18:56):
Bouton moncl So all those stocks haveseen a little or sell off recently.
So I think that, combined withall the other facts that you mentioned,
was the reason they called it offdespite the IPO being oversubscribed by I think,
you know, it's kind of it'skind of embarrassing to pull the plug,

(19:17):
but in the grand scheme of things, I think it was the right
decision for you know, you don'twant a disaster for an IPO, so
I guess yeah, so we dohave a successful local story in Australia and
then you know, kind of internationalI'd say an IPIO that didn't hit the
market. Uh. I think wemight jump to some crypto some crypto news.

(19:44):
So if you guys are familiar,I think we talked about ft X
back last year. Run the lastyear, we spoke about it again you
mean Luna, no, no,no, but like at these kind of
linked right right same time period.This has happened around the collapse of Terror
Labs and FTX, so right aroundwhen FTS collapsed. I think actually I

(20:07):
think this came before. I thinkthis was kind of the this kind of
led to the f test collapse.All right, I mean not necessarily,
not necessarily, but it did.It's kind of like it kind of I
think fueled, right, I thinkbecause they had terror on their books,
so that kind of I'm sure theyplayed a part for sure. Yeah.

(20:30):
So around the same time f testcollapse, I think a few weeks prior,
a algorithm stable coin protocol, uhTerror. So the company's Terror Labs,
right, terrorform Labs. The Sohow the coin where this this this
protocol works is they had a nativetoken Luna, which they used to mint

(20:55):
or burn to keep their algorithm,their their their their steable and pegged at
a dollar and I think it gotattacked and the dollar lost the peg.
And that's a huge problem for astable coin because you know that this defies
you know, it just makes thewhole thing useless. Right, So last
stable coin, So what the theTerror Labs did to kind of repeg their

(21:19):
token or repegged that their stable coinwas to mint more Luna, but I
think it kind of spiraled out ofcontrol where they kept minting infinite amount of
Luna to kind of peg it backpegged back the stable coin. Ust that
didn't work and it kind of killedthe whole problem. Protocol a whole forty
billion dollars wiped, and their founderDo Kuwan was convicted earlier this year or

(21:45):
laid last year, I think inSouth Korea. I'm not sure how many
years in jail he's doing. Butjust recently, just like last week,
the company agreed to pay a fourpoint four billion dollar fine to the sec
UH making it the largest major cryptocurrencycompany to pay a hefty US penalty.

(22:11):
And you know this entity. Imean, they did launch another coin,
Luna Classic Americ correct they did.I think they try to rebrand and relaunched
under Luna Classic, and they alsolaunched their stable coin under us T Classic.
I think that too, now ishistory as the company's fully dissolved.

(22:33):
So I think it's goodbye to Terrorcompletely Terraform Labs, so by it to
us T Classic, their old stablecoin. And the problem is pretty sad
because I think Luna had a huge, huge cult cult group of following Do
Coon and so it's kind of sadto see this whole community, you know,

(22:55):
kind of disappear. I think it'sworth having this discussion, right because
we were having this before we startedrecording as well. But we were and
we were talking about what the riskrisk reward ratio is that that would be
acceptable for these founders to to reallycash out, because realistically they know that
they're going to go to prison becausethey're doing something illegal. For example,

(23:18):
Sam Beckminfreed knew that he was usingcustomer funds and that he would get caught
at some point and he would goto freak. But I would assume in
his head the thought process was,oh, I can most likely pay my
way out of it. Because hehad a lot of political parties on payroll.
Yeah by pyrol, I mean hewas donator, yeah, for their

(23:40):
parties, and so I think itwas the same assumption for him that they
would help him out get out,They would help him avoid prison or have
a very short sentence if it evercame to it. Now, in his
case, he did end up inprison for twenty five years, and when
it does come out, he willprobably still be a billionaire. Very well
lost, very yeah, very well, very well. Yeah. But at

(24:00):
that point is it worth it?That's a question you were asking, right,
Yeah, after twenty five is like, what's the point? Right?
Times more valuable than money, Ithink, I think, yeah, twenty
five And we said I don't knowhow old he was, but I think
it was the early you said,late twenties or early thirties. Yeah,
I think he's in his twenties.Yeah, I think he might have been.

(24:21):
Yeah, I think I saw somethinghim being like the yeah, first
richest under thirty. I think that'sa couple years ago. I think I
saw that. Yeah. So yeah, coming out after you're fifty years old,
even though you're a billion that show. But you've missed out on half
your life. Well, you spendyour whole life like you spend the same
amount of time out of Jill injail, right, Yeah, pretty much?

(24:42):
And I mean making that much money, right, is that you want
to make it and then at leastenjoy it. Yeah, help out the
people you want to help out.But I guess it was really harm people
he did. Yeah. I thinkwe're trying to say, Okay, so
let's say he's in jail right fortwenty five years, but his family could

(25:03):
kind of, you know, enjoyhis wealth. But then he's single.
He doesn't have a family, right. All he does have is siblings.
I don't know his parents that arepretty old. But on the flip side,
we're talking about CZ right, Yeah, so so only like what four
months in jail, right, untingCZ's stories obviously different right, different of

(25:29):
course, Yeah, he didn't commitstraight up theft. What he did was,
or what Finance did, was theyoperated in the US and onboarded US
users without having the proper licenses todo so. And I think it's a
little it makes a bit more sensein their case since there was no real
standard for how to onboard users andcrypto in the US, so they did

(25:49):
it. I think. I thinkthe other thing they were trying to charge
them for is also to like theyalso failed to prevent money laundering, and
I think people were saying they werefinancing a lot of your organizations. I
think, if I'm not wrong,that's why I think they're being charged.
Right, So four months for that, I don't think more months with that
and being forced to step down asCEO of Finance is not that big of

(26:11):
a deal for all, already abillion dollars, I think that's a pretty
big And and definans paid at hispocket, They Exchange paid those fins.
Yeah, and y friend relatives arestill on the board of directors, so
he is by proxy still having somesort of influence over the decision making Yeah,

(26:33):
so go back to the reward ratiothen, So how much time in
jail do you think would be worthit? Like? How? Yeah?
So yeah, what's what's the sentencefor you? And the do you have
a number? I don't think Ihave a number, you don't. I
I definitely want to be CZ.I think four months that slight, That

(26:56):
slight work, you know, fourmonths in jail coming out. Yeah,
I guess. I mean if you'rewalking about with one hundred billion dollars,
but I guess. Bob on thecrypto topic is also worth mentioning that the
Australian Stock Exchange had its first Bitcoinet F lift this week and this sorry

(27:17):
earlier this week as well. Itwas listed by van K well Vanguard yeah,
van k Vanguard. It was notVanguard. Vantguard does not have a
big coin, but van Ck does. They had their US and now they
are the first ones to have itlisted in the Australian Stock Exchange, which

(27:38):
is the biggest one domestically. Soshout out to them. I think,
yeah, as doing good. EtherealMETF coming soon hopefully hopefully, Yeah,
because I got improved the greatest monthyeah for the US, but that is
for e ETFs in Australia, butI'm sure they're working on it, definitely.

(28:00):
Yeah, So that's I think bringsus to a close for this episode.
I think we had you know,decent uh dialogue on the US elections,
what we think or you know,the market things, who's getting elected
and and what you know could beand then a bit of an I P

(28:22):
O S and then kind of somecrypto conversation. So with that, I
think, you know, we'd liketo thank you for listening and peace. Peace,