My guest today is Callum Morton-Smith. Callum is a Chartered Quantity Surveyor with experience in Perth, London, Dubai and Saudi Arabia.
In today’s conversation, we go deep into the construction industry and Quantity Surveying in the Middle East, some trends there, and Callum’s investment journey.
I hope you enjoy my conversation with Callum Morton-Smith!
[00:00:31] – [First question] – Background
[00:01:50] – What is Quantity Surveying?
[00:06:47] – The time, cost and quality triangle
[00:07:44] – How difficult is it to push recommendations and get changes through?
[00:08:45] – How much of the job is client management?
[00:10:29] – Pre-contract vs Post-contract work in Quantity Surveying
[00:12:17] – How does a project even start?
[00:14:21] – How do you build a cost estimate?
[00:19:18] – In Callum’s pre-contract role, does he still deal with contractors?
[00:21:34] – When do contractors get paid?
[00:25:53] – Dealing with disputes
[00:27:08] – How long is this whole process?
[00:27:40] – Being a Chartered Quantity Surveyor, the process, and is it essential
[00:33:12] – Callum’s pivot into finance
[00:34:24] – First investment and lessons learned
[00:36:24] – Callum’s investing style
[00:37:28] – Callum’s research process
[00:42:13] – Differences across the markets Callum has worked in
[00:44:18] – Projects in the Middle East
[00:47:33] – Favourite Investing book?
[00:49:33] – Most valuable life experience?
[00:51:45] – Plans for the future?
[NOTE] Timestamps are a bit off for some reason so not 100% accurate. Apologies.
Connect with Callum:
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Kalani Scarrott (00:31): Alrighty. My guest today is Callum Morton-Smith. Callum is a chartered quantity surveyor with experience in Perth, London, Dubai, and Saudi Arabia in today’s conversation. We cover being a quantity survey in the middle east, some trends there and Callum’s investment journey. So I hope you enjoy my conversation with Callum Morton-Smith. Cool. Callum, cheers for being here but before we get started, , maybe just tell me a bit about yourself, so the listeners can have a snapshot of who you are and where you currently living and what’s your day to day.
Callum Morton-Smith (01:12): So thanks for having me on the pod. Kalani , great to be here and have a chat. so yeah, look, born and raised in the beautiful city of Perth, Western Australia. I’ve been working in the construction industry as a quantity surveyor, for about coming up to 10 years. Now, I’d say, for the past six years I’ve been living overseas. I first moved to London, lived there for just so over a year before moving over to Dubai and I was there for maybe three and a half years and made the move from there to Rya in Saudi Arabia. And I’ve been there for the past two years and shortly I’ll be, back to Perth to be back with family and, yeah, I’m really looking forward to it.
Kalani Scarrott (01:56): So yeah, for anyone that doesn’t know, could just gimme a quick breakdown of what quantity surveying is.
Callum Morton-Smith (02:00): Yeah. So quantity surveying is basically we act as a cost consultant to the construction and property industry. So I started out as a consultant and really it involves being engaged by the architect and the client right at the start of the project. So at inception, when someone has an idea, they bring us on board and we help to prepare the sort of budget, construction, estimates, and budget, consultant fees and things like this. Uh, we work with the design team and the client right through the design phases, through concept design, schematic design, detailed design, right up to tender design. Um, throughout the stage, the information is getting much more detailed and we’re able to refine our cost estimate in accordance with that. Uh, then we go through the tendering phase. Um, we send the documents out to the contractors and they give us back their pricing.
(02:57): We undertake analysis of those, those prices. We make a recommendation ultimately of who we think should win the project. And after that we will manage the post contract, which is basically once, once the project’s been awarded and we’ll take assessments of monthly payments and variations and claims and things of this nature, ultimately all the way until handover of the project. And after that, that’s pretty much where we finish. Okay. So the answer I’ve given outlines, the development process from a QS perspective in its most generic form or what we call the traditional form. Uh, there are so many different approaches such as design and build or what we call in Australia design and construct which in itself can vary in a number of different ways, depending on when you engage the contractor throughout that sort of design process. Under this form of procurement, the architects take the design to a less developed or a less detailed stage.
(03:59): And this package is tended to a group of contractors who then have a responsibility to take the design from wherever the architect took it up to and take it right through to the construction drawings. And then also undertake the construction, hence the term design and build or design and construct. Uh, these two forms of procurement are probably the most common. Uh, but in addition to that, there’s so many others such as like design, build and operate, build own operate, transfer, management contracting, construction management, the list goes on, it’s often the role of the quantity surveyor to recommend what root is most appropriate and to do this right at the outset. You first need to take the time and effort to really understand what the client’s key objectives are. Um, we talk about the triangle of time, cost and quality and getting to know what is most important for the client in terms of, you know, these three factors, as well as, you know, understanding the size and the nature of the project, where whether it’s infrastructure or, you know, whether it’s an office building or a house and the size, the, and complexity of the project, all of this will inform your decision of what procurement route you should ultimately go down.
(05:20): They all have the advantages and disadvantages and yeah, depending on the situation, you’ve just got to weigh these up. And sometimes you might even outline a number of these options to your client and make your recommendation, but also make them aware of what other options they have. So I explained earlier that I started out as a consultant QS, and I should probably elaborate a little more on this. Uh, the QS role exists all throughout the supply chain. So you can be a QS as a supplier. Uh, maybe you are quantifying, I don’t know, let’s say that you are quantifying paving, for example, <laugh> as a subcontractor as a main contractor and as a client in house, you know, maybe you’re working for a real estate developer as a QS. Currently I’m working as a client side QS. So my role’s a little bit different now in that I’m not preparing the, you know, the, the bills of quantities that go out for tender or the very detailed cost plans. Um, I’m undertaking the early what we call rough order of magnitude estimates. And then the more detailed pieces of work are being undertaken by a consultant. And I do more of a coordinating, managing almost quality assurance type role around checking this and providing feedback, you know, back to the consultants.
Kalani Scarrott (06:48): So that triangle, you mentioned – time, cost and quality. Are you only able to pick two outta the three when doing projects?
Callum Morton-Smith (06:55): Uh, so that’s a good question actually, cause what often happens is the client will say, well, all of them are, are most important and you’ve really just got to stick to your guns I guess, and say, look, you, you’ve got to tell me what is, you know, most critical for you. Sometimes it might be that you know, they need the building complete by certain date because they’ve signed a contract with someone to, you know, come in and occupy the building. Uh, so in that case time is your most, you know, important, you know, objective. So you might go with something like, just for example, a design and build where you can take the drawings to an earlier stage and get the contractor to complete them whilst also beginning to undertake some of the early works like their foundations. So they can start building while also finishing the design mm-hmm <affirmative>
Kalani Scarrott (07:44): And now obviously every client is different, but how difficult is it to push recommendations and get changes through? Is it just client management or how do you go about it?
Callum Morton-Smith (07:55): Yeah, definitely. I think you know, given my experience in Australia, the UK, UAE and Saudi Arabia, I’d say Australia and the UK, the clients, there are much more understanding and realistic. Uh, I’ve gotta be honest. In UAE and Saudi Arabia, they’re often not realistic and it’s, I mean, it’s not really their issue. It’s more so the board that oversee them and they’re answering to these guys who have given really, really tough, you know targets to achieve. And these guys are answering to them so often they probably know it’s not realistic, but they don’t really have a choice unless they wanna lose their job.
Kalani Scarrott (08:45): And a simple question, but one that I’m curious about is how often are you dealing with clients and how much of your job is managing them or dealing with them, I guess.
Callum Morton-Smith (08:54): Yeah. So although I am working for a client now and effectively, I am the client to, you know, the cost consultant. I also have my in-house clients. So I treat the development management team as my ultimate client because these guys have ownership ultimately of the project. So yeah, within my organization, just as an example, you know, we must have say 30 different development managers and yeah, you can’t treat each of them the same because they’re all unique. They all have, you know, different personalities and characteristics. So you’ve just gotta be very wary of who you’re dealing with and how they like things to be done. So a lot of it is people management working in house, the job actually, isn’t that difficult, it’s much more difficult when you are working as a consultant, cause you need to go into much more detail. Um, whereas now I’m relying on those guys, the consultants to be, you know, my expert. Yeah. I don’t need to necessarily be the expert anymore. It’s more just people management. Yeah. Yeah.
Kalani Scarrott (10:00): And do you, don’t ever have to go on site?
Callum Morton-Smith (10:02): Uh, you do if you are working in a post-contract capacity, but I’m working purely in pre-contract at the moment. So we do every now and then just to, you know, have a look at our projects, how that, you know, how they’re getting on and it’s always nice to go to site to see what you’ve only been up until that time you know, observing on paper in the drawings. So for sure we do, but that’s more a post-contract thing.
Kalani Scarrott (10:29): So you talked a little about pre-contract vs. post- contract and could you explain further maybe specialization and what route you went down?
Callum Morton-Smith (10:37): Yeah, for sure. So I think earlier at the outset of anyone’s QS career, it’s pretty important to get exposure to both because I feel like you can’t really understand what’s going on in the drawings unless you’ve also been able to site and visualized it all, you know, walked around, you know, touch and feel what’s going on on-site. That was certainly the case for me for the first let’s say four or five years. Um, but pretty early on I realized that the precontract side of things was where I was much more interested. I just found that it’s, it’s a little more difficult actually. I found it a lot more difficult and you can also be creative as well. And you gotta be very careful in sort of outlining your assumptions, your exclusions, you know, the basis of what your numbers, you know, come from.
(11:34): Whereas post contract is more administrative and I find that it’s a little bit dull for me. No offence to all the guys who love post-contract. But yeah, just for me, I think it’s, you know, you have all, you have your contract there, it should all be pretty black and white. Uh, you’ve got, you know, you’ve got your templates and your processes in place for, you know, the post-contract administrative, you know, stuff, whether it’s payments or variations or whatever it is. And it’s just a matter of yeah. Ad administering it. Yeah. So for me, it’s not as difficult, not as challenging and just not as interesting. Fair enough.
Kalani Scarrott (12:17): So I’m curious to know at the start of a project, how does it all begin? Does the client send you a 30 page PDF outlining what they want done or how does it all begin? Yeah,
Callum Morton-Smith (12:26): It really depends. Uh, so sometimes, you know, may whether it’s a government client or a private client, or maybe it’s even a, someone who’s not a developer per se, but they’re just someone with cash who wants to, I dunno, build something. It might even be a charity. Um, yeah, they, the expertise of the client varies massively and so do their own systems and processes. So they often don’t come to you with, you know, a, a 30 page PDF. Um, they might just come to you and have a chat usually to the architect first and get the architect to outline a, maybe a vision deck, you know, roughly of what the building is based on the client’s key objectives. Um, and based on maybe what the client has done as a business case. Uh, so, you know, they might have a site identified and they undertake a highest and best use study.
(13:31): And from that it’ll determine what the mix of assets will be. Maybe it’s a bit of commercial, a bit of residential, a bit of retail, maybe it’s just commercial. And yeah, from there, that’s when we are typically engaged as the cost consultant, you’ll undertake a series of, you know, cost studies on maybe the various options that they’re proposing. And from there, the design will get more and more refined based on which option works best, both from a cost perspective. And also from a returns perspective, that’s ultimately what the client is often looking for is the best return. So as we’re feeding in costs, you know, the client might have a consultant or maybe they do it in house, they’ll be working out, you know, what the revenues would be and you know, what the IRR is. And
Kalani Scarrott (14:21): So starting from scratch, how do you go about building a cost estimate?
Callum Morton-Smith (14:25): Yeah. So depending on the stage, let’s just for example, start out with concept design stage where the designers, I mean, there is certain requirements for what concept stage should look like based on Reba, the Royal Institute of British architects, but most often, you know, the design doesn’t look anything like that. It might just be an area schedule. It might just be sort of blobs on a piece of paper or sometimes, you know, it’s done in a little bit more detail and, you know, we can take off some quantities and things like that. But personally, I think concept design stage is the most difficult because there’s a whole host of assumptions that you have to make. It’s not just showing there on the drawings. And I think you should devote the most time, the most resources in the concept stage, but we often find that that’s not the case.
(15:20): So if we just started from scratch, you know, let’s just say that we’ve got blobs on the drawing and we’re told that it’s an office building, we’ll work with the architect and the client to determine a certain set of parameters. Like I dunno, how high is the building? Um, what’s is, is it gonna be shell and core or is it gonna be category a or category B? Uh, I should probably explain what that is. <laugh> shell and core is really just the, the frame and, and the box, if you like. So you’ve got the, you’ve got the walls, you’ve got the floors, you’ve got the columns, you’ve got the beans. Um, and you’ve got the services plugged into the common areas, but then just capped off at where the tenanted areas are gonna be. Then we go category a, which is another step to that where we have maybe the carpets and ceilings and paint to the tenanted areas and the services all plugged in, but we don’t have any furniture.
(16:24): So that’s when we go to category B where you know, we include all the loose furniture, often, sometimes fixed furniture as well. Um, you know, things even, even to the extent of paintings and artwork and your it systems or your computers, and you might even have to allow for more services based on where they’re going to, you know, put all their computers and printers and all that sort of thing, you know, and then we determine what these, you know, what the client wants with respect to factors like this, and we’ll take those assumptions and work up a cost plan based on that. So we’ll start from the ground up. Uh, that’s often the best way to do it and we’ll work with whatever method of measurement is most appropriate. So it depends on, on the country, like in Australia, they use the Australian standard method of measurement in the UK it’s often RM, which is new rules of measurement and in the UAE, it’s, it’s also RM in Saudi it’s RM, butit can get a little bit interesting.
(17:36): Um, there’s, there’s a, there’s a bunch of different sort of categories that they also include, like for example, at the moment we’re using CSI to categorize all of our construction elements and yeah, we, we build it up from the ground up. So we get whatever drawings we have and we plug it into our measurement software and we take off whatever measurements we can which at concept design might not be a whole lot. And then we, yeah, just quantify, you know, we, we make our assumptions and plug those quantities in, and then we build up the rates to that. So the supply rate, the installation rate, the overheads and profit, and we get these rates based from, based on, you know, contract data, ideally most recent contract data to similar projects or maybe we have tendered rates or we’ve built out detailed cost plans in the past.
(18:35): And, and that ultimately spits out a total cost given that it’s very early stages. And depending on the information we have, we’ll also allow for contingency on top of that. Um, generally the, the allowed contingency at concept design is like plus minus 30%, which is quite a lot. And often clients get really<laugh> uncomfortable when you plug in a 30% plus or minus at the end, but that can really be improved upon if the client works with you to refine your assumptions and gives you enough time to, you know, to, to build up a solid cost plan.
Kalani Scarrott (19:18): So in your pre-contract role now, do you still deal with contractors?
Callum Morton-Smith (19:22): Yeah. So in a precontract capacity, you do still liaise with contractors. Uh, if you are following a traditional procurement route, it won’t be until the tendering stage. So once you’ve got the issued for construction drawings or the IFFC drawings it’s gone out for tender, they’re reviewing all this information and they’re sending back queries. We are responding to all the queries that relate to the bills of quantities, or often also the contract as well. And then the architect, the engineers, they’re responding to, you know, the engineering questions, the design questions. Um, once they, the contractors have submitted their tender, we then review it and we come up with a whole host of queries concerns. Um, we do a full side by side analysis. So we, we basically build a big Excel sheet. We plug in all the contractors submissions side by side.
(20:21): We do like a high, low median you know, standard deviation, all that sort of thing. And we send all our queries back to the contractors and we have, you know, a lot of interface from then on until the point of making a recommendation for award. Uh, at that point, you know, it all goes post contract, once it’s awarded and whatever QS is working post contract will then inherit all those documents and they’ll take it from there. But in the instance that we are doing a design and build route, we’ll engage with the contractor much earlier on. Sometimes we have what’s called an early contractor involvement agreement or ECI agreement, and we might even get the contractor on board at concept design stage. And they often act almost like a consultant with the design team. Uh, so they’ll be providing advice on you know, like constructability or regulations and things like that. And they’ll be preparing cost plans as well as the QS or, or maybe they prepare the cost plans and we review it. And in that instance we’ll have interface with them right up until yeah. Award.
Kalani Scarrott (21:34): And then how does payment work for the contractor? And then when does the developer see the return too?
Callum Morton-Smith (21:41): Yeah, so I can speak about the contractor first, sometimes, but not always we might include an advanced payment in the contract, so maybe it’s 10% it could even be 20% and that would be 10% or 20% of the overall contract sum. Uh, this is often used as a tool for the contractor to put a down payment on procuring long lead items. So say you’ve got a really tight program, but they need to order some specialist equipment. Um, I don’t know, like escalators or lifts or something like this. They can place an order straight away. And you know, that way there’s not gonna be delay further on because they’re waiting for payment in order to afford to, to pay for them. Yeah. Um, beyond that, it’s typically monthly every month they’ll submit a progress claim and the post contract quantity surveyor will review it and you know, discuss it, walk around the site and, you know, take measurements of what’s been done and they’ll undertake their own assessment and make their recommendation to the client for payment.
(22:47): Typically it’s best to agree with the, with the contractor before making this recommendation to the client on what to pay, but it doesn’t always work like that. And yeah, the, depending on the contract, maybe the terms are 60 days or 30 days post that recommendation or post the contractor’s claim. It depends on the contract. Uh, and that’s when the client will make payment to the contractor. Often what’s also included in the contract is retention. So from every payment we might, or the client might withhold 5% and that’s withheld right up until the end as a form of security right up until practical completion where half of that overall retention will be released. And then another half, maybe 12 months later following the defects liability period. So this is where the building is finished. It’s being occupied, but during that 12 months, or maybe it’s 24 months, again, it depends on the contract.
(23:43): The contractor’s still liable for any defects, you know, maybe taps aren’t working properly lights, aren’t working properly, things like this. Maybe there’s, you know, a crappy paint job or tiles a crack. The contractor has to come in and fix that stuff. So that’s why the client withholds, you know, a little bit of money just in case the contractor might decide not to come back and say no stuff here. I’m done. So that’s the contractor the client as the developer they’ll get paid. It depends a little bit as well, but, okay. So let’s say it’s a, a retail building or a commercial building where the client’s often not selling, they’re leasing it out. So they’re only gonna make money once they’ve, once they’ve signed a lease with someone and, you know, then from then on, it’ll be however many years to recoup their money. If it’s a residential project where, you know, not a, not a buy-to-let, which is becoming more and more popular now in Australia, but, you know they just wanna sell all the apartments. Let’s say then they’ll often recoup a lot of their money just by selling off the plan. And then once the building’s complete, you know, the, the owners will have to make payment for the remainder of the money, not just the 10% or 20% down payment. So it really depends on the type of development
Kalani Scarrott (25:01): And then a QS consultant?
Callum Morton-Smith (25:03): Uh, as a, as a consulting QS. It, it varies as well in terms of when you’re paid. Um, typically what happens is you outline a fee for concept stage schematic stage detailed stage tender stage, and also a post contract fee. Maybe it’s a, a monthly fee and you propose, you know, what resources you’re gonna include in that fee. Maybe it’s two senior quantity surveys and one you know, normal quantity surveyor and, you know, a few hours for a director to check it off. Um, and you’ll be paid at the completion of each stage. So once the client is satisfied with your concept design cost plan, your schematic cost plan, your detailed cost plan they’ll make payment based on that. And post contract is typically monthly. You’ll get paid
Kalani Scarrott (25:53): And where do disputes come to this? And how are they resolved?
Callum Morton-Smith (25:56): Yeah. So disputes, yeah. Post contract, it can get pretty ugly actually. Um, yeah. The one thing about working post contract is it is pretty fun sometimes to roll up your sleeves and have a bit of an argument with the contract and they typically enjoy it as well. You know, we’ll go into a meeting, we’ll get all furious and butt heads, but after it will laugh and shake hands yeah, often, you know, most often we can come to an agreement on, you know, what is a, a fair and reasonable amount for the contractor to be paid. What’s a fair and reasonable amount for a variation based on, you know, the contract documentation in the situations where we are unable to reach an agreement. We’ll have to bring in a, maybe it’s a mediator at first then it might be, you know, an adjudicator, an arbitrator, maybe it goes to court yeah, it can get pretty ugly. And yeah, you’ll see in the papers, you know, fairly often that there are big disputes that do go to court in the construction industry, it’s contractors, certainly in Australia, they, they work to pretty tight margins. So yeah, things can get really heated.
Kalani Scarrott (27:08): So how long does this whole process take? Sorry, just from start to finish.
Callum Morton-Smith (27:11): Usually it really varies on the size and the nature of the project. So, I mean, you could get a fast track, small job that maybe the whole design takes, I dunno, three months and the construction might be another three months. So you can go from something like that right up to a mega or what they’re calling now giga project. Like some of the things I’m working on in Saudi Arabia, and this can be in planning for a couple of years and the construction can take another couple of years. So it really varies.
Kalani Scarrott (27:40): And education-wise, could you talk a little bit about the process of becoming chartered and maybe why should someone become chartered?
Callum Morton-Smith (27:48):Yeah. So the process to become chartered it depends on the body that is undertaking your assessment. The most recognized globally is the RICS or the Royal Institution of Chartered Surveyors, which is who I did. My chartership with that process basically involves two. It depends on your experience level, but if you’re a fresh grad, it typically involves two years of structured learning and you have to complete a diary. You have to complete a, a case study of, I think it was maybe 2000. I think it’s 3000 words actually of detailing, you know, an experience where you demonstrated a certain competency basically, and maybe a challenge that you overcame and you then have to take that case study, put it in a, like a PowerPoint presentation, go to an interview with a panel of three chartered surveyors. There’ll be a chairman.
(28:53): And then two other assessors. You have to present your case study for 10 minutes. And it’s very strict on that time slot. I guess they wanna see how well you can stick to, you know, certain parameters. So you give you a 10 minute presentation, then you are questioned on your presentation for, I think it was 10 minutes overall, this, in this whole process, this this interview and presentation will go for about an hour. So you’ve got your 10 minute presentation, your 10 minute interview on your presentation. And then there’s another, maybe half an hour on all the rest of your competencies. I think from memory there’s like 12 different competencies and then 10 minutes on ethics. Uh, if you get one ethics question wrong, doesn’t matter how well you did on everything else. You automatically fail. That is a seriously stressful interview. I don’t think I’ve ever been more nervous for anything else in my life and the feeling of coming out after it is just the biggest relief.
(29:49): And yeah, certainly once you get the notification that you pass, it’s just like the best feeling in the world. Um, but yeah, in addition to preparing your case study and your diary, you know, right up to the lead up of the, of the interview, you also have to complete a, I guess it’s like a summary of your experience. And yeah, as I said before, I think it’s 12 competencies from memory. It ranges from things like business planning to accounting principles to yeah. Like cost planning building technologies. I can’t remember the mold off the top of my head now, but yeah, it’s a pretty strenuous and stressful period of your life going through that. The RICS is really recognized worldwide, but, you know, in Australia we also have the, IQS or the Australian Institute of Quantity Surveyors.
Kalani Scarrott (30:41): And just curious, how essential is it to be chartered in your field? Yeah,
Callum Morton-Smith (30:45):
So being chartered certainly anywhere outside of Australia is very critical. You can’t progress, or it’s very difficult to progress, at least as a consulting QS. If you’re not chartered as a contractor, it’s a little bit different, you don’t necessarily have to be chartered by like a body, like the R ICS, you might be chartered through the chartered Institute of building or builders. I can’t remember what it is, the CIO B or you might be like a, a chartered Institute of arbitrators, for example, because you need to be a bit more versed in contracts. Um, but yeah, certainly as a consulting QS, you, you need to be chartered and through the RICS in Australia you know, I haven’t worked as a QS there for maybe six years, but when I left the RICS, wasn’t like the dominant body, it was more a IQS and yeah, certainly I think you had to be, you know, a member of the, a IQS in order to advance your career seriously. Although I think quite a few people probably got away without it. Um, but I’ve seen now just on job postings and things like that, that yeah. They typically require, or at least it’s a big advantage to be chartered through the RICS
Kalani Scarrott (32:04): So makes sense. So why did you originally get into the construction industry in the first place?
Callum Morton-Smith (32:08): I guess like a lot of people followed in my dad’s footsteps, so, he was working in the industry and I found it pretty interesting and I thought let’s give it a shot. And I enjoyed the first couple of years of uni. I found it pretty interesting. I thought it’s something that I could do until I stumbled across rich dad, poor dad by Robert Kiosyaki as a lot of us dothat was probably halfway through my studies. And from then I sort of thought, wow, maybe construction’s not for me. And I wanna get into sort of finance and investing. And the last couple of years of uni, I think I spent more time, you know, know, researching all that sort of stuff. Um, then I did my uni, so yeah, it’s been a bit of a journey since there, but you know, what’s it now seven years after graduating, I’m halfway through a master’s degree now and banking and finance, and hopefully from there, I’ll be able to progress into the sort of investment world.
Kalani Scarrott (33:12): So you mentioned, so you’re studying global finance and banking at Kings college. What made you choose this degree? Like, why not? You said, mentioned halfway through university. Why not just switch to the time? Why do it now? And yeah, it just seems like a completely different avenue to what you’re doing now. Yeah.
Callum Morton-Smith (33:26): I think at the time I’d already done two, maybe three years of uni and I thought, well, I might as well finish this thing off. I’m pretty desperate to, you know, get a job and start making some money to be able to actually start investing. So that was the plan. And after a year at home working in Perth, I made the move to London and actually I was looking for jobs, you know, in the investment world, but didn’t have any luck. And fortunately I could transfer with the company I was with over to London. So I just did that. And then things just moved so quick and, you know, lots of opportunities came up and I just stayed in the industry. And you know, finally after moving to Saudi Arabia where there’s not a whole lot to do outside of work I decided to take up this, this master’s degree and yeah, I’m really enjoying it and can’t wait to see what opportunities it brings me once I finish.
Kalani Scarrott (34:24): Cool. Cool. So you mentioned rich dad, poor dad. Uh, what do you remember your first investment?
Callum Morton-Smith (34:28): I do remember my first investment. Um, I think I’ll bring it to my grave because it was pretty profound for me. I think maybe back here in the end of 2014, maybe early 2015, I’d invested in a little gold stock. We’ve all been there. Dacian gold. It was. And it did really well for a couple of years actually. And I doubled down and tripled down. <laugh> all of my part-time income and then full-time income at the time and thought I was a genius cause maybe it went up, I don’t know, 13, 14 times. And I thought you know, I know what I’m doing here. I’m gonna quit my job, become a day trader <laugh> and uh, subsequently it you know, a series of bad news events came out and the stock plummeted and I held it, uh for a while.
(35:24): I think I ended up getting out around break even for fortunately on its upward spiral. I did sell a few shares here and there to pay for certain things and a bit of travel. So not the worst thing in the world, but it’s pretty sad to see a big green number turn into turn into a break even. So anyway,
Kalani Scarrott (35:46): So what were your lessons or takeaways from that then?
Callum Morton-Smith (35:48): I think I probably had a lot of bias towards the stock and I maybe became quite emotional about it and I believe too much in it and, you know, maybe had to take a step back and undertake more due diligence than I did. And certainly have tried to bring those lessons to the forefront of my mind when I’m, you know, investing today and try to take emotions out the pitch and just look at it for what it is, which is easier said than done. But for sure, I think I learned some valuable lessons from that investment.
Kalani Scarrott (36:24): So how would you describe your investing style now and how has that developed over time?
Callum Morton-Smith (36:27): It’s changed over time and I think it will continue to change. Um, I’ve been investing for what maybe seven or eight years now. And I think I’ve tried all the different methods under the sun. <laugh> um, you know, all the sort of day trading, swing trading, you know, technical analysis, fundamental analysis. Um, nowadays I like to be more long, longer term and I’ve tried to build a core portfolio of, you know, diversified sort of ETFs and large cap stocks. And the intent is that I hold them forever on the side. I do have some sort of satellite holdings, I guess you could say things where I find short term opportunities. Maybe I think, you know, a stock’s been oversold and it’s, there’s an opportunity there for a, a rebound and just other, maybe smaller cap stocks that I think have some great potential. Yeah,
Kalani Scarrott (37:24): That’s fair. Probably better for your sanity as well.
Callum Morton-Smith (37:25): It is, yeah. I can sleep easier at night now.
Kalani Scarrott (37:28): So you’ve got your holdings. What does your research process now look like then? Like, is it just more just monitoring the news and seeing what pops up
Callum Morton-Smith (37:34): Or yeah. So typically now I’ll discover an opportunity by looking at the chart still. So a typical investment for me would be looking at a stock that’s been completely oversold in my opinion, the chart looks ugly and it’s been sort of flat lining for quite some time. And you know, maybe there’s been a change in management a change in direction of the strategic objectives of the company. And that will make me do a deeper dive on the company and take a look at all the financials. And you know, now I’ll do a DCF and all that sort of thing to come up with what I think is a sensible valuation. And once the stock starts to tick up a little bit, I’ll sort of combine the technicals and fundamentals now to get an entry point. And yeah, that’s, that’s the goal now. And then I just try and hold it for well, hopefully forever, but I do monitor it now to see, you know, whether things are fundamentally changing and then I’ll, I’ll look to sell or trim the position.
Kalani Scarrott (38:35): Just curious. Do you ever find paralysis by analysis? Like I’m probably the opposite. I’ll probably jump in a bit too quickly, but then it’s just like I commit, but how do you find that?
Callum Morton-Smith (38:43): I think I’ll probably the same as you I’m not, not trigger shy. <laugh> I think it would be nice to have a little bit more of that analysis paralysis. Yeah. But I certainly jump in, I get, I get really excited about an opportunity that I’ve found and I probably think I’m much smarter than I am and I just hop on board. So I think I’m pretty similar to you in that respect. Yeah.
Kalani Scarrott (39:05): So how do you go about exiting then? Like is it literally buy and hold forever or yeah.
Callum Morton-Smith (39:08): Uh, yeah, the, the goal is to buy and hold forever. And it’s hurting me a little bit now because just, well, when was it maybe mid sort of 20, 21? I’d just freshened up my portfolio cause I knew that I was coming back home and there’s a bunch of tax reasons for doing that. So not long after that, the whole tech sort of sector’s um, plummeted and it’s looking pretty ugly for me right now. <laugh> so it would’ve been nice to, to sell off a bit, but um, no, as I said, I like to hold forever. Um, but if there is something that I think is fundamentally changed in the company, for example, maybe the, maybe the CEO and the management team are really selling off their holdings. Um, or maybe there’s a couple of quarters of, you know, negative growth, whatever it might be. Then I’ll certainly look to trim my position and also something else that might make me change my position is I might find a better opportunity and I think, okay, this can, this can do maybe better than what I’m currently holding. So let’s switch it up a little bit, little
Kalani Scarrott (40:14): Bot a lot of people think about that as a better opportunity elsewhere, but that’s a good point.
Callum Morton-Smith (40:17): Yeah, exactly opportunity costs.
Kalani Scarrott (40:19): Yeah. So you touched on it a little bit there and you’ve mentioned what you look for, but is there anything you will not touch any sectors countries?
Callum Morton-Smith (40:25): I don’t think so. I think yeah, as long as the numbers sort of stack up and I think, you know, the management have some skin in the game and they’ve been with the company for quite some time then. Yeah. There’s, there’s no real factor that will make me not invest as, as long as those, you know, parameters are there. Um, I think there are a lot of, there’s a lot of sort of smaller microcap companies out there that just feel pretty dodgy. And uh, I try to steer clear from those, but you know, if, if they do look promising then for sure, I’ll, I’ll have a look further.
Kalani Scarrott (41:02): Yeah. Any mention dodgy, anything you look for there?
Callum Morton-Smith (41:05): You can listen in on earnings calls and things nowadays there’s a few apps out there and it’s interesting when they sort of try to evade the analyst’s questions and I just get a real sense that these guys are hiding. Yeah. You know, hiding a lot of what the truth is about how the company’s performing. So I find that are pretty useful tool to, you know, weed out the, you know, the real
Kalani Scarrott (41:32): Bad actors. Yeah. The bad actors. Yeah, nah fair enough. Do you have any bias towards any certain sectors or pretty sector agnostic?
Callum Morton-Smith (41:39): No, I don’t actually. And you’d think that I’d tried to lead on my experience in the, you know, know construction industry and real estate industry and maybe have a bit of bias there, but I don’t actually now I come to think of it. I don’t think I hold anything in the construction or property industry. So now I’m pretty open. Honestly, I don’t, I don’t really do a sector analysis unless I really need to rebalance my portfolio. If I’m my portfolio currently is pretty well balanced, but um, yeah, I don’t need to, you know, I don’t have any bias towards any sector.
Kalani Scarrott (42:13): No, that’s interesting. Now you touched on the construction sector there. So you’ve worked in Perth, London, Dubai, and now Saudi Arabia. What have been some of the differences that you’ve noticed across these markets then?
Callum Morton-Smith (42:22): Yeah, they’re all really different to be honest. I mean yeah, I, I can only speak from living there and working in the construction industry. I dunno about the whole investment world, but Perth for me at least was, you know, you work pretty hard. Everyone seemed to be pretty skilled at what they do moving to London. I found at least for my sector and my job that the, the working atmosphere was a lot easier. I know there’s probably some guys, you know, some analysts and guys who are working in the investment field and finance field now who are probably thinking what’s on about <laugh>. I know they’re probably working crazy hours, but at least for me it was, it was pretty easy going moving to Dubai and Saudi Arabia as well. The, the working environment is really crazy. You work really long hours. It’s really stressful. Um, clients are not forgiving and um, you work really hard. Obviously you do make a little bit more, you know, working in those sorts of countries. So you have to, you have to earn that money. And yeah, it’s a real work hard sort of play hard culture in Dubai, at least maybe not Saudi Arabia, Saudi Arabia is just work hard and then try and, you know, relax and catch up on sleep on the weekend and then get back into it again.
Kalani Scarrott (43:43): So even across projects.
Callum Morton-Smith (43:44): Yeah. So projects, it’s all really different as well. There’s, there’s different contracts, different construction methodologies. The contractors are, you know, I mean, in Perth and in, in the UK, they’re very skilled, very knowledgeable Dubai to a less degree, Saudi Arabia to an even less degree. And you know, there’s, there’s different challenges in each market. And I wouldn’t say it’s necessarily harder in, you know, one market versus another it’s just that the challenges are, are a lot different.
Kalani Scarrott (44:18): Cool. So for the middle east, maybe specifically, if you’re able to talk about it in general, what types of projects are you seeing there and like who are the main stakeholders there and what trends you seeing? Yeah.
Callum Morton-Smith (44:28): So I’ll speak about Saudi Arabia because that’s where I am now. And I’ve been there for a couple of years. Um, it’s really exciting. What’s going on there at the moment? The public investment fund are investing a lot of money in real estate. Uh, they’ve set up a number of different organizations that fall underneath the public investment fund. Um, some specialize in hospitality, so big sort of hotel resort projects through to what my company does, Russian real estate, we’re building, master plan communities for, for the Saudis. Uh, then you’ve got other companies that are sort of doing tourism and museums and sports and anything and everything you can imagine. Um, the projects are on a really huge scale. I don’t think it’s been carried out in, in history. So everyone there were all learning. Uh, it’s all, you know, new for us and certainly a great challenge.
Kalani Scarrott (45:27): No, it’s interesting though, cause yeah, it’s pretty quiet on the world news front, you know what I mean? Like you never hear people talking about it,
Callum Morton-Smith (45:31): But yeah. Look, there’s, there’s a few things that have been announced. That’s sort of, you might see in the media. I, I think that, I think they’re, yeah, they’re pretty, they’re pretty active on LinkedIn at least I think neon the line has come out recently and that’s, that’s gained some media interest, but yeah, there’s a whole lot of other stuff that’s not been announced and you’ll see it over the coming years. That’s what a lot of, a lot of us are busy on now in those sort of early planning stages of these projects. Oh
Kalani Scarrott (45:57): Cool. So my favorite question, do you have any interesting stories or strange, strange tales you’ve had along the way? You obviously don’t have to mention names, but if you’re able to yeah. Anything interesting dealing with clients or contractors? Uh,
Callum Morton-Smith (46:07): There has been, there’s been quite a few interesting things to be honest in Saudi Arabia, but I probably can’t, I probably can’t reveal it. Um, you know, maybe we’ll have a chat after the, after the podcast. <laugh>
Kalani Scarrott (46:20): Fair. Fair enough. Um, so back to investing, you’re talking about your style, your process who have been your maybe mentors heroes or who have you really? Yeah. Bunched off, I guess.
Callum Morton-Smith (46:30): Yeah. So as I mentioned at the beginning, I guess my foray into investing well started off because of my, my reading of Robert Kiyosaki’s books. And he was a major influence for me from the beginning. But from there, obviously we go into like Warren buffet, Howard marks I mean the list goes on Benjamin Graham and uh, yeah. Sort of any, any in investing book that’s, you know, available, I’ve tried to read it and um, I just try and absorb any little snippets of information. I can.
Kalani Scarrott (47:06): It’s funny. You mentioned rich dad port. Cause I remember reading that. I think that was usually probably one of my first. Yeah. You know what I mean, making money.
Callum Morton-Smith (47:11): Yeah, yeah. Yeah.
Kalani Scarrott (47:12): And by the end of the book, I was like, excuse my French. But I was like, man, just tell me what fucking doing it was so annoying. Cause I was like, you’ve spoken in big board terms. I was like getting into specifics, looking
Callum Morton-Smith (47:21): For yeah, exactly. Um, that was a great book and that’s what made me think. Wow. Like investing, I can, I can be asleep in my money’s just, you know, working, going up in value. So yeah, it was a really interesting book.
Kalani Scarrott (47:33): Your favorite investing book?
Callum Morton-Smith (47:34): That’s a tough one. Um, I think it’s probably not a book. It might be the Berkshire Hathaway letters to shareholders. Yeah. Yeah. I really enjoy reading those. I just find so many great bits of information. Um, and it’s so interesting to read all the way back to, you know, the sixties, I think when he started posting them, you know, right up to now and just how, you know, we seem to think that, you know, this has never happened before in history and you go back to his papers early on and you can see it was happening back then as well. So yeah, for sure. I’d, I’d find his, his letters to be the most valuable, you know, resource for investing. You’ve
Kalani Scarrott (48:17): Got a big backlog to go through.
Callum Morton-Smith (48:18): Absolutely.
Kalani Scarrott (48:18): Yeah. So yeah, I’m sure there’s lots of other young professionals like you who have experience in a field, but also have branched out into investing. Is there any advice you’d give them for those who are wanting to start, but don’t know where or how, like
Callum Morton-Smith (48:31): I think now there’s so many resources out there, like you’ve just got to, I don’t know, search that’s the problem so much. Yeah. True. Now actually you mentioned analysis paralysis before, I guess trying to learn about investing. You probably would have analysis paralysis now because go on YouTube. You know, every guy and girl out there has a channel about, you know, how to trade and how to invest. And I think I’d start off by reading this, the fundamental books, you know, read the Warren buffet which his book snowball, I think read his letters, you know, read, read Howard marks, read intelligent investor by Benjamin Graham, read what the professionals have to say. Don’t go on YouTube and listen to, you know, <laugh> all these, all these sort of retail traders, I guess you could say, and
Kalani Scarrott (49:19): It’s hard as well. cause if you get all your information from them, they’re providing a snippet of a book, but you’re not getting the full
Callum Morton-Smith (49:24): Thing exactly. Like exactly. You’ve gotta read it for yourself and get what you take away from it. Not the secondhand information. Yeah.
Kalani Scarrott (49:31): Take away the takeaway.
Callum Morton-Smith (49:32): That’s it? Yeah, yeah.
Kalani Scarrott (49:33): Yes. So I’ll move into my closing round of questions. So for you personally, what do you think is the most invalid life experience that university age students don’t give way to? So what do you think is an underrated skill or experience you think people should have? I know you’ve traveled, but
Callum Morton-Smith (49:46): Yeah, I think certainly for me traveling has just changed my perspective massively, massively. I think growing up in Perth, it’s a small city, you get trapped in, in the bubble. And as soon as you get out of that, you just see the world from a different perspective. So I think traveling is so important and for sure we should be encouraging people to go and travel, you know, after uni for a couple of years, at least just to change that perspective, experience, new things, meet new people, be exposed to different waves of thought. Uh, so yeah, travel for me is something I think’s really undervalued. Yeah.
Kalani Scarrott (50:25): Couldn’t agree more. And besides rich dad, poor dad and all the investing books, has there been any other books that have been influential in shaping your view of the world?
Callum Morton-Smith (50:33): Yeah, I think there’s a couple by Tony Robbins as well. Uh, awaken the giant within, I think was a, was a really interesting book for me. Uh, it’s all about personal development. He’s got a couple of money books out there as well. Can’t remember what they’re called right now. I think unshakeable is one of them. Um, also how to win friends and influence people. Uh, that was a really interesting book. There’s been loads. I can’t think about them off the top of my head right now, but I mean, in addition to books, there’s also podcasts. I listen to, I love listening to podcasts. Um, in addition to your podcast, I like <laugh> I like the, the Huberman lab Dan Huberman, he’s the, he talks all about sort of neurology and neuroscience and things of that nature. Uh, the old Joe Rogan. I love the old Rogan podcast.
Kalani Scarrott (51:23): You’ve done DMT?
Callum Morton-Smith (51:24): <laugh> no, no answer that. <laugh> no, not for me. <laugh>
Kalani Scarrott (51:29): Any other pods?
Callum Morton-Smith (51:30):
I think equity mates is another good one, another finance and investing one another Aussie one, which is great. Cause yeah. They’re doing really well. And I think you’ll find there’s a lot of us content out there, but not a whole lot of Aussie content, so yeah, for sure. They’re pretty good.
Kalani Scarrott (51:45): Cool. And from a final question, what plans or vision do you have for the next five to 10 years? Even just the next few years cause you sort of things are changing up for you. Yeah. Um, yeah. What’s it look like going forward? Yeah.
Callum Morton-Smith (51:54): So in the process of relocating back to Perth and um, I’m working remotely for the next few months and once I’m finished that and finish my masters, I really hope to move into the, into the investment world. So there’s a few opportunities that I’m exploring at the moment. Um, but first and foremost, I just wanna get settled in back home and sort of spend more time with family and friends. You know, that’s the most important thing for me for now maybe combine my passion for investing and you know, experience and expertise in property and you know, quantity survey and do a bit of real estate development as well. Um, combine my skill set with, you know, my brother as well. He works as a development manager, so you never know maybe there’s something we can <laugh> we can do there in the future. Thank you.
Kalani Scarrott (52:45): All right, cool. So yeah, cheer, to be honest, I really appreciate it.
Callum Morton-Smith (52:48): Thanks. Thanks a lot. Had a great time.
Kalani Scarrott (52:50): Anything you wanna plug?
Callum Morton-Smith (52:50): Uh, no, I’m pretty quiet on social media to be honest. I mean LinkedIn, if you did find any of this interesting, you could maybe get in touch on LinkedIn, but uh, other than that yeah, pretty quiet on the socials front.