This week on Equity Mates

Hey there Equity Mate,

We’re right in the middle of earnings season in the United States as companies report their Q1 results (how they’ve gone in January-March 2024).

On today’s episode of Equity Mates Investing podcast we unpack some of our key takeaways from earnings season so far. Here’s three big headlines:

• Inflation hasn’t gone away: Plenty of companies are reporting inflationary pressures in their supply chains. We’re not out of the woods yet

• Smaller tech companies have rebounded: Many smaller tech names fell 80% or 90% in 2022 and 2023. But a lot of them are back. Spotify, Shopify, Snap, Carvana headline a long list of tech companies that have rebounded (and we wish we’d bought 12 months ago)

• AI is going to be expensive: Meta reported an additional $3bn in spend a year, Microsoft’s capital expenditure was up 79% while Alphabet’s was up 91%. This AI revolution isn’t going to be cheap.

Listen to the latest episode of Equity Mates Investing to hear those headlines explained and what else we’ve learned from earnings season so far.

Here’s what else we’ll be releasing this week:

Equity Mates Investing (Spotify | Apple | YouTube)

• Monday - Earnings season, Pimp my Portfolio & why we’ll never invest in airlines

• Tuesday - Buy or Sell: Adam Keily with Scott Phillips

• Thursday - Expert: Dion Hershan - Avoid the Mundane 7

• Friday - Bonus: Meshel Laurie - The world's first AI news show

Get Started Investing (Spotify | Apple | YouTube)

• Tuesday - $100 Challenge: Investing in a cost of living crisis

Your questions, answered

Emily asked via email:
“Would it be more advantageous to allocate additional funds towards bolstering my ETF portfolio or directing them towards paying off my new mortgage?"

We put Emily’s question to Luke Laretive, CEO & Portfolio Manager Seneca Financial Solutions.

Book a call with Luke for professional investment advice.

Pay off your mortgage - assuming it's a principal place of residence. It’s non-tax deductible debt and with mortgage rates running at c.6%, you will find it hard to generate risk-adjusted returns, that beat 6% guaranteed.

If you’re talking about an investment property, it depends on your assumed returns on each option, your tax rates and what kind of property you own (i.e. what deductions you can claim). Generally speaking, I’d think retaining the tax-deductible debt and investing elsewhere would be optimal… but again, it really does depend on your unique situation.

If you have a question you’d like answered, hit us up at [email protected] 

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What we’ve been reading

The NBA’s media rights are up for grabs. Billions are at stake

We generally share written articles in this email, but today we wanted to share an episode of The Journal, a podcast by the Wall Street Journal. It focuses on the battle for the NBA broadcast rights, but don’t worry if you’re not a basketball fan. The reason we’re including it is it is the best summary of where we’re at in the streaming wars and the fall of cable television.

Sports broadcast rights are such a valuable asset in media. They have been the only thing keeping millions of people subscribed to cable, and they are the attraction that will draw millions of people to a particular streaming service.

In the 10 year NBA media rights deal signed in 2014, Disney (owner of ABC and ESPN) pays ~$1.6 billion a year and Warner Bros Discovery (owner of TNT) pays ~$1.2 billion a year.

But as a new 10 year deal is being negotiated there are plenty more players. The owners of traditional cable networks: Disney, Warner Bros Discovery and NBC Universal. But also the tech giants: Amazon and Apple chief amongst them.

While this is an American story, the same forces are playing out in Australia (with the slight difference of our anti-siphoning laws). Where sports goes, the viewers will follow, and as a result the winners of this battle for the NBA rights will have a huge impact on the future media landscape in America.

The 16 best ways to sabotage your organization's productivity, from a CIA manual published in 1944

You might be thinking this is a strange article for us to include in our email, but many of the lessons the CIA learned in 1944 are very relevant today. And while the CIA’s target market were sympathisers and spies operating in Germany and Japan and territories occupied by those powers, perhaps the same insights can be passed to an obstructive boss or the team member that is a handbrake on productivity.

Sadly, 70 years later, workplace culture hasn’t evolved too much. Some of the suggestions from the CIA seem very applicable to the modern workplace:

• Insist on doing everything through "channels." Never permit short-cuts to be taken in order to expedite decisions.

• Refer back to matters decided upon at the last meeting and attempt to re-open the question of the advisability of that decision.

• When possible, refer all matters to committees, for "further study and consideration." Attempt to make the committee as large as possible — never less than five.

So the next time you feel like you’re in a meeting that could’ve been an email over something that doesn’t really matter, consider whether you’re in a CIA psy-op. And if you’re pretty confident you’re not, maybe send this article to the team.