Help us make Equity Mates better in 2025:

Every year we survey the Equity Mates community as we plan the year ahead. The insights really do matter, last year it prompted us to move this email to daily, focus more on YouTube and develop a new show (more on that in the coming months).

So if you enjoy what we do, and want to help make it better, we have a request: help us by completing this year’s Equity Mates Community Survey (Survey Link).

Here’s what you need to know today

• Donald Trump was sworn in as the 47th President of the United States and hit the ground running. On Day One Trump: (NY Times)

  • Withdrew from the World Health Organisation,

  • Withdrew from the Paris Climate Agreement,

  • Pardoned almost all of the 1,600 rioters that stormed the Capitol on January 6,

  • Extended the US ban on TikTok for 75 days,

  • Withdrew from a 130-nation agreement on a 15% minimum corporate tax,

  • Created the Department of Government Efficiency,

  • Rescinded Biden-era rules on AI safety, and

  • Declared a national emergency at the US-Mexico border.
    
    

• President Trump also said he would create an ‘External Revenue Service’ to manage tariff collections, with the President confirming he was planning to impose 25% tariffs on both Canada and Mexico starting 1 February. He also floated the idea of universal tariffs but noted “we’re not ready for that yet”. (Time | Reuters)
  
  

• Wesfarmers has announced it will wind down its eCommerce retailer Catch.com.au and will transfer operations and fulfilment centres to Kmart (also owned by Wesfarmers). Catch is expected to lose $40 million for the half and Wesfarmers will wear a one-off cost of $50-60 million to shut down the business. (Capital Brief)
  
  

• Belgium has opened a criminal investigation into Apple, accusing the tech giant of sourcing tantalum, tin, tungsten and gold (metals collectively known as 3TG) from conflict zones in the Democratic Republic of Congo but using a fraudulent certification system to have their origin appear as Rwandan. (Reuters)
  
  

• Bumble founder Whitney Wolfe Herd will return as CEO to the struggling dating app. Since going public in 2021, Bumble’s market value has fallen 90% from $7.7 billion to $847 million. Wolfe Herd will return a little more than year after she stepped down from the role. (CNBC)
  
  

• Petrol stations in Victoria will be banned from raising fuel prices more than once per day under the government’s ‘Fair Fuel Plan’. Under the plan, companies will be required to publicly report prices the day before which would then be locked in for 24 hours. The plan still needs to be passed as legislation, expected to be introduced later this year. (ABC News)
  
  

• Australia’s Federal opposition has pledged a $20,000 tax deduction for staff lunches and entertainment for businesses with a turnover of less than $10 million. While the next Federal election date hasn’t been finalised, it is clear both sides of politics are getting into campaign mode. (ABC News)

What the…?

In a surprising final act, President Biden pardoned five members of his family minutes before turning over the keys to the White House to President Trump. Biden issued blanket pardons for his brother James and his wife, Sara; his sister, Valerie, and her husband, John Owens; and his brother Francis.

None of them have been accused of any wrongdoing or been subject to Republican attacks. (Axios | AP News)

Investing is a lifelong journey

Here’s what you can learn today.

Using leverage in an investment strategy

This is an excerpt from the Equity Mates Investing podcast episode titled Q&A on leveraged ETFs, Netflix’s 300% surge & we react to terrible financial advice (Listen on Apple, Spotify or YouTube)

Q: Why would investors use leverage or gearing as an investment strategy?

A: Where gearing is really powerful is when we think about how much it costs to buy a house these days or how long people are living. Ultimately the number one risk we face may not be risk or volatility or a sell off in markets. It might be building up enough capital to reach our financial aspirations or indeed to last the rest of our lives. And the great thing about gearing or leverage is it allows us to use capital that we don't have today to put into the market and compound returns over the long term. 

If we think about the growth in property prices over the last 10 years, we often say that Australian wealth has been built off home ownership. It's not actually the home ownership that's led to that growth in wealth. It's the ability to use leverage when you're buying a house.

Q: What are the different ways to achieve leverage through ETFs and why do some methods work better than others?

A: There are two primary ways to achieve leverage within ETFs. First is internally geared funds, where if an investor puts in $100, the fund manager arranges a loan for say $50 to buy $150 worth of shares, all held within the fund. The loan is against the fund itself, and the end investor has no direct relationship with the lender. The second approach uses synthetic ETFs, where instead of buying underlying shares with a loan, the ETF provider uses futures contracts. While both approaches can achieve similar pre-tax outcomes, they have very different tax consequences. Internally geared funds holding underlying shares can take advantage of capital gains tax discounts, while synthetic ETFs using futures result in income gains rather than capital gains, often leading to higher tax consequences.

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