Here’s what you need to know today

• Australia needs 1.9 million more homes today to make housing affordable. That is the conclusion of the Housing Industry Association (who, it should be acknowledged, have a vested interest). This would be equivalent to a 16% increase in Australia’s housing stock and the HIA believe it would reduce the average home price by 40%. Given Australia is not on track to build our target of 1.2 million homes in 5 years, this modelling is purely theoretical. (AFR)
  
  

• The bad news for DroneShield continues. Days after it was revealed that CEO Oleg Vornik sold all of his stock and CEO of the US business Matt McCrann unexpectedly resigned, defence experts are questioning the effectiveness of DroneShield’s type of radio-frequency jamming technology after reports emerged that Russian engineers have worked out ways to get around it. (AFR)
  
  

• These questions saw DroneShield shares drop 20% yesterday. It has been a rollercoaster year. Shares were up 780% by early October, only to fall 70% in a month. That leaves it up 163% for the year.
  
  

• The AI-circular economy continues, with Nvidia, Microsoft and Anthropic announcing a multi-billion dollar deal that would see the three of them buy chips, cloud capacity and AI models from each other. A key criticism of the AI economy is that many of the large players are investing in, and committing to spend with, each other. (FT)
  
  

• Meta has survived an attempt to break it up. A US Court found that Meta does not have a social-media monopoly, particularly once TikTok and YouTube are factored in. The US Government originally brought the case in 2020 and was attempting to carve WhatsApp and Instagram out of Meta. (Bloomberg)
  
  

• Australian wages increased 3.4% in the 12 months to September, led by public sector wage growth of 3.8%. This is good news for Australian workers, with wages once again growing faster than inflation, which came in at 3.2% in the 12 months to September. (Capital Brief)
  
  

• One of Australia’s largest gym operators, Fitness & Lifestyle Group, is up for sale. The company, owned by Quadrant Private Equity, operates the brands Fitness First, Jetts, Goodlife and Barry’s Bootcamp amongst others across Australia, New Zealand, Thailand and Singapore.. (AFR)
  
  

• Japan and China are caught in an escalating dispute. It started last week when Japan’s new prime minister, Takaichi Sanae, said her government may defend Taiwan from a Chinese invasion. Chinese state media attacked the Japanese leader and warned citizens not to travel to Japan. Now, China has informed Japan it will ban all imports of Japanese seafood. (Reuters)
  
  

• Good economic news for the UK, as inflation eased to 3.6%. This is down from 3.8% in September and is the first fall since May. This is welcome news for Chancellor Rachel Reeves as she prepares to deliver the government’s budget next week. (Reuters)
  
  

• Saudi Prince Muhammad bin Salman visited the White House, his first trip to Washington DC in seven years, and announced Saudi Arabia would increase investments in America from $600 billion to $1 trillion. US President Trump contradicted the assessment of US intelligence agencies and claimed the Saudi Prince “knew nothing” about the 2018 murder of Jamal Khashoggi. (BBC)
  
  

• Many of corporate America’s biggest names were at the White House for a dinner to honour Saudi Prince Muhammad bin Salman including Apple’s Tim Cook and Nvidia’s Jensen Huang. But the most notable was Elon Musk, returning to the White House for the first time since his public split with President Trump. (AFR)
  
  

• The US House of Representatives voted 427-1 to force the Justice Department to release its files on Jeffrey Epstein, a deceased sex-offender. Republican Clay Higgins from southern Louisiana was the only ‘no’ vote. The Senate quickly followed, unanimously passing the bill. It will now go to President Trump for signature. (The Guardian)

What the…?

A mother & daughter duo have been arrested after allegedly defrauding $70m from their clients by claiming to be fortune tellers. The mother, who also claims to be a Feng Shui master, convinced members of the Sydney Vietnamese community to take out loans based on her fortune tellings that a billionaire would enter their future very soon. Almost sounds too good to be true!

The pair were arrested at a $12.9m Dover Heights residence on Wednesday. NSW Police allege the mother became an Australian citizen in 2001 but had not worked during that time and was receiving disability payments. Police also claim that the repayments on the Dover Heights residence were $56,000 a month and she was a VIP customer at a Sydney casino. (ABC News | AFR)

Investing is a lifelong journey

Here’s what you can learn today

The timing of dollar cost averaging

This is an extract from the Equity Mates Investing episode titled ‘Warren Buffett’s swan song, we’re changing our cost portfolios & timing your investing’ (Apple | Spotify | YouTube)

Community question: I can invest about $300 a fortnight. We're just wondering your thoughts on whether we’ll be better off investing $300 a fortnight, $600 a month or wait until we've got a lump sum of say a thousand dollars and investing in one big go?

Alec: I think when we're thinking about the timing of dollar cost averaging, there's two ways to approach it. One is a hard mathematical answer and then the other is a behavioural answer.

Simon: Like many things in life, there's the spreadsheet answer and there's the messy reality of life answer as well.

Alec: So let's start with the spreadsheet answer. Luckily we didn't have to crack out the spreadsheet for this. There is an investment frequency calculator online (Calculator link) to answer this question mathematically, there are four key considerations, how much you have to invest your brokerage costs, your expected returns on the investment, and then your expected returns if you are holding that money in cash. So let's go to the calculator and do it hypothetically. So assuming $5 per trade in brokerage, we’ll be conservative an assume no return in a savings account as I think most saving money to invest aren't putting it in a high interest savings account.

Simon: Yep and then we could just use a return of 10% per annum which is pretty widely accepted as the long-term return rate of the share market.

Alec: Yep, so if we plug that in, according to the investment frequency calculator, the most efficient way would be to invest $1,200 once every four fortnights. And the difference over a 10 year period, if you invested every four fortnights, you'd have $129,250. If you invested every fortnight, you'd have $128,000. So I think our biggest takeaway from that is there’s a marginal difference, so it really comes down to your personal preference in terms of frequency which leans into the behavioural answer. The most important thing is regularly investing and finding a way to build that into your routine or ideally automate that into your financial processes is the best way to do it.

Want to watch the full episode? Check it out on the Equity Mates YouTube channel:

A message from Pimco

The PIMCO Short Term Active Yield Active ETF (ticker: EARN) is tailored to meet the needs of a diversified Australian portfolio. Designed to deliver monthly distributions and aiming to outperform cash and term deposits, EARN is managed with the same disciplined approach as PIMCO’s institutional client mandates while offering the flexibility, transparency and daily liquidity of an ETF. 

Investors should obtain a copy of the Product Disclosure Statement (PDS) relating to the product and consider the PDS before making any decision about whether to acquire an interest in any PIMCO fund mentioned in this publication. PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246 862 has determined the target market for this product which is set out in the target market determination (TMD) published on our website. The current PDS and TMD can be obtained via www.pimco.com/au/ 

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