Here’s what you need to know today

• The 2024 Paris Olympics kicked off over the weekend. As we do every Olympics, Australia has started strong particularly in the pool. Ariarne Titmus was the first Australian female swimmer to defend her individual gold since Dawn Fraser as she won the 400m freestyle. The Australian women also won the 4×100m relay for the 4th consecutive Olympics. Outside the pool, cyclist Grace Brown claimed Australia’s first gold for the games. As of Sunday night (AEST), Australia and China were equal first on 3 gold medals.
  
  

• The Olympics got off to an inauspicious start after a series of apparently related arson attacks targeted France’s high-speed rail network. Trains were suspended across most of France after fires were lit to the west, north and east of Paris. It remains unclear who was behind the attacks.
  
  

• Aussie property keeps breaking records. The median house price in Sydney and Melbourne is already well over $1 million. Now Brisbane and Perth are expected to follow suite. Brisbane is expected to cross that mark in the next 3 months, and Perth is expected to follow by June next year.
  
  

• The US Federal Reserve’s preferred measure of inflation - Personal Consumption Expenditures (PCE) Price Index - ticked down. It showed that prices rose 2.5% in the 12 months to June, a tick below the 2.6% growth in the 12 months to May. The latest data shows strong consumer spending combined with falling savings rates, suggesting Americans are dipping into their savings to maintain spending levels.
  
  

• Barack and Michelle Obama both endorsed Kamala Harris for US President (with a particularly cringe endorsement video). With their endorsement all major Democratic party leaders, a significant chunk of Democratic delegates and the majority of donors are behind Kamala - meaning we’re locked in for Trump v Kamala Presidential election. Here we go.
  
  

• The fight for the rights to broadcast the next 10 years of America’s NBA is heading to court. The NBA accepted a deal worth $76 billion from ESPN (owned by Disney), NBC and Amazon. The biggest loser was Warner Bros Discovery-owned TNT who lost the broadcast rights they currently enjoy to make way for Amazon. Warner Bros Discovery are not happy, and have said they’ll see the NBA in court.
  
  

• The ridesharing and food delivery apps got a big win in California after the State’s Supreme Court upheld a ruling that classifies gig workers as independent contractors rather than employees. California has been ground zero for the push to recognise gig economy workers as employees, which so far the platforms have held back with a barrage of money and political lobbying.

What the…?

Here’s a surprising impact of climate change: melting ice caps are making our days longer.

That’s according to research published in the Proceedings of the National Academy of Sciences, that found ice loss added time to Earth’s day between 0.3 to 1 milliseconds per century through the 20th century. But since 2000, the rate has accelerated to 1.33 milliseconds per century.

How? In a non-scientific explanation, as ice melts at the South and North Pole, water moves from the poles toward the equator — making our Earth bulkier and slower to rotate.

Investing is a lifelong journey

Here’s what you can learn today.

Question: How should we be thinking about valuation when we’re looking at individual stocks?

We put this question to Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University.

I think first you need to be realistic. Investing is about preserving and growing wealth. It's not about getting rich.

In fact, if you define investing as ‘I want to get rich’, you are going to crash and burn because you're going to overreach. You're going to concentrate your portfolios, you're going to make bigger bets than you should.

So here's the bad news in investing: to invest, you need wealth. To get wealth, you got to do something. So if you're a doctor, spend your time as a good doctor. Don't spend the middle of your day checking out the stock pages because you think you can get rich that way. Earn an income as a doctor and use investing as a way of preserving and growing wealth.

I tell people who are not in the investment community, there's nothing wrong with being interested in markets, but you need to earn to be able to invest. You have to make sure you're not putting your earning power at risk because you're so fascinated by that next big hit you can get.

Second, think incrementally, right? I mean, Warren Buffett didn't sit down in 1956 and say ‘I want 40 billion’. No, he built up and along the way he was good. But he also got lucky. He's open about admitting the fact that he hit the market at a time where it's easy to find undervalued companies because people are not digging very deep. I'm not sure if he started in today's market he would be able to pull it off. In fact, his advice to investors is to put your money in an index fund. Go back to living the rest of your life, which is actually awfully good advice for most people in investing.

More time and energy and resources is wasted chasing and trying to beat the market more than any other activity. So first don't invest if you don't enjoy the process of investing. Don't invest because you expect to get a reward. This is a game where you can do everything right and have nothing to show for it.

I give people a very simple test.

I say that you are an active investor. You go pick. Try to find these undervalued companies. You do this year after year. You read Ben Graham Security Analysis. You read every one of Warren Buffett's letters to his shareholders. You're immersed in value investing. And every year you go do your homework. You pick companies. Let's say you're at the age of 85, you're lying on your deathbed.

And I'm a very cool person. I show up at your deathbed with your investment track record for the last 60 years, with all the work you put in and a competing portfolio with what would have happened if you had just taken your money at the age of 25, put an index fund and left it there.

The question I ask people is, would you be okay if the index fund beat you. If the answer is no. Don't be an active investor because here's what happens. People are active investors because they think they're doing the right thing, and then they think they're entitled to earn a higher return than the neighbours who are picking stocks based on watching Jim Cramer on CNBC or reading the stars or whatever. And then they discover that their neighbour bought Nvidia by accident four years ago and is rich and they're not. And that's when bad things start to happen. Because you get frustrated, you get angry at markets and then you double down.

The key to remember in investing is if things don't go against you, they don't. There are too many things you don't control. You have to be okay doing everything right and not getting a reward. But you're okay with it because you enjoy the process.

So don't overdo it. Just take it a step at a time. Enjoy the process. And if you find yourself not enjoying the process, step away. There are far better ways to live your life than chasing after stocks and getting frustrated. Because you know, it doesn't work for most people who claim to be professional investors. Why do you think it should work for you?

Watch our full conversation with Aswath on YouTube:

This email is thanks to Australian Property Scout

Join Sammy Gordon, Equity Mates’ regular property expert, as he is joined in the studio by investors Aaron and Jo who built a 9 property portfolio in less than 2 years.

Aaron and Jo unpack their journey whereby they started out as complete novices, and built their portfolios in a rapid way, hell bent on creating a significant future for themselves.

Their story started sideways when they purchased incorrectly, overpaying and buying a headache at the top of the market. They did all the wrong things on this first deal, however realising their mistake, they changed strategy and the rest is history.

This episode is packed with lessons and learnings from the pair as they dissect their wins and losses with Sammy until they have arrived at the position they are now. An inspiring episode showing what true commitment to a financial goal combined with serious action taking can produce.

Tune in to this very inspiring episode on the Scouting Australia Podcast on all your favourite listening platforms.