This week on Equity Mates

Hey there Equity Mate,

The news of the week is the Australian government’s budget. For a budget slated as “responsible” and “not inflationary”, we’d probably sum it up as “quiet”.

Sure, many of the budget’s bigger items were already known, including: changes to stage 3 tax cuts, paid student placements for certain degrees, a change to 2023’s HECs indexation and an increase in defence spending.

The headline announcement for the night was that every household will be getting $300 off their energy bill. We’re not complaining - $300 is always welcome - but it did lead to some good responses the next day.

The question that we are left with is - did this budget meet the moment?

Faced with a population under unprecedented financial strain, an upcoming hole in the budget (the next 3 years are forecast to be deficits) and a broken housing market, a lot of voters would’ve been looking for more.

Before we get too deep down that rabbit hole, here’s what else has been making headlines this week:

• The US is set to apply 100% tariffs on Chinese imports of electric vehicles, solar panels and batteries. This move is expected to affect $18 billion worth of imports.

• Google unveiled new “AI Overviews” that will be coming to a Google search near you. Rather than responding with a series of links, a Google search will now start with an AI generated answer for your query.

• UK mining company Anglo American rejected BHP’s second bid to acquire the company. Now Anglo American have announced they will start selling off assets, which analysts believe is part of a move to fend off the Australian mining giant.

• Meme stocks - GameStop and AMC Entertainment - are having a moment, up 110% and 93% respectively in the past couple of days. The reason? Roaring Kitty aka Keith Gill, the man who led the 2020-21 GameStop short squeeze through his Reddit posts, reappeared online. Who said the market was efficient?

With that, let’s have a look at what we’ve released this week:

Equity Mates Investing (Spotify | Apple | YouTube)

• Monday - Woolworths 4 day workweek, Pimp my Portfolio & small tech stocks are back

• Tuesday - Ask an Advisor: Dylan Pargiter-Green - When can I retire, is private school worth it & screwing up in your 30s

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

• Friday - Expert: Catriona Burns - Investing in AI outside the Big 7 | Wilson Asset Management

Get Started Investing (Spotify | Apple | YouTube)

• Tuesday - Highlights of Warren Buffett’s 2024 Berkshire conference

Your questions, answered

Leon asked via email:
“What's your one stock for the next 10 years?”

We put Leon’s question to Luke Laretive, CEO & Investment Adviser at Seneca

Book a call with Luke and the team for investment advice.

Investing is not a ‘get rich quick scheme’, nor is there a ‘silver bullet’ – be it a single stock, a secret Signal chat or an ‘educational’ course. The reason professional fund managers like us run a portfolio of 20-40 companies is because the data shows that owning less (or more) is foolish.

In short, if we could be so certain about the future that we only needed to invest in 1 company, I wouldn’t be answering this question, or managing money for clients. You’d be reading about me as having just overtaken Bezos on the Forbes list.

Further, the idea of holding 1 stock for 10 years, hell or high water, is madness. The whole point of publicly traded equity is to be able to transact it. I buy a company trading at $1 because I think its worth $2. If it gets to $2 within a week, a month, a year… I’d sell it and go find another company trading below my fair valuation.

That said, Bryce and Alec will get angry with me if I don’t give you a stock code, so how about I pick LVMH (MC-FR) and let's bet that inequality gets worse. The 1% continue to spend their ever-growing riches in weird and wonderful ways, in an effort to differentiate themselves and not-so-subtly remind prospective mates of their abundant resources and social status.

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

A word from this week’s sponsor, J.P. Morgan Asset Management

In a late cycle where economic growth slows, this generally presents a favourable environment for quality fixed income assets (i.e. those with higher credit ratings). Investing in a global portfolio of higher-rating bonds presents opportunities for diversification while mitigating volatility.

Find out more about the JPMorgan Global Bond ETF.

What we’ve been reading

People taking the weight loss drug Wegovy are keeping the weight off for years, study says

The incredible results from Ozempic and other semaglutide drugs continue piling up. This latest set of results were presented at the European Congress on Obesity in Venice by Ozempic-maker Novo Nordisk. Novo presented that people on Wegovy (a sister drug formulated specifically for weight-loss, while Ozempic is intended for type 2 diabetics) were able to maintain their weight loss for up to 4 years using the drug.

The trial looked at 17,000 patients and found that after 65 days (a little over a year) of taking Wegovy, the average weight loss was 10% of body weight. When researchers checked in with patients four years from when they first started taking Wegovy, patients had maintained that weight loss.

This is further evidence that (1) these weight-loss drugs seem to work long-term and (2) for them to work long-term, users have to continue taking the drug. That seems to bode well for Novo Nordisk, Eli Lilly and the other pharmaceutical companies racing for market share in this new market.

One other finding that is worth noting from this trial. Regardless of how much weight a patient loss, researchers found that Wegovy reduced the risk of serious heart problems, such as strokes and heart attacks, by an average of 20%. Again, seeming to support another emerging thesis, that the benefits of these semaglutide drugs may go well beyond weight loss.