Here’s what you need to know today

• Elon Musk has his $1 trillion pay package. Tesla shareholders overwhelmingly backed the proposal, with 75% of votes cast in favour of the plan. To realise the payday, Elon must steer Tesla to some significant milestones, including, an $8.5 trillion value, selling 12 million more electric vehicles, rolling out a 1 million car robotaxi fleet and selling 1 million AI robots. (CNBC)
  
  

• America’s largest tech stocks had a tough week. Overall, $800 billion was wiped off their value with Nvidia down 10%, Microsoft down 5% and Meta also down 5%. The Nasdaq 100 index was down 4%. But that still leaves it up 20% so far in 2025. (FT)
  
  

• As China and Australia jockey for influence in the Pacific, China is using its deep pockets to curry favour. The latest example is an $86 million gift to Vanuatu to dissuade the government from signing a security deal with Australia. This is China’s fifth-largest donation to a Pacific island country. (AFR)
  
  

• China has unveiled its third aircraft carrier. The 316-metre ship is China’s most advanced and puts it ahead of India, the UK and Italy who each have two aircraft carriers. China remains a long way behind the US, who operates 11 aircraft carriers. (BBC)
  
  

• Since Russia invaded Ukraine, the west has been united in trying to get the world to stop buying Russian oil. US President Trump has just broken ranks by giving Hungary an exemption to buy Russian oil. In return, Hungary will make a number of investments in America’s energy sector. (Reuters)
  
  

• Most disappointed by the Hungary exemption will be India. Early this year, President Trump put an additional 25% tariff on Indian imports to the US after India refused to stop buying Russian oil. (BBC)
  
  

• Andrew Bragg, the opposition housing spokesman, has said it is likely the Coalition will ditch the super-for-housing policy it took to the last election. (ABC)
  
  

• The number of public servants working on the National Disability Insurance Scheme (NDIS) has almost doubled since 2022 to just over 10,000 people. The NDIS is now one of Australia’s largest social programs at $50 billion a year. (AFR)
  
  

• As we get towards the end of America’s Q3 earnings season, the takeaway is: things have been surprisingly good. Companies are reporting the fastest profit growth in 4 years, defying concerns that tariffs would squeeze profit margins. (FT)
  
  

• Block, the fintech that owns Square payments processor and Afterpay, fell 16% after reporting quarterly results. Investors were disappointed by shrinking margins for Square as overall payments processed (up 12%) grew faster than gross profit (up 9%). (Reuters)
  
  

• Media giant News Corp reported a 2% increase in revenue and a 1% increase in profit. Not the most exciting numbers but better than expected, and shares jumped 8%. (Capital Brief)
  
  

• Macquarie Group’s shares were down 6% as its results missed expectations. Profit for the half was up 3% when compared to the same time last year, but down 21% compared to the second half of FY25. (Capital Brief)
  
  

• Pfizer has won a bidding war against Novo Nordisk for Metsera, a biotech with promising weight-loss drug candidates. Pfizer will pay $10 billion for the company, almost $3 billion more than it originally was going to pay. Metsera was founded just 3 years ago and has only 100 employees. (FT)

What the…?

American consumers are drowning in debt. Recent data from FICO showed the average American’s credit score dropped 2 points to 715, its first notable drop in years.  

The reason for the drop are credit card delinquencies, up 48% since 2021, and auto loan delinquencies, up 24% since 2021. Total credit card balances are now at $1.21 trillion – a record high, that may suggest more trouble ahead. (Quartz)

Investing is a lifelong journey

Here’s what you can learn today

Every company has a price

This is an excerpt from our Equity Mates Investing interview with Kyle Macintyre, who was, at the time, Investment Director at Firetrail Investments. (Apple | Spotify)

Alec: Beginner investors often hear that every company has a price, but they wonder what makes up that price. Experts say it's the present value of future cash flows. How do you determine the right price for a company? Is it based on discounted cash flow, or is it something else?

Kyle Macintyre: For me, one of the most practical measures of price is the price-to-earnings (P/E) ratio. This ratio essentially asks how many years' worth of earnings you are willing to pay today for those future earnings. For example, historically, Qantas has traded at a P/E ratio of around nine, meaning it would take nine years to recoup your investment based on the company's earnings.

While the P/E ratio is a practical tool, there are various valuation methods available. You can use a price-to-sales ratio, which compares the company's price to its revenue. There’s also discounted cash flow valuation, where you model earnings over a certain period, typically ten years, and assign a terminal value based on growth and discount rates.

Valuation approaches vary from one company to another. High-quality businesses with strong earnings growth typically command higher P/E ratios. For instance, the average stock on the ASX 200 trades between 16 to 20 times the P/E ratio. Strong performers like Seek or Xero will have even higher ratios. Conversely, cyclical or value businesses like Qantas, which historically trades at around nine times, reflect more volatility in earnings.

Ultimately, different companies require different methodologies, and it’s essential to choose one that aligns with the specific company and your investing comfort level. For new investors, the P/E ratio is a great starting point. Comparing a company's P/E to the broader market can provide insight into whether it’s undervalued or overvalued historically. For example, insurers typically trade at about a 25 percent discount to the market's P/E multiple. If you identify a company trading below its historical valuation, that can signal a potential investment opportunity worth further investigation to see if it’s a broken story or a hidden gem.

A message from Viola Private Wealth

Wealth isn't one-size-fits-all. Your investment strategy needs to work for your life and not just the markets.

Viola Private Wealth manages over $2.5 billion for Australians with significant wealth, crafting tailored portfolios across public and private markets. With deep expertise and a client-first approach, Viola helps you focus on what matters: growing and protecting your capital with clarity and confidence.

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