This week on Equity Mates

Hey there Equity Mate,

We’ve got a new segment we’re excited to introduce to you in this year on Equity Mates Investing podcast: Pimp My Portfolio

What Xzibit did for cars, we’re hoping to do for portfolios.

The premise is simple, take the portfolio of an Equity Mate and have an expert run an eye over it. Then without knowing anything about the Equity Mate’s personal circumstances (remember: general advice only), the expert will share some thoughts and give some advice for us to all go away and apply to our own portfolios.

We launched the first Pimp my Portfolio last week. The second is live in today’s podcast. Check it out and let us know what you think.

That is just the start of a big week of content here at Equity Mates:

• Equity Mates Investing (Apple | Spotify)

  • Monday: Pimp my Portfolio, two investor letters & what do UGG and Hoka have in common?

  • Tuesday: Ask An Advisor: Phil Thompson - You'll never think about insurance the same

  • Thursday: 7 takeaways from Buffett letter, Reddit's IPO & a question on share registries

• Get Started Investing (Apple | Spotify): 

  • Tuesday: Best starting point for a beginner to start investing?

The community survey has now closed, but that doesn’t mean we don’t want to hear from you. If you have feedback or want to jump on the podcast, hit us up at our contact page.

Your questions, answered

Mary asked via email:

I want to get my kids interested in investing. How should I speak to them about it?

We put Mary’s question to Hugh Lovibond, from Millennium Wealth:

It’s an amazing idea to get your kids involved in investing at an early age. This will provide them with a wealth of knowledge and experience to use throughout their adult life.

The first consideration when it comes to investing is what structure do we want to use to purchase any investments in.

Kids can only generate $416 per annum in income before they pay at least the highest marginal tax rate. So having investments in their personal name may not be ideal.

It would be worthwhile considering the following alternatives:

• Investing in you or your partners names on behalf of your children

• Education/investment bonds

• Family Trust structures

I would recommend talking to an accountant/financial adviser before making this choice.

Once you have decided on a preferred investment structure, then I would recommend teaching them the basics around investing so they can start to get involved.

This may include talking about why you are investing in the first place & possibly even setting some goals for the money. Such as wanting to build 50k in investment by the time they turn 21 to help fund their university costs.

I would give them a basic idea around how compounding returns work & how it will give them a much larger amount of money to use in the future.

I would then talk to them about their time frame and encourage them not to touch the money until at least a designated point of time. For example when they turn 21.

When it comes to the investments themselves, I would try and keep them as simple and low maintenance as possible while keeping the investments focused on shares/property exposure.

Some potential options would include:

• Listed index ETF’s. These are simple and cheap ways to get exposure to various markets across the world. A good example would be VGS which is The Vanguard MSCI Index International Shares ETF. You will need a simple broking account which can takes minutes to set up online.

• Education/investment bonds - Providers like Generation Life provide you with a large variety of unlisted managed fund investment options to select between.

If you have a question you’d like answered, hit us up at [email protected] or if you’d like to be connected with our trusted advisor network, head to equitymates.com/advice 

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What we’ve been reading

Two investor letters show the range of outcomes in 2023

On the Equity Mates Investing podcast episode out this morning (listen now: Apple | Spotify) we unpacked two investor letters from funds that had quite different years: Rowan Street Capital, up 103%, and Ace River Capital, down 29%.

Investor letters are one of the most useful sources of investing lessons, and there’s plenty of lessons in both the good and the bad.

Starting with the good, Rowan Street Capital’s year is a reminder that to have the good years, you have to maintain conviction when everyone else is losing theirs. The biggest contributors to their performance in 2023 were Meta, Spotify, Trade Desk and Shopify. All 4 companies had great 2023’s after shocking 2022’s.

• Meta: Down 64% in 2022, up 194% in 2023

• Spotify: Down 66%, up 138%

• Trade Desk: Down 51%, up 61%

• Shopify: Down 75%, Up 124%

It’s easy to look back in hindsight and think about how obvious it was. It would’ve been a lot harder fielding investor calls in late 2022, convincing them to stay the course and not pull their money from the fund as the Rowan Street team stuck with their conviction.

On the other hand, Ace River Capital was one of the worse performing funds we came across. Despite the performance, the letter is an interesting look at a couple of smaller companies: RCI Hospitality (NASDAQ: RICK) and Vox Royality Corp (NASDAQ: VOXR).

There’s plenty more to unpack in both letters, so after you’ve read the letters make sure you listen to the latest Equity Mates Investing podcast episode to hear what else we’ve learned (Apple | Spotify).

AA: The good, the bad, and the sober

This is a completely out of left field piece that we found fascinating: a deep dive into Alcoholics Anonymous. The program that helps alcoholics manage their addiction was started in the 1930s and today has just shy of 2 million members worldwide.

AA’s "Big Book” - basically the AA handbook - is one of the best-selling books of all time. First published in 1939, it has now been updated and translated into 43 languages and is estimated to have sold over 37 million copies.

There’s not really an investing angle to this article, just a fascinating look at something that is ever-present in our pop culture (and maybe front of mind because I - Ren - am halfway through Netflix’s Loudermilk).

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