This week on Equity Mates

Hey there Equity Mate,

The last episode of the Summer Series goes out today on Equity Mates Investing, which means we’re back next week with a whole slate of new segments and plenty to unpack!

We’re excited to kick off the year with some new segments lined up across both Equity Mates Investing podcast (EMI) and Get Started Investing (GSI), that will give you the opportunity to ask your questions, and get involved on the shows.

Pimp My Portfolio (EMI): If you feel like your portfolio is missing something, or is a ‘showbag of shit’, then this segment is for you. Submit your portfolio, and we’ll get an expert to provide some ideas on how to improve it.

Stock or investing idea (EMI): we’d love to hear about any ideas you have brewing, or stocks that you’re buying. Come and join us, and give us the pitch!

$100 challenge (GSI): Investing $100 per month for 40 years at 8% per year gets you to $350,000. So, each month we’re trying to find new ways to save or earn and extra $100. If you have an idea, let us know!

Ask An Advisor (both): If you have any money related question, send it through and we’ll get it answered by one of our trusted advisors.

Here’s what we released this week:

• Equity Mates Investing (Apple | Spotify)

  • Will US fixed mortgage rates lead to a renovation boom? - Lowes

  • Selling car parts, buying back stock - Autozone

• Get Started Investing (Apple | Spotify): 

  • FIRE: Financial Independence (!) Retire Early (?)

Your questions, answered

Sam asked via email:

What's one thing you tell all of your clients?

We put Sam’s question to Felicity Thomas, Senior Private Wealth Advisor at Shaw & Partners:

This is a great question and even more relevant than ever over the past few years with turbulent market conditions.

One crucial piece of advice that I consistently share with all clients is the importance of keeping emotions out of investment decision making. 

This advice is rooted in the field of behavioural finance, which recognises that human emotions can often lead to irrational and detrimental investment choices. By adhering to this principle, you can stay focused on your financial plan and increase your chances of achieving their long-term financial goals.

Emotions, such as fear, greed, and overconfidence, have the potential to cloud judgment and drive us to make impulsive investment decisions.

During times of market volatility, it is common for investors to panic and sell their investments, driven by the fear of further losses. Conversely, during periods of exuberance, investors may become overly optimistic and chase high-risk, high-reward opportunities, driven by greed.

These emotionally-driven actions can disrupt a well-thought-out financial plan and result in poor investment performance.

The 5 that I want to highlight are: 

• Loss aversion - we tend to dislike losing something more than we enjoy gaining something of the same value

• Confirmation bias - we tend to favour information that supports what we already think and ignore or downplay information that contradicts it

• Herd mentality - people often go along with what others are doing or thinking, even if it might not align with their personal beliefs or judgments

• Overconfidence - people often believe they are more skilled, competent, or knowledgeable than they actually are

• Anchoring bias - we often use an initial reference point, or "anchor," to guide our thinking and subsequent judgments

To counteract these tendencies, it is essential for you to recognise and understand your emotions when making investment decisions.

By being aware of your emotional biases, you can take steps to mitigate their impact. Setting clear investment guidelines and sticking to a well-diversified portfolio can help mitigate the influence of emotions.

By staying disciplined, adhering to your financial plan, and seeking guidance from a trusted financial adviser, you can navigate the ups and downs of the market with a clear focus on your goals.

Markets reward discipline and I think that is why so many investors fail. STICK TO YOUR PLAN!

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

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What we’ve been reading

Stratechery: The Apple Vision Pro

Apple’s Vision Pro glasses are arguably their biggest product launch since the iPhone. Sure, in the almost 20 years since Steve Jobs launched the smart phone revolution Apple have launched the iPad, the AirPods, the Apple Watch, the Apple TV and CarPlay but none of them were a new computing platform in the way that Apple hope the Vision Pro will become. For Apple’s CEO Tim Cook, this will be legacy defining.

One of our favourite technology writers is Ben Thompson, the author of Stratechery. In this article he shares his thoughts on the launch of the Vision Pro glasses and where to next.

For this first launch, there are some technical challenges - the eye tracking is clunky, it is not optimised for multiscreen use and the narrow field of view.

Thompson makes the case that all of the limitations he found were when he tried to use the Vision Pro to replace his laptop as a work and productivity tool. As he writes, this may be a deliberate choice by Apple to optimise it as an entertainment device first.

In this way, the best way to think about the Vision Pro may be like the iPod. The iPod was a step-change in music listening but was only short-lived, just six years between the launch of the iPod and the launch of the iPhone, that took it’s listening experience and added to it. The Vision Pro may be Apple’s step-change in video, with future devices to have new features that make it the iPhone-like game changer that Apple hopes it will become.

AI, and everything else

Benedict Evans is a former partner at venture capital firm Andreessen Horowitz and an analyst on all things technology. Every year he puts together a slide deck on the state of technology and any new and emerging trends that are worth watching. This is his latest deck, wrapping the year that was 2023, and there’s no prizes for guessing which technology features prominently: Artificial Intelligence.

The deck steps through the business side of AI - who is winning now (Nvidia), who is quickly catching up (the Big Tech players) and where is this technology leading. But then Evans moves on to the bigger question, is ChatGPT and its peers a step on the path to Artificial General Intelligence (AGI)?

AGI is a theoretical milestone where AI systems possess autonomous self-control and a reasonable degree of self-understanding. In a nutshell, it is when they have a cognitive ability similar to humans and when faced with an unfamiliar task they could find a solution. This is as opposed to the AI we see today which has been trained on huge amounts of existing data and tries to predict the correct answer based on the data it is trained on.

One of the biggest challenges in answering that question is even defining the parameters of that question. What exactly are we measuring, as Evans outlines in this slide below.

Beyond AI, the deck covers a number of other developments in the tech ecosystem. One interesting one, after COVID pulled a lot of eCommerce demand forward and then the market crash of 2022 saw many of these companies struggle, it appears that the shift to eCommerce is back to its long-term trend. This is one of the best visual representations of a bubble or hype cycle we’ve seen. After a period of mania, there is a stagnating period and then things return to their long-term trend.

One final trend we thought worth pulling out - today, more than half of relationships in the USA begin online. We’ve come a long way from the days of stigma around meeting your partner on a dating app.

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