Here’s what you need to know today

• Despite the US government shutting down after Congress was not able to agree on a budget, America’s share market rose with the S&P 500 up 0.4%. Australia’s market followed, with the ASX 200 up 1.1%. This is a sign that investors and markets see this as political theatre rather than a serious breakdown in governance. (Capital Brief)
  
  

• The Wall Street Journal has looked at how markets have performed over the 20 shutdowns since 1980. The average of the 20 has been a slight gain. However, the most recent shutdown in late 2018 and early 2019, saw the S&P 500 add 10% over 22 days. In summary, this happens too frequently for markets to panic (which is both reassuring and an indictment on the US political process). (WSJ)
  
  

• OpenAI has taken the mantle of the world’s most valuable private company. The AI leader has just completed a share sale at a $500 billion valuation, surpassing Elon Musk’s SpaceX which last sold shares at a $400 billion valuation. (Bloomberg)
  
  

• Don’t feel too bad for Elon Musk, he is celebrating his own $500 billion milestone. Elon just became the world’s first half-trillionaire, as Forbes real-time tracker saw his net worth tick over $500 billion. (Forbes)
  
  

• Meta has announced it will start using the interactions users have with its generative AI to personalise content and target ads. Users will not be given a choice to opt-out. (Bloomberg)
  
  

• Different day, same headline: gold keeps breaking to new all-time highs. Gold hit a new record US$3,895 per ounce, and Australian gold miners followed. Smaller miners led the way with Westgold Resources was up 8%, Catalyst Metals up 4% and Vault Minerals up 3%. Meanwhile, the big miners were also up, with Newmont up 2% and Northern Star up 4%. (Capital Brief)
  
  

• Geoff Wilson, the investor behind the Wilson Asset Management, has launched a vicious attack on a fellow fund manager. Wilson accused L1 Group (the newly formed entity combining Platinum and L1 Capital) of “stealing money from shareholders” with a proposed increase in fees. (Capital Brief)
  
  

• The Victorian government has put its $2 billion Breakthrough Victoria Fund under review. The fund was set up in 2020 to be a patient, long-term investor in Victorian businesses. To date it has deployed $480 million to 69 companies, with anymore spending now subject to review. (Capital Brief)
  
  

• The European Union has gathered in Copenhagen to discuss a “drone wall” to intercept Russian drones. The concept isn’t universally support with German defence minister, Boris Pistorius, and French President, Emmanuel Macron, speaking out against the idea. (Reuters)

What the…?

A growing concern around AI is its impact on office jobs, with suggestions that up to half of all entry level office jobs being automated in the next few years. American author Derek Thompson believes we should be focused on a more immediate concern: how AI is replacing our ability to think.

Thompson points to a growing body of studies that find declining test scores, writing skills and reasoning ability. The numbers paint such a stark picture that it had the Financial Times wondering if humans have “passed peak brain power”.

Or as the journal Nature eloquently warned, “Students, scientists, and anyone else who lets AI do the writing for them will find their screens full of words and their minds emptied of thought.” (Substack)

Investing is a lifelong journey

Here’s what you can learn today

What does a buyer’s agent cost?

This is an excerpt from our conversation with Chris Bates, mortgage broker and founder of Alcove. (Apple | Spotify | YouTube).

If you would like to speak to Chris and the Alcove team, fill out the form on our website and we’ll put you in touch (EM Website)

Chris: So they [buyer’s agents] do vary around the country in cost. Melbourne's a bit cheaper. Sydney's obviously a bit more expensive. Brisbane's probably in the middle. Some people probably argue with that, but I do think they're a little bit cheaper in Melbourne and they're more established. There's a lot of competition in the market there.

So what's the fee? I mean, you're probably looking at 10 to 15 thousand in Melbourne to be honest.

Alec: So it's not really a percentage of the purchase price, it's just cash?

Chris: I mean a lot of people just do that. They'll say it's between 1% to 2%, but then what will happen is, particularly as your purchase price goes up, you should be able to negotiate a flat fee. And I'd absolutely negotiate with a buyer's agent. Just because they say “this fee”, there's nothing stopping you negotiating. I would personally say, “right, can we just come up with a fee that we're both happy with?”

Just be careful that you don't just pick based on fee. There's a human bias there that we absolutely all have. They're a bit cheaper. It feels lower risk. Well, the risk is here, you're picking someone a bit cheaper, but you are not getting the experience that you really need in buyer's agent world. So pick based on their experience, their local market knowledge, how long they've been doing it in that market, and if you are dealing with the business owner. I think that really matters in buyer's agents. I think if you go to a bigger firm that has got some superstar person driving the firm, that doesn't mean their knowledge is spread across all their buyer's agents.

It's a hard job to scale. So I would be going with a small practice, someone who's super experienced five, 10 years, not one of their newer buyer's agents and local market knowledge. Then sense check it, speak to some local agents in the area and ask them who are the buyer’s agents that you consistently see? What's your thoughts on them and have you worked with so-and-so before? Because some of them will be like, no, nah, I haven't worked with them. Buyer's agents and real estate agents usually don't get along, but the good ones absolutely get along with these agents and so pick someone based on that. Don't pick them based on their fee because a few thousand dollars more for the best in the game versus someone who's new is worth it.

Want to watch out full conversation with Chris? Check it out on YouTube:

A message from Betashares

Betashares has launched GGBL, the newest addition to its Wealth Builder range of ETFs.

GGBL is designed to help investors access the benefits of gearing as part of their long-term wealth creation strategy. By borrowing at institutional rates that are typically much lower than those available to individual investors, GGBL provides cost-effective access to geared investing.

The Fund offers moderately geared exposure to a globally diversified portfolio of around 1,300 companies across more than 20 developed markets, excluding Australia.

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