This week on Equity Mates

Hey there Equity Mate,

Another big week here at Equity Mates HQ.

We were particularly excited to bring back our Buy or Sell episodes with Adam Keily. If you missed these episodes last year, Adam sits down with an expert and works through a quick-fire ‘Buy or Sell’ for a list of stocks the expert is watching.

To give you a sense of the content, check out this clip we posted on Instagram.

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Buy or Sell was a hugely popular content series last year and we heard the calls to bring it back for 2024. If you want to share your thoughts on what else we should be doing for 2024 - fill out the Equity Mates Community Survey.

Buy or Sell was just one episode of five we released this week across Equity Mates Investing and Get Started Investing. Here’s what else we released:

• Equity Mates Investing (Apple | Spotify)

  • Monday: Semiconductors beyond Nvidia, Book club is back & introducing: Pimp my Portfolio

  • Tuesday: Buy or Sell: Adam Keily with Julian McCormack

  • Thursday: Ren's 2024 portfolio, ETF question & expert stock pitch: Australian Financial Group

  • Friday: Uncovered: Emyria - Bringing psychedelic-assisted therapies to Australia

• Get Started Investing (Apple | Spotify): 

  • Tuesday: $100 challenge: Sam's making money with Lego

If you have thoughts on what you’re enjoying or what you’d like to see changed, you know how to let us know - the Equity Mates Community Survey.

Your questions, answered

Millie asked via email:

How should I split my investments for a core portfolio? Is there an ‘ultimate portfolio’ construction?

This is a question we’re often asked, and one that Tristan Scifo, from Purpose Advisory answered.

When solving an important problem, ask the brightest minds you can find.

I identified Chat GPT-4, Warren Buffet, Ray Dalio, Peter Lynch, and the Australian collective unconscious as the best 5 sources to answer this.

Chat GPT-4’s Response

I pressed Chat GPT-4 to propose an “ultimate portfolio” for someone living in Australia, investing $1,000pm. Here’s a summary of what it produced:

• 40% Australian Shares

  • 25% Larger companies

  • 10% Smaller companies

  • 5% Sector or Dividend Focus

• 25% International Shares

  • 15% Developed Markets

  • 10% Emerging Markets

• 20% Bonds/Fixed Income

  • 12% Australian Bonds

  • 8% International Bonds

• 10% Real Estate

• 5% Alternative Investments

• 5% Commodities / Infrastructure

As a general rule, one should never do exactly what Chat GPT says. But this is a useful place to start, and a reasonable yardstick to compare any alternatives against.

Professional Investor Responses

Warren Buffet is possibly the world's best investor, achieving an average return of 20% pa since 1965. Buffet recommends all investors buy low-cost, diversified index funds. In his will, his estate will be invested for his wife's benefit:

• 90% in a low-cost S&P 500 index fund and

• 10% in short-term government bonds

Ray Dalio launched and ran one of the world's top-performing hedge funds, which has returned on average 12% pa since 1975. Dalio proposed the well-known "All Weather" portfolio, designed to perform well across various economic environments:

• 40% long-term bonds

• 30% shares

• 15% intermediate-term bonds

• 7.5% gold

• 7.5% other commodities

It's all about the Execution

Successful investors know NOT to worry about finding the perfect strategy, but focus instead on effective execution. There are no $million-dollar ideas, there’s only $million-dollar execution.

Creating the 'ultimate portfolio' comes down to firmly in sticking with a strategy over the long term, more than in optimising your percentage allocation.

A Financial Adviser’s Tips

I’ll leave you with my 3 simple rules I share with clients to help them choose a strategy that works best for them:

1a. Make investing fun - choose a strategy you'll enjoy setting up and managing, even 5 years from now. Investments should add joy to your life.

1b. Don't make investing a drain - being consistent with your strategy requires you to not hate the work. Automate or outsource the parts you don’t enjoy (where practical) and cultivate a winner’s attitude.

2. Make it simple - complexity breeds mistakes, confusion and energy drain. Good strategies become increasingly complex over time, but a great strategy should be simple enough to explain to a child.

3. Leverage your expertise - You have unique money-making talents. Learn what you could be best in the world at, sharpen these skills You don't need to hands-on, but you do need to at least understand your strategy in depth, and know how to adapt it over time

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 network of trusted advisors, head to www.equitymates.com/advice

Take the next step on your investing journey with Rask + Equity Mates courses

Together with Rask, we bring you the best courses to learn about the nitty-gritty of investing in shares and companies — from beginning to dividend.

For starters, we have the free Get Started Investing course. It covers all the basic of what is the stock market, how do I start investing and how do I build a portfolio.

For the more advanced investor, we have the highly-rated Value Investor Program. Normally priced a $499, we are excited to offer $100 off if you use the promo code: MATES.

What we’ve been reading

Why Disney’s $1.5 billion stake In Epic Games is a smart play

With some of the strongest Intellectual Property in the world, Disney should be better at gaming. Across Marvel, Star Wars and everything else, they are more known for licensing their IP to other game developers that building anything in-house.

This has been the case since 2016, when Bob Iger shut down Disney Interactive Studios (a division that was reportedly losing $200m per year).

But the scale of gaming is impossible to ignore. The video game industry is 8-times the size of Hollywood. And it is even bigger with Gen Z and Gen Alpha. It was only a matter of time before Disney tried its hand at gaming once again.

Earlier this month, Disney made its move. The company invested $1.5 billion into Epic Games, the maker of Fortnite, with Epic agreeing to build out digital worlds based on Disney’s IP.

The more you look into the announcement, the more it reminds you of something - although both companies wouldn’t say it. That something is: Metaverse. Take the comment from CEO of Epic Games, Tim Sweeney, the plan is to “build a persistent, open and interoperable ecosystem that will bring together the Disney and Fortnite communities.”

Uh oh. Here we go again…

There might be a weight loss drug competitor to Ozempic — and the company's stock is soaring

The competition against Novo Nordisk is on. First it was pharmaceutical giants Eli Lily and Pfizer racing to catch up to the maker of Ozempic. Now it appears other smaller pharmaceutical companies are getting involved in the gold rush of GLP-1 weight loss drugs.

Danish company Zealand Pharma saw their stock rise more than 34% in one day after announcing strong results in a clinical trial for a liver disease drug that is also being tested for weight loss.

Zealand Pharma is not alone. Regeneron, Amgen and Viking Pharmaceuticals are all racing to develop weight loss drugs and catch up to Novo Nordisk and Eli Lily.

It seems there’s still plenty of room for this market to grow. Despite product shortages around the world, Novo Nordisk project sales will grow 26% in 2024. As the market grows, and production catches up to demand, the only question is: which pharmaceutical company will be the market leader?

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