This week on Equity Mates

Hey there Equity Mate,

We hope you had a great weekend.

The Summer Series continues this week across Equity Mates Investing and Get Started Investing.

On Equity Mates Investing Podcast we’re deep diving into 12 stocks with 12 expert investors to understand their research process and how they build an investment thesis.

Over on the Get Started Investing Podcast, we’re taking a journey to financial independence and discussing the pro’s and con’s of the FIRE movement.

Here’s what will be dropping this week:

• Monday: Equity Mates (Apple | Spotify): The Aussie small cap taking on the tech giants - Dropsuite

• Tuesday: Get Started Investing (Apple | Spotify): Saving and investing during a cost of living crisis

• Thursday: Equity Mates (Apple | Spotify): Riding the boom in aesthetic medicine - InMode

Tell us what you think of Equity Mates and you could win $500!

The Equity Mates Community Survey helps us to understand who is engaging with Equity Mates Media, and more importantly, how we can continue to improve our content to help you on your money and investing journey.

Win $500 in cash by completing the Equity Mates Media Community Survey 2024 & sharing your Bold Prediction for the year ahead. 

It shouldn’t take you more than 15 minutes to complete.

The survey is now open and closes on midnight on the 3rd March. T&Cs apply.

Your questions, answered

Niall asked via email:

I’ve got some pretty healthy returns from investing in Tesla and NVIDIA. Should I continue to hold or take profits? How do I know when to sell?

We put Niall’s question to Dominic Alafaci, from the founder of Collins House Private Wealth:

This is an excerpt from an Ask An Advisor episode with Dominic.

Good question. Three, three parts to my answer. Why did he buy the stocks in the first place? What was his objective? He needs to look back at that. If it's just simply to make money he’s at least achieved this objective.

Nvidia is my favourite stock in the world. Just about being an old game-y. I'm glad to see all those motherboards I spent money on have made them lots and lots of profits down the track.

So what was your objective? If you’ve achieved your objective then sell out.

Do you sell the the whole lot? If you achieve your objective, most people will keep some money in there and perhaps keep half.

The other question is do you have a diversified portfolio? Because if you don't, you're taking a huge amount of risk. If these are the only two stocks you've got [Tesla & NVIDIA] well, you don’t have much diversification. It doesn't matter how much money you make. And you could have easily invested into duds and lost your shirt. So if you don't have diversification - 5% to 10% in each position - you need to get it. So sell some and diversify.

And the third thing is your tax situation. If you're making this money and you've now got the opportunity to sell out, take a gain, pay the capital gains tax and if you've got a mortgage, I would sink that money straight into the mortgage. Because the riskless rate of return is almost double what the interest rate is and you can't invest. With zero risk.

If you have a question you’d like answered, hit us up at ask@equitymates.com

A word from our sponsor

Beat home country bias, and access 13 international markets like a true global investor, through CommSec. With brokerage on the US Market from $5 USD, you could be investing in the US, Germany, Norway, Japan plus more.

CommSec T&Cs and other fees and charges apply. Investing in overseas markets exposes you to additional risk.

What we’ve been reading

Buying Apple Computer In 2000

It is a none-to-helpful trope to look back at the Big Tech companies that emerged from the wreckage of 2000 tech bubble and consider how much money you could’ve made. If you had invested $1,000 in Apple in December 2000, today you would have $870,000. Rather than rehashing those tropes, this article asks a slightly different question: were there signs at the time that suggested Apple was going to be one of the long-term winners?

It is important that we don’t ignore the survivorship bias in this analysis. For every investment in Apple that could’ve gone from $1,000 to $870,000 there was an investment in WorldCom that could’ve gone to zero. For every successful investment in Amazon.com there was an unsuccessful investment in Pets.com. In hindsight, it’s easy to see why some companies work and some don’t. The challenge for us as investors is to figure it out at the time.

In 2000, it wasn’t obvious Apple would be a winner. Their key customers were the very technology startups going bust, and in the years that followed their new products weren’t sure things.

There are no perfect stories and no perfect companies, but those investors that looked past those challenges, saw the leadership and the potential and took the risk on Apple were handsomely rewarded.

As we fast forward to today, there are another generation of companies that were slammed in the 2022-23 COVID bubble bursting. Twenty years from now we’ll look back and think similar thoughts about a handful of companies that we think about Apple today. Our challenge as investors is to identify those companies. 

So, You Want to Buy a Pro Sports Team? Here’s How

The unbelievable rise and continued rise in the value of professional sports teams has been a story well told in this email. Around the world, professional leagues are cashing in on the increasing value of TV rights deals and the owners of professional teams are enjoying the benefits of owning truly scarce assets. There are only 32 NFL teams, only 30 NBA teams and those that want to buy one must pay a premium.

Traditionally the plaything of the ultra-rich, we are now see celebrities get involved either as minority owners or as owners of smaller teams: Ryan Reynolds, David Beckham, Serena Williams.

This article from GQ explains how the game is played. It speaks to owners like Ted Leonsis who paid $85 million for the Washington Capitals in 1999 (and sold his AOL stock to do it which a year later plummeted). The Capitals are today valued at $1.4 billion. And to Mark Cuban, the owner of the Dallas Mavericks who bought the team for $285 million and recently sold a majority stake - without surrendering operational control - at a $3.5 billion valuation.

However, the focus of the article is on the bankers and lawyers that manage the sales of these coveted assets.

It is a fascinating world and one that hasn’t fully made its way to Australia (while we do have some private ownership of sports teams, the monied frenzy in the United States and Europe hasn’t made its way down under). With the ever increasing value of TV rights (especially with the online streamers led by Amazon now also bidding) and the legalisation and increased social acceptance of sports betting, the value of these professional sports teams is only going to grow. And with it, the heated competition from the ultra-wealthy to own these few, coveted assets.

Want to pick up a free copy of the hottest summer read?

Start the new year off on the right foot with our latest book. We outline the absolute simplest way to invest, how you can automate it, and importantly, why it is enough.

To grab a free copy, just refer 4 people to this Equity Mates mailing list using your unique referral link below.