Thought Starters

Today’s email is sponsored by Fidelity

Investing globally is more than just the west. Are you missing out on investing in some of the world’s fastest growing companies by not expanding your horizons?

From China’s reopening to India’s growing middle class - the outlook for Asia look promising. But these dynamic markets can be volatile, and it pays to be selective.

Fidelity has been investing globally for over 50 years. Our investment experts are on the ground around the world, with local knowledge to invest in quality companies we believe can thrive through the market cycles.

Invest with a manager with global strength backed by local expertise.

_{This information does not take into account any person’s objectives, financial situation or needs. The PDS and TMD for the relevant fund can be obtained by contacting Fidelity or on our website www.fidelity.com.au and should be considered before making any investment decision. FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”) issues Fidelity’s managed investment schemes. To the maximum extent permitted by law, Fidelity Australia, its associates and related bodies corporate disclaim all responsibility and liability for any loss however arising in relation to this information which is solely for use by and distribution to the intended recipient.}

_{© 2023 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International, the Fidelity International Logo and F symbols are trademarks of FIL Limited.}

Automate your investing so you don’t have to think

Honestly, right now, I (Ren) don’t want to be writing this email. It is Sunday night and I have just driven 6 hours to get home, after a fun weekend watching two of our best friends get married (shout out Lucy and Rory!). I am hungover and my couch is calling.

It is for moments like this that I have automated my investing.

No matter how hungover or tired I am now. No matter how under the pump I am at work this week. And no matter how much fun I’m having next weekend, I know one thing - my money is automated and my portfolio will continue growing without me lifting a finger.

Here’s what I do and what you can do too.

At Equity Mates, we get paid every second Monday. Tomorrow, my fortnightly salary will hit my bank account. From there:

• On Tuesday, I have set up automatic transfers to my savings account and brokerage account

• On Wednesday, my brokerage account will automatically take that money and invest it in a few ETFs

That process will repeat every two weeks. Every two weeks I invest in a diversified portfolio of global stocks without giving it a thought or pressing a button.

Meaning I can head down the coast for a friend’s wedding confident that I have the processes in place to continue growing my wealth.

More and more investors are realising the power of auto-investing and, as a result, more and more brokers are offering this. In Australia, three to check out are Pearler, Superhero and Sharesies. (Not sponsored, just genuine appreciation for the auto-invest feature they each offer).

Wondering what to start auto-investing in? We did a podcast episode over summer A Strong Core to Support your Future which is a great place to start.

Now if there was a way that I could automate writing this email as well, then I’d truly be able to settle into the couch. Maybe that’s a conversation I need to have with ChatGPT…

Block: How inflated user metrics and “frictionless” fraud facilitation enabled insiders to cash out over $1 billion

Hindenburg Research is one of the most famous activist short sellers in the United States. Once they find a company they believe is fraudulent, they will take a short position in the company’s stock (where they make money if the share price falls) and then publish a public report on the company hoping to expose the issues they’ve identified. Hindenburg were the first to identify the problems with India’s Adani Group earlier this year and made their name a couple of years ago exposing electric truck company Nikola.

Last week they published their latest short report on Block, formerly Square (NYSE: SQ and ASX: SQ2). Block has a number of business units, amongst them:

• Square: the point-of-sale system and white credit card reader

• Afterpay: the Buy Now, Pay Later giant

• Cash App: a mobile app that allows peer-to-peer payments

• Tidal: a music streaming service

Hindenburg made a number of claims about Block but the two allegations that have captured the most attention:

• Misleading investors by overstating user counts, with former employees claiming up to 75% of users may be fake or fraudulent

• Allowing Cash App to be used for illicit activities and failing to ban fraudsters

Block’s share price fell 22% on the day Hindenburg released their report. But the company has come out swinging, saying they intend to pursue legal action against Hindenburg for the “factually inaccurate and misleading report”.

Watch this space. This story has plenty more to play out.

Will the Ozempic era change how we think about being fat and being thin?

There are two diabetes drugs that are being touted as miracle weight loss cures. Ozempic and Wegovy, both manufactured by Danish pharmaceutical company Novo Nordisk, are intended for the treatment of Type 2 diabetes. But people all over the world are trying to get their hands on it for its weight loss effects.

They work by sending messages to the brain that we’re full which increases insulin production which in turn lowers blood sugar. They also reportedly lowers food intake by lowering appetite and slowing down digestion in the stomach. Studies have found they reduce hunger, food craving, and in turn, body fat. No wonder they’ve been in such high demand.

These drugs have been so sought after that last year diabetics in Australia couldn’t get their hands on Ozempic because it was sold out across the country.

The stories about these new drugs are nothing short of astounding. But, as with all medications, they are not without their risks. This article takes a great look at the success stories and the side effects and then asks the ultimate question: if we have stumbled into a world of effective weight-loss drugs, how will that change how we think about being fat and being thin?

Tesla’s doctored numbers in investor presentation

This is a huge claim from Brad Munchen, an auto industry investor and Tesla bear. This article looks at what we learned at Tesla’s recent investor day. And the first thing that Brad claims he learned - that Tesla’s CFO bends some of the numbers in his presentation.

Beyond that claim, which we’ll let you make up your own mind about, the article unpacks where Tesla sees its future. It has ambitions to deliver 20 million vehicles a year by 2030, which would give it a 25% market share on today’s numbers (in 2022 global vehicle demand was 80 million vehicles). To get there, Tesla plans to spend between $150 billion to $175 billion.

Another aspect of this plan that has Brad raising his eyebrow (remember he is a Tesla bear, so really everything about this plan has his eyebrows raised) is that Tesla doesn’t have a pipeline of new car models in production. Instead, outside of the Cybertruck, they only have two new models scheduled out to 2030. With huge improvements in electric vehicle technology and increasing competition from Chinese and European carmakers, there is a question about whether the existing Model 3, Model X and Model Y will be able to continue competing.

Elon challenges this idea of needing more car models:

“Conventional carmakers are running out of things to do and they’re just reshuffling the deck with all their hundreds of variants, which are mostly not good. They’re just variants for the sake of variants. There used to be hundreds of flip-phone (variants). Now how many do we have?”

Elon has stared down Tesla bears before. Time will tell if he is right again.

Old mice grow young again in study. Can people do the same?

The quest to extend human life has long been a focus for those with extreme wealth. And our generation of tech billionaires is no different. Amazon’s Jeff Bezos invested in Altos Labs, Google’s Larry Page and Sergey Brin invested in Calico, and Peter Thiel was an early backer of Unity Biotechnology.

Beyond the clickbait headline to this article, there is some fascinating research coming out of the billions being poured into this space. And while the answer to the headline’s question may remain “no” for a long time, hopefully the research will lead to medical breakthroughs that will improve people’s quality of life, even if they keep ageing.

This study in Boston was able to give old, blind mice their eyesight back, develop smarter and younger brains and build healthier muscle and kidney tissue. The research team are now turning their attention to do a similar genetic reset on primates.

But for any tech billionaires reading this (which we’re sure there are) don’t get too excited yet. The research team thinks the possibility of human trials would still be decades away.

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