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📈 Twitter's one year anniversary | Thought Starters

A collection of our favourite articles from the past week

Catch up on Equity Mates

Here’s just some of the experts we’ve recently spoken with on Equity Mates Investing Podcast:

  • Rikki Bannan about two small caps in her portfolio: Propel Funeral Services (ASX: PFP) and Clarity Pharmaceuticals (ASX: CU6)

  • Glen James on the best way to invest for kids

  • Corey Doctorow about the influence of Big Tech and policy options to curb it

  • Patrick Malcolm to answer the age old question: pay off mortgage or invest in shares?

  • Andrew Norelli about the opportunities in fixed income and bonds

Find all of these interviews and more in the Equity Mates Investing Podcast feed on Spotify, Apple Podcasts or wherever you listen to podcasts.

Australia’s coming housing bust

A few weeks ago, on Equity Mates Investing Podcast, we celebrated Bryce taking the plunge and buying a house. Ironically, that same day we read a report from an analyst based in Singapore titled ‘Australia’s coming housing bust’.

We spoke about it on the podcast and shared some of the charts on Instagram, but here we are sharing the full article for those interested in reading.

For Australians, this is a story that has been well told. But we found it interesting to read from an outsiders perspective.

  • Historically, house price growth has tracked wage growth

  • Since the 2000’s, government policy has driven up the price of houses

  • Australians were forced to borrow more and more, even as housing became unaffordable by all traditional measures

  • This borrowing was sustainable as long as interest rates continued declining

  • Now that interest rates are rising, we’re seeing mortgage stress

Nothing we post across Equity Mates gets nearly as heated a reaction as housing posts. And one key element that the author of this report seems to miss is the net overseas migration numbers. With 400,000 new residents in 2022-23 and another 300,000 forecast for 2023-24, many housing experts believe that will create demand and keep prices rising. Especially because at our best, Australia is only able to build a bit shy of 200,000 new houses each year.

However, this short-term bump from migration doesn’t change the longer term story. House prices have become completely divorced from the broader economy. This chart that shows how house prices tracked earnings until the turn of the century really sums it up.

All of this isn’t to say that a crash is inevitable. We could see the market propped up for years or decades to come with new government policies and a growing population. Or we could see the market trade sideways as it allows earnings to catch up.

At the end of the day, the reality is that the Australian housing market is one of the most unaffordable in the world. It is important to remind ourselves that hasn’t always been the case and it isn’t inevitable that it will remain so. Over the long term, financial markets have a habit of reverting to the mean.

They Cracked the Code to a Locked USB Drive Worth $235 Million in Bitcoin. Then It Got Weird

The stories of people losing access to their cryptocurrency can be devastating. There is Stefan Thomas, who forgot the password of his storage device and can’t access $235 million in Bitcoin. Or James Howell, who accidentally threw out the USB containing £200million Bitcoin and is lobbying to dig up a tip in Wales to find it. Could you imagine how they would feel.

This article takes a look at a lab in Seattle that has spent 8 months working on devices like the one Stefan Thomas is locked out of, solely focused on finding a way to unlock that $235 million of Bitcoin.

The challenge with his device is that it allows the user 10 guesses of the password. After the 10th incorrect guess, the device locks and the data is unrecoverable. Stefan has used 8 of his guesses.

This Seattle lab believes after 8 months they have found a solution and have tested it on devices that are the same make and model are Stefan’s. But here’s where the story gets weird. Stefan’s not interested in their help.

The Elon Effect: Twitter (X) is shrinking under its new owner

Happy anniversary to Elon Musk and Twitter. It was on 27 October 2022, after a six month will-they, won’t-they, that the deal was closed and Elon officially owned one of the world’s largest social media platforms.

This article from Slate takes a look at what has happened in the year since. The first, inescapable conclusion is that Twitter (now X) is smaller than it was one year ago. And not just because Elon fired a lot of the workforce. It has been reported that Twitter’s app has lost 13% of its daily active users.

At the same time, Twitter’s core users continue driving engagement on the platform. In October 2022, the top 10% of users accounted for 70% of all time spent on the app. A year on, and the top 10% now accounts for 72% of all time spent.

Critics of Elon will point to total users numbers and argue the billionaire broke Twitter. Supporters of Elon point to the massive reduction in headcount compared to a much smaller reduction in users and argue that the company is more efficient and profitable one year on. The truth is likely somewhere in the middle. Twitter continues to be a powerful platform to distribute information in real time around the world. When news breaks, most of the world’s journalists would first log onto Twitter. The only question that really matters is, will that statement continue to be true in three, five, ten years time?

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Uncovered: Altech Batteries (ASX: ATC)

Uncovered is our exploration of smaller companies that receive less media attention and analyst coverage.

Energy storage is one of the biggest challenges of our transition to a net zero electricity grid. These days, there are plenty of options to generate electricity – solar, wind, hydro – but far fewer options to store electricity.

When you start thinking about renewable energy storage, you think of lithium-ion batteries. From our phones, to electric vehicles and to grid-scale storage, lithium-ion batteries have become the standard. But they have a lot of problems. Two key ones: they’re expensive and they have a habit of setting on fire.

Altech Batteries is an ASX-listed company working on commercialising grid-scale energy storage batteries that don’t require lithium, cobalt, graphite and copper to help drive the world’s energy transition. In our latest Uncovered article we take a look at the company and the new generation of batteries they’re working to develop.