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Here’s what you need to know today

• One week into the Australian government’s expanded Home Guarantee Scheme (where first home buyers can avoid paying LMI with a 5% deposit) and economists are sounding the alarm. Across Australia, the average home is already up 5% since February when the RBA started cutting rates, and economists are warning this new scheme will accelerate this price growth. (AFR)
  
  

• Hamas has agreed to release all Israeli hostages, but on the condition it can negotiate details about the future of Gaza and the rights of Palestinians. This came after US President Trump warned Hamas they would face “all hell” if it did not agree to the American peace proposal. (BBC)
  
  

• After Hamas agreed to the principles of Trump’s peace plan, Trump publicly demanded Israel stop bombing Gaza. He posted, "Israel must immediately stop the bombing of Gaza, so that we can get the Hostages out safely and quickly!" (ABC News)
  
  

• Apple is reportedly quietly moving on from the Apple Vision Pro headset and shifting its focus to smart glasses. The company reportedly has two models in the works, one to be released in 2026 and a second in 2027. A key factor in this pivot has been Meta’s growing smart glasses sales, which have triples over the past year. (Bloomberg)
  
  

• Warren Buffett may have just made his last deal. Berkshire Hathaway has agreed to buy OxyChem from Occidental Petroleum for $9.7 billion. This is Berkshire’s largest deal in 3 years and with Buffett retiring as CEO at the end of the year, it may end up being his last. (Quartz)
  
  

• The Australian government’s Snowy Hydro 2.0 pumped hydro project has acknowledged it will not meet its $12 billion budget. This budget was already 6-times the budget that was first set when then-Prime Minister Malcolm Turnbull announced the project in 2017. The latest estimates put the project around $20 billion. (AFR)
  
  

• For months, the future of paying in cash in Australia has been under threat as big retailers and banks negotiated with the company that has a monopoly on transporting cash between the two, Armaguard. A new agreement sees all parties recognise the transport of cash around the economy as an ‘essential service’ with independent oversight of all contracts. (AFR)
  
  

• Telstra has been fined $18 million for breaching the Australian Consumer Law after moving almost 9,000 Belong customers to a lower speed NBN plan without notifying them. (Capital Brief)
  
  

• American lawmakers continued to fail to pass a government budget, leaving the federal government shut down over the weekend. The fifth budget vote is scheduled for Monday. (CBS News)

What the…?

Bad news for Japanese beer drinkers, supplies of Asahi beer are running low. Since last Monday, the Japanese brewer has been dealing with a possible ransomware attack leaving the brewer’s 30 Japanese breweries idle.

These attacks are happening more and more. Fellow Japanese companies Hoya and Kadokawa faced weeks-long shutdowns after ransomware attacks. And British carmaker Jaguar Land Rover reported losses of £50 million after a similar attack. (Finimize)

Investing is a lifelong journey

Here’s what you can learn today

Why Claude Walker loves small caps

This is an excerpt from our interview with Claude Walker, founder of A Rich Life, on Equity Mates Investing (Apple | Spotify)

Claude: Small caps are appealing because having a smaller amount of investment can be advantageous in this space. This advantage persists until you manage around ten million dollars. Since I don’t have that yet, it’s great to focus on small caps.

Bryce: Can you explain why that makes a difference?

Claude: Sure. Many small companies, especially those with management owning a significant portion of shares, can have limited trading volume. For instance, a company valued at around one hundred million dollars might have management holding fifty million dollars of shares. The available shares in the market could be quite low, making it difficult for larger funds to accumulate a meaningful position without impacting the share price. For a fund managing one hundred million dollars, it could take days or months to build even a small position, making them less likely to invest in these companies.

Consequently, many funds avoid these stocks, eliminating a substantial source of capital from competition. If you identify a small, profitable company with a solid business strategy, traditional investors might ignore it due to its size, providing an opportunity for you. Over time, if the company grows and increases its liquidity, it may attract larger investors once it becomes more established.

The optimal scenario occurs when such a company enters the ASX 200. This transition can lead to forced buying from ETFs tracking the index. If the share register remains tight, this can create a liquidity squeeze that drives up the share price, particularly if the company has grown without significant dilution.

When this happens, it’s a good time to consider taking profits or holding on; however, I generally wouldn’t buy at that point since it tends to be a peak moment. Overall, investing in small caps can be very rewarding if you have a solid entry point.

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