This week on Equity Mates

Hey there Equity Mate,

There’s been some good financial news to start the year. Yesterday, the Australian Bureau of Statistics (ABS) released Australia’s latest inflation figures. The headlines:

• Annual price inflation was 4.1% to December 2023

• Quarterly inflation to December 2023 was 0.6%, down from 1.2% in the quarter to September 2023

• Annual inflation peaked in December 2022 at 7.8% and since then it has been on a steady path downwards

This is good news for all Australians. We’ve all been feeling the increasing cost of living and have been hoping to see inflation fall back into the target 2-3% range.

Aussie homeowners will be particularly pleased. This data basically takes further interest rate rises off the table.

And the good news doesn’t stop there. Our Summer Series continue on both Equity Mates and Get Started Investing, meaning there’s been another big week of content for you to enjoy.

• Equity Mates Investing (Apple | Spotify)

  • Designing the AI revolution - Altium

  • From oil refining to servos - Viva Energy

• Get Started Investing (Apple | Spotify): 

  • The millionaire next door

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Your questions, answered

Ava asked via email:

What is the worst and best piece of financial advice you’ve heard?

We put Ava’s question to Jelena Koncar,

This is an excerpt from a recent episode we did with Jelena.

The worst thing that I've heard and that bothers me the most, especially at the moment, is when people are certain about the future. You should avoid people that have certain predictions about the future.

When people are so adamant about a particular outcome, that irks me the most, and it applies to many professionals in the industry. And it's so transparent when they're trying to push their own product, and many clients can fall for it.

Let's say a defensive value-based global equity fund, they’re typically more in favour when times are tough. So that bears naturally to them trying to promote their own funds, ‘predicting’ the markets will be down 30% next year. That's a typical example of a bear and pushing their own product. And they're very adamant on the fact that it's going to be down. And and I'm like, hang on a second.

So you need to ask yourself ‘why are you the expert?' How do you know what's going to happen?’ Buyer beware.

The best piece is from one of my idols, Suze Orman. She's a financial expert from the U.S. Her main saying is people first, then money, then things. And that's the point of it - you should put your relationships first. Money is the next most important thing, having financial security. And things are last. So really, when you go to buy that thing, you don't really need to impress the person you don't really care about. Think twice about that.

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

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What we’ve been reading

Why Taiwan’s Voters Defied Beijing—Again

Despite allegations of Chinese interference in Taiwan’s recent election, the voters have delivered the ruling Democratic Progressive Party (DPP) an unprecedented third term in office. The DPP has sought to enhance Taiwan’s defence against China with deeper security and economic ties with the United States and her allies - Japan, South Korea, Australia and likeminded democracies. Not what China had hoped to see. 

This article from the Journal of Democracy unpacks the results of the election and considers what we can learn about Taiwanese politics and China-Taiwan relations. And understanding the China-Taiwan relationship will be critical in the coming years. Despite ongoing conflict in Eastern Europe and the Middle-East, it may be China and Taiwan that present the biggest possibility of dragging major, nuclear-armed, world powers into direct confrontation. 

Military strategists around the world believe that President Xi wants to reunify China before 2030, peacefully or by force. For example US military personnel writing in the Journal of Indo-Pacific Affairs have suggested 2027 is the year that President Xi has circled on his calendar. 

Returning to this article, the results of this election will only further deteriorate Taiwan-China relations. Which are already at a low ebb after the past year.

As we enter 2024, we should expect more military exercises from Beijing and greater economic coercion, starting with increased tariffs on key Taiwanese exports. As President Xi gets older and China’s economy slows, there is an expectation that Xi leans on more nationalist rhetoric to maintain domestic support and build his legacy. We should all hope that his rhetoric doesn’t lead to an escalation that cannot be taken back. 

Road kill on the information highway: 30 years on

In 1993, the soon-to-be Chief Technology Officer at Microsoft, Nathan Myhrvold, wrote an internal memo for Microsoft employees titled “Road Kill on the Information Highway”. It included a set of predictions for the direction of technological development and the future of computing and the internet. That memo has become a famous piece of Silicon Valley lore, and 30 years on, has proven quite prescient as many of Myhrvold’s predictions have come to pass.

This Tweet (X) thread captures many of Myhrvold’s predictions and considers how they have played out in the 30 years since.

He made a number of predictions about the future direction and use of technology: the use of body cameras by the police, voice calls becoming essentially free, telecommuting and working from home. He also predicted which industries would suffer as a result: broadcast TV will suffer a slow, 20-30 year decline, books would be okay, and “newspapers are in probably the worst situation of any form of print media”.

It is interesting to look back at a time before the widespread use of the internet (the first widely used web browser, Netscape Navigator, was still a year away from launch) and consider how those at the frontline of technology thought the world would develop. Our biggest takeaway? Many of Myhrvold’s predictions were correct (at least directionally) but they took far longer to play out that he thought at the time.

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