Month: May 2022

The Zip Co Ltd (ASX: ZIP) share price has been spiralling downwards to post a loss of 14% in May.

This comes despite the buy-now pay-later (BNPL) company keeping relatively quiet on the news front lately.

At the time of writing, Zip shares are down 3.59% to 94 cents apiece.

What happened to Zip shares?

Late last month, Zip advised that a number of its securities are due to be released from voluntary escrow.

On the day, this sent the Zip share price heavily south, with a 10.82% drop following the announcement.

Furthermore, the recent dip as described by management in its third quarter trading update could be the significant volatility in equity markets. The S&P/ASX All Technology Index (ASX: XTX) has fallen around 8% over the course of May.

Investors continued to sell off Zip shares following negative sentiment across the tech industry.

This is being driven by high inflation, a tightening monetary policy and the latest COVID-19 outbreak in China.

Particularly, consumer prices in Australia have surged at the fastest annual pace over the last 20 years.

The Reserve Bank of Australia updated its statistics, indicating that inflation has risen 5.1% in the March quarter of 2022. This is being blamed on high levels of building construction activity combined with shortages of materials and labour, as well as record automotive fuel prices.

However, in an effort to slow down the rising price of goods, the RBA has been lifting interest rates.

What this means is that consumers are less likely to spend on discretionary items when interest rates are picking up.

The cost of debt such as credit cards as well as personal loans will require extra payments, affecting consumer spending habits.

Ultimately, this impacts Zip’s business model.

Zip share price summary

It has been a rollercoaster ride for Zip investors.

The company’s shares rocketed to an all-time high of $14.53 in February 2021, before plummeting since. This means based on today’s price, Zip shares are down more than 93% from their record high.

On valuation grounds, the company commands a market capitalisation of around $588.19 million.

The post May was another shocker of a month for the Zip share price. Here’s why appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: AGL demerger scrapped, A2 Milk jumps
• ‘Intestinal fortitude’ or just wishful thinking? Why do some investors stick with Zip shares?
• ‘An easy one’: Expert reveals which ASX share he’d hold for 4 years
• Why is the Zip share price beating the ASX 200 today?
• The Zip share price is down 80% in 2022. Should you cut your losses?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/EQ25srx

The Pilbara Minerals Ltd (ASX: PLS) share price has jumped ahead in May, but could it go higher?

The lithium miner’s share price has leapt 7% since the first trading day in May from $2.77 to the current share price of $2.975. In today’s trade, the company’s share price is currently down 0.17%.

Let’s take a look at the outlook for Pilbara Minerals.

Is the Pilbara Minerals share price a buy?

Pilbara Minerals is a lithium producer working on the Pilgangoora Lithium Tantalum Project near Port Hedland in Western Australia.

Broker Macquarie has recently retained an outperform rating on the company and placed a $4 price target on the Pilbara Minerals share price. This is a 34% upside on the share price at the time of writing.

Macquarie analysts updated their outlook for Pilbara following the company’s fifth spodumene concentrate auction on the Battery Metal’s Exchange (BMX).

The company received strong interest with a winning bid of US$5,955 per dry metric tonne. As my Foolish colleague James reported, Macquarie noted this was much higher than predicted. The broker also highlighted lithium prices are well above forecasts, which could mean a revision to the company’s earnings estimates.

Back in 2021, Pilbara Minerals accepted a bid of US$1,250 per tonne on the BMX. This means prices have increased 376% since this date.

Meanwhile, Pilbara Minerals was among the three most traded ASX 200 shares on Monday, my Foolish colleague Sebastian reported. More than 30.6 million Pilbara shares swapped hands on the market yesterday.

Pilbara recently received a $20 million grant from the Federal Government. This will be used towards a joint venture with Calix Ltd (ASX: CXL) to develop the chemicals facility at Pilgangoora to produce lithium salts.

Share price snapshot

The Pilbara Minerals share price has surged 140% in the past year, but has fallen around 7.5% this year to date.

For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) has jumped 5% over the past 12 months and almost 8% this year.

Pilbara Minerals has a market capitalisation of about $8.8 billion.

The post What’s the outlook for the Pilbara Minerals share price in June? appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most traded ASX 200 shares on Monday
• 3 ASX lithium shares set to roar back: experts
• Top brokers name 3 ASX shares to buy next week
• Here are the 3 most traded ASX 200 shares on Friday
• Why Infomedia, Pilbara Minerals, PointsBet, and Talga shares are racing higher

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/CDMtYbH

Yesterday was a momentous occasion for anyone opposing the demerger of AGL Energy Limited (ASX: AGL), even if the share price dipped to the downside.

For those who missed the headlines, the energy giant revealed that it would not proceed with its proposal to break the company into two parts. Instead, AGL will conduct a strategic review to decide what is the best course of action to take next.

The wooden stake through the demerger’s heart follows months of pressure from tech billionaire Mike Cannon-Brookes. In short, the Atlassian Corporation Plc (NASDAQ: TEAM) co-founder believed the best decision would be for AGL to remain whole and adopt a more ambitious path toward decarbonisation.

But, considering the AGL share price slipped on the news, is staying as one company the right move?

Why one AGL on the ASX is better than two

As a new day dawns on the AGL share price, the company’s shares are clawing back from yesterday’s losses. At the time of writing, AGL shares were trading at $8.74 apiece, up 0.23%.

Today, Monash Energy Institute director Professor Ariel Liebman explains the merits of yesterday’s decision.

Amid skyrocketing coal and gas prices, Liebman notes the decision to keep AGL together is a ‘great outcome’. Importantly, he says, it gives the company the best chance to prioritise a shift to renewables.

Leibman states:

This bodes well for consumers as it will accelerate the move away from ageing and unreliable fossil assets that are increasingly resulting in higher wholesale prices, as seen in the last few weeks. Failing coal-powered generators owned and managed by energy companies are one of the drivers of recent electricity price hikes, as the price of electricity generation increases due to the reduction in electricity supply while such fossil stations are being repaired.

In the last week, the fragility of fossil fuels to sudden changes in supply and demand has been demonstrated.

Roughly 7% of the east coast’s commercial and industrial gas customers hang in the balance after Weston Energy ceased operations. The gas retailer ground to a halt as it was no longer financially capable of dealing with the 180% price increase in its supply.

Similarly, Liebman points out that the ‘new’ ASX-listed AGL would not have been able to fund its foray into renewables. The sustainable energy systems professor said:

If the demerger had gone ahead the so-called “New AGL” (AGL Australia) would have been unable to invest in large renewable energy generation projects and conversely the stand alone and mostly generation-heavy entity, Accel Energy, would have had an incentive to keep their coal and gas generators operational to maximise shareholder value.

Out with the old, in with the new

Coinciding with the ditching of demerger plans, the board will be getting a new look. According to yesterday’s release, the board has commenced a search process to find replacements for the chair, CEO, and two directors.

Shareholders might be hoping for ASX-listed AGL to gain more renewable energy-focused board representation from this process. There is the possibility that Mike Cannon-Brookes will be seeking out spots for nominees of his own.

Lastly, the AGL share price is up 7.1% over the past year. Despite all the noise, the company has outperformed the S&P/ASX 200 Index (ASX: XJO) on a trailing 12-month basis.

The post Why the decision to keep AGL as one makes sense: expert appeared first on The Motley Fool Australia.

More reading

• Why these 2 ASX 200 shares are undervalued opportunities: WAM
• 3 ASX shares to buy in troubled times: expert panel
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX shares today
• Why this rich lister is buying ASX dividend shares that ‘pay you to wait’

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/SNnY8xW

ASX-listed Tasmanian whisky distilling company Lark Distilling Co Ltd (ASX: LRK) has been the subject of many headlines this year, each likely weighing on its share price.

The stock has tumbled 43% since the start of 2022 amid numerous scandals. At the time of writing, the Lark Distilling share price is down 0.34% for the day at $2.92.

At that price, stockbroker Angus Aitken reportedly believes it’s trading for “dirt cheap”.

Let’s take a closer look at why the $220 million whiskey business has caught the expert’s eye.

Stockbroker flags this ASX share as ‘dirt cheap’

The Lark Distilling share price has endured plenty of drama this year and Aitken has used the resulting sell-off to jump on board.

The stockbroker told The Australian the spectacle involving the company’s now-former CEO “didn’t change the value of the brand or the maturing whisky”.

The ASX share hit headlines back in February when a video of then-CEO Geoff Bainbridge appearing to smoke illicit substances emerged.

Bainbridge quickly resigned and claimed he was the victim of an elaborate extortion attempt.

However, multiple media outlets later disputed such claims, pulling previous articles framing Bainbridge as a victim of extortion, reported the Guardian.

If that wasn’t bad enough, the company was back in the headlines earlier this month. This time, it was caught up in criticism of a $4.5 million grant from the Coalition Government, reported The Mercury.

While the bad press likely disappointed some market participants, it reportedly gave Aitken a good entry point.

“We are new to Lark as we think the valuation is dirt cheap,” he told The Australian. He added:

Lark is the only Tasmanian premium whisky producer we see as having the scale to get into Asia long-term and compete with the high-end Scottish and Japanese whiskies.

Lark should easily make [$25 million to $30 million] (in earnings) down the track and hence you are buying this stock on single digit multiples when the average [earnings before interest, tax, depreciation, and amortisation (EBITDA)] takeover in the premium spirits space is [30 to 40 times].

The post The ASX share trading on ‘dirt cheap’ valuation right now: broker appeared first on The Motley Fool Australia.

More reading

• Why the decision to keep AGL as one makes sense: expert
• Bubs share price tumbles 5% amid broker downgrade
• Buy the dip? 2 cryptocurrencies to watch
• The pros and cons of dollar-cost averaging
• Iron ore price to fall 27% by end of 2022: CBA

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/sQBvNDL

The Bubs Australia Ltd (ASX: BUB) share price has run out of steam on Tuesday morning.

At the time of writing, the infant formula company’s shares are down 5% to 64.5 cents.

Why is the Bubs share price sinking today?

There appear to be a couple of catalysts for the weakness in the Bubs share price on Tuesday.

The first is profit taking after a stellar gain on Monday following news that the company has struck a deal with the Biden Administration to supply 1.25 million tins of infant formula to help with shortages in the United States.

The market’s reaction was so positive that the Bubs share price remains up 33% this week despite today’s decline.

What else is weighing on its shares?

Also potentially weighing on the Bubs share price is a broker note out of Bell Potter this morning.

According to the note, the broker has downgraded the company’s shares to a (speculative) hold rating with an improved price target of 75 cents.

Bell Potter was pleased with the aforementioned news but highlights that the US FDA’s infant formula enforcement discretion policy (IFEDP) is only in place effect until November. As such, it is treating this development largely as a temporary sales boost. It said:

The IFEDP is only in effect until Nov’22 and in this light we have treated this largely as a temporary sales boost, with additional toddler formula sales thereafter.

Though, the broker does acknowledge that the announcement should boost brand awareness in the US, which is a market it believes could be very lucrative for Bubs. It explained:

At the very least the announcement de-risks near term sales forecasts for BUB, which are premised on execution against the Alpha Group equity linked distribution deal announced earlier in the year.

It could also be a viewed as a positive signal for BUB’s achieving future USFDA approval for its infant products and enhanced brand awareness for its existing toddler products which are already distributed in the US. The upside potential in the US is high, particularly the organic grass fed IMF product, where we have estimated in the past a 2.0-4.5m pa tin opportunity for similar products.

However, due to the strong rise in the Bubs share price, the broker doesn’t believe the risk/reward on offer is enough to maintain a buy rating.

It concludes:

This is a good announcement for BUB and at the least will likely result in increased US brand awareness while benefiting near term cashflows. BUB remains a high ceiling growth play in the IMF, however, in light of the recent share price gain we downgrade our rating from Buy, Speculative risk to Hold, Speculative risk.

The post Bubs share price tumbles 5% amid broker downgrade appeared first on The Motley Fool Australia.

More reading

• 2 ASX All Ordinaries shares rocking new 52-week highs today
• Why Alkane Resources, Block, Bubs, and Telix shares are storming higher
• Why is the A2 Milk share price climbing 11% on Monday?
• Bubs share price rockets 77% on US deal with Biden Administration
• Why is the Bubs share price toddling higher on Monday?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/W9Z17ld

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Renowned investor Warren Buffett once said, “Be greedy when others are fearful.” And with the crypto market down roughly 40% to $1.3 trillion year to date, now could be a good time for investors to shop around for quality assets trading at a discount. Let’s explore why Avalanche (CRYPTO: AVAX) and The Sandbox (CRYPTO: SAND) should be on your radar. 

1. Avalanche 

Avalanche is a blockchain designed to host decentralized applications (dApps), self-executing programs that offer services on the network. It has faced near-term headwinds because of its association with the failed stablecoin platform Terra. But this challenge doesn’t kill its long-term growth thesis. 

In early May, the U.S-dollar-tracking cryptocurrency TerraUSD lost its peg, triggering a collapse in its complementary token LUNA, designed to absorb the stablecoin’s volatility. Avalanche has also taken a hit because Terra’s developer, via the Luna Foundation Guard (LFG) (an organization that held digital assets to help prop up Terra’s peg), holds around 2 million AVAX tokens — stoking fears that it could unload the position to pay for real-world expenses such as taxes or possible litigation. 

But with almost 270 million AVAX in circulation, the sale of LFG’s holdings probably won’t have a significant impact on Avalanche, aside from bad press. And investors should keep a long-term perspective. 

Unlike most blockchains, Avalanche is naturally deflationary. The platform has a fixed maximum supply of 720 million AVAX tokens and burns (removing from circulation) all its transaction fees. So far, it has burned roughly 1.8 million units of AVAX worth $55 million. This mechanism should help boost the token’s price over the long term — although it will depend on demand increasing or remaining stable, which isn’t guaranteed.

2. The Sandbox

Is the metaverse overhyped vaporware or a once-in-a-lifetime investment opportunity? Only time will tell. But however the concept turns out, blockchain technology is already playing a role in its development. Investing in The Sandbox is a great way to bet on this trend because of its early mover advantage in the industry. 

Some major financial institutions are optimistic about the metaverse. Analysts at CitiBank believe the opportunity could be worth a jaw-dropping $13 trillion by 2030, becoming the “next generation” of the internet. Cryptocurrencies like The Sandbox are well suited to benefit from this trend through technologies like non-fungible tokens (NFTs), which are a secure means of establishing ownership of digital assets. 

The Sandbox boasts a portfolio of over 166,000 plots of digital real estate called LANDS where individual users can build games and other digital experiences. And as one of the first crypto projects to show tangible progress in building a blockchain-based metaverse, it has attracted significant real-world interest. 

In May, Dubai’s Virtual Assets Regulatory Authority announced plans to open a headquarters within The Sandbox to engage with crypto-related companies seeking to operate in the jurisdiction. This is a massive vote of confidence in the platform that could attract more investment. 

Timing the market?

Investing in a bear market is tricky because it’s hard to call the bottom. But time in the market tends to be more important than timing the market. And while investors may want to wait a few months for the dust to settle, Avalanche and The Sandbox could make great long-term bets because of their unique designs and expanding market opportunities. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Buy the dip? 2 cryptocurrencies to watch appeared first on The Motley Fool Australia.

More reading

• Why Ethereum and Dogecoin are recovering nicely today
• Why Ethereum, Dogecoin, and The Sandbox dropped today
• Why The Sandbox Cryptocurrency Is Up Today

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Terra. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/fTU3Isa

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

When thinking about investing, one consideration is whether to invest funds all at once or over a period of time. If you choose the latter route, you might be opting for an investment strategy called dollar-cost averaging.

With dollar-cost averaging, you invest your money in equal portions, at regular intervals, regardless of the ups and downs in the market.

Let’s say you receive a bonus or have saved up $10,000 to invest. Instead of investing that amount all at once, with dollar-cost averaging you might split that $10,000 into 10 parts and invest $1,000 a month for 10 months.

You might already be engaging in dollar-cost averaging and not even know it. If you have a 401(k) [employer-contributed retirement fund, similar to Australian superannuation] or another type of defined contribution plan, your contributions are allocated to one or more investment options on a regular, fixed schedule, regardless of what the market is doing. Every time this happens, you’re dollar-cost averaging.

Before you start divvying up your money, here are three things to know about dollar-cost averaging:

Why might someone consider dollar-cost averaging?

It would be great if we could buy stocks, or other types of investments, when the market is low and sell when the market is high. Unfortunately, efforts to “time the market” often backfire and investors end up buying and selling at the wrong time.

When stocks go down, people often get fearful and sell. Then, when the market goes back up, they might miss out on potential gains. On the flip side, when the stock market goes up, investors might be tempted to rush in. But they could end up buying just as stocks are about to drop.

Dollar-cost averaging can help take the emotion out of investing. It compels you to continue investing the same (or roughly the same) amount regardless of the market’s fluctuations, potentially helping you avoid the temptation to time the market.

When you dollar-cost average, you buy more shares of an investment when the share price is low and fewer shares when the share price is high. This can result in paying a lower average price per share over time.

And by wading in, as opposed to handing over your money all at once, dollar-cost averaging can help you limit your losses in the event the market declines.

What are the potential downsides of dollar-cost averaging?

Dollar-cost averaging can be a helpful tool in lowering risk. But investors who engage in this investing strategy may forfeit potentially higher returns. With dollar-cost averaging, you’re holding onto your money as cash longer, which has lower risk but often produces lower returns than lump-sum investing, especially over longer periods of time.

If the market goes up during a period when you’re dollar-cost averaging, you might miss out on the potential gains you could have had, had you invested right away in one fell swoop.

Of course, this doesn’t apply to something like your 401(k) because, in that situation, you’re investing the money as you earn it, not holding money in cash until a later date.

Also, keep in mind that if you engage in dollar-cost averaging, you might encounter more brokerage fees. These fees could erode your returns. And you also need to be disciplined with that money that’s sitting on the sidelines in order to actually eventually invest it and not erode it with purchases.

What’s the bottom line for investors?

As is the case in all aspects of investing, it’s important to consider potential returns as well as your tolerance for risk.

Investing all of your money right away might yield higher returns than dribbling out smaller amounts over time.

But if you’re looking to reduce your risk and control your emotions, or you’re concerned about volatile market conditions, then dollar-cost averaging could be a viable strategy — even if that means forfeiting some potential upside. If your main concerns are reducing short-term downside risk and avoiding feelings of regret after a potential loss, dollar-cost averaging might be right for you.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post The pros and cons of dollar-cost averaging appeared first on The Motley Fool Australia.

More reading

• Iron ore price to fall 27% by end of 2022: CBA
• Interest rates have mugged shares… for now
• Here’s why the Kalium Lakes share price is rocketing 25% higher today
• 3 ASX mining shares billionaire John Hancock is buying for rising inflation and the energy transition
• Here’s why I’m going to invest in more Soul Pattinson shares in June

Subscribe to FINRA’s Investor Insights newsletter for more information about saving and investing. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/beOgp5f

The latest commodity price forecast revisions from Commonwealth Bank of Australia (ASX: CBA) could impact ASX dividend investors eyeing long-term payouts from the likes of Fortescue Metals Group Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP).

Both of the iron ore giants showered investors with record dividend payouts over the past year on the back of all-time high prices for the industrial metal. But CBA is forecasting iron ore prices are due for a significant retrace.

What’s been happening with iron ore?

Iron ore reached nearly US$220 per tonne in July last year before sliding to US$92 per tonne in November and then rebounding once more. It’s currently trading for just under US$135 per tonne.

With the miners flush with cash, much of which was returned to shareholders, this sees BHP currently trading on a 11.0% trailing dividend yield and Fortescue paying a whopping 15.2% yield.

But if CBA’s commodities team has it right, the big miners may need to tighten their belts in the face of a 27% drop in iron ore prices by year’s end.

What is CBA forecasting?

CommBank’s director of mining and energy commodities research Vivek Dhar said CBA has “made significant revisions to our commodity price deck”.

According to Dhar (as reported by The Australian Financial Review):

Industrial metal and iron ore prices remain beholden to Chinese policy. We anticipate that China’s COVID‑19 lockdowns will ease enough by [the second half of] 2022 to enable policy support measures to boost China’s demand impulse. Base metal prices should lift from [the third quarter of] 2022 to [the fourth quarter of] 2022 as a result.

Our declining iron ore price profile indicates China’s plan to reduce steel output production this year. Steel production will likely need to be constrained later this year, echoing restrictions [imposed in 2021].

CBA forecasts iron ore prices will fall to US$120 per tonne by the end of September and finish 2022 trading for US$100 per tonne.

Gazing further ahead, CBA analysts see a further 20% slide the following year, with iron ore trading for US$80 per tonne at the end of 2023 and likely staying in that range into 2025.

The post Iron ore price to fall 27% by end of 2022: CBA appeared first on The Motley Fool Australia.

More reading

• Why the CBA share price is beating the market in May
• Why did the Fortescue share price lag the ASX 200 in May?
• Why this rich lister is buying ASX dividend shares that ‘pay you to wait’
• Leading brokers name 3 ASX shares to buy today
• Why I’d buy these 2 ASX 200 shares

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/jpBsQhf

Inflation.

Scary, huh?

Prices in the US are up by 8%.

9% in the UK.

Producer prices are up more than 12% in Germany.

Here?

5.1%. For now.

The last quarterly read was 2.1%.

If you annualise that… well, the US experience comes to mind.

And I have to say, there’s no guarantee that it doesn’t get worse from here.

I was talking to a mate on Saturday who has his own business.

He’s seeing prices going up all over the place, particularly imports.

He reckons there’ll be worse to come. I think he might be right.

If there’s a good time not to be a central banker, it’s right now.

It’s also the time we need their expertise most, of course.

But it won’t be easy.

We’re still emerging from a pandemic.

There’s war in Europe.

Shutdowns in China.

Ports are clogged and sclerotic.

We have the same amount of money, chasing fewer goods.

Is it any wonder prices are rising?

Don’t get me wrong, I’m still an eternal optimist.

Our best days – as a country and as a system of democratic capitalism – are ahead of us.

But it might be a bumpy ride on the way, particularly this year and maybe next.

Right now, share markets are scared.

You only have to look at the indiscriminate selling of the shares of ‘growth companies’ to see that.

Sure, some businesses may not survive as prices rise and new funding dries up.

But the rest?

They’re the babies being thrown out with the bathwater.

I was talking to another mate last week.

He mentioned a US company whose shares have fallen from 36 times revenue to 3 times, despite sales growth of almost 50% year over year.

Sure, that 36 might have been (almost certainly was!) a crazy multiple.

But 3 times?

The same business. The same growth trajectory. The same impressive outlook.

No, you shouldn’t buy shares just because they’re down – they can always go further (or, in a worst-case scenario, to zero).

But – and this is important – it’s not the time to sit on the sidelines, or worse, to sell.

If inflation continues at these sorts of rates, your purchasing power is being eroded, almost daily.

If some share prices are at panic levels, that opportunity isn’t going to be around for long.

Whether you’re looking for income from your shares, or for the next 10-bagger, this is precisely the time you should be paying most attention.

But guess what?

Most people aren’t. They’re waiting for the good times to return first.

Good times? Like when that company’s shares were at nosebleed levels and everyone was partying?

You can see the problem, can’t you?

Oh, I’d love to wait until the coast is clear, too.

Wait for someone to yell ‘Come on in, the water’s fine’.

But you know who tried that? The people who waited, in March and April, 2020, for COVID to be over before investing.

And since then?

The ASX is up more than 50%.

Plus dividends.

I’m not Harry Hindsight, by the way. I was banging the table at the time.

How much will our purchasing power be eroded by the time some people decide to invest?

How far will share prices have risen before some people decide the water is calm enough to dip their toes in?

You know Warren Buffett, right?

He famously said that we pay a ‘high price for a cheery consensus’ in the stock market.

In other words, by the time everyone is feeling good, prices have already risen.

The time to buy is when everyone else is scared.

That’s when prices are low(est).

Which is precisely how the most money is made.

Not in a day. Or in a week. Or even necessarily in a year.

Don’t you wish you’d invested (more) in March 2020?

$10,000 invested then would be worth north of $15,000 today. Plus dividends!

Not bad for 26 months’ (of no) work, huh?

And how far will retail prices have risen in the next 26 months?

What will that $1,000 buy you by then? Maybe something like 10 – 20% less?

Even if bank interest goes up a little bit, it’s very, very unlikely to even go close to keeping up with inflation.

Can I guarantee that share prices will?

Nope.

But I can tell you that, over more than a century, Australia’s share market has earned an average of 9 – 11% per annum.

Which beats cash in the bank. And, over time, should handily beat inflation, too.

It might be a bumpy ride.

It might fall further before it rises.

Those gains could take a while to come to fruition.

But I’m betting (literally; my entire retirement savings are invested in shares alone) that they’ll come.

And when they do, that they’ll beat inflation.

And I reckon history will show that a portfolio of quality businesses will have been a bargain in May and June 2022.

Some will do spectacularly well from here.

But you need to take action.

You know the overwhelming response I get from investors, in 2022, when we talk about March and April 2020?

“I wish I’d bought more”!

I’m not saying this is the bottom. If I did, I’d be guessing. So would everyone else (but they might be less honest about it).

What I am saying is that I think now is a great time to be buying (and/or holding) shares if you have a long term investing horizon.

I think there is an opportunity for the enterprising investor, if they’re prepared to grasp the nettle and (to mix my metaphors) ride the waves.

The choice is yours.

Fool on!

The post Interest rates have mugged shares… for now appeared first on The Motley Fool Australia.

More reading

• Here’s why the Kalium Lakes share price is rocketing 25% higher today
• 3 ASX mining shares billionaire John Hancock is buying for rising inflation and the energy transition
• Here’s why I’m going to invest in more Soul Pattinson shares in June
• Why these 2 ASX 200 shares are undervalued opportunities: WAM
• Buy these 2 impressive ASX 200 shares in June 2022: experts

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/J8ObzRA

The Kalium Lakes Ltd (ASX: KLL) share price has been in sensational form on Tuesday.

In morning trade, the sulphate of potash (SOP) developer’s shares are up 25% to 11 cents.

Why is the Kalium Lakes share price racing higher?

Investors have been bidding the Kalium Lakes share price higher this morning after the company released an update on its Beyondie SOP Project.

According to the release, the company has validated the process design with production of approximately 400 tonnes of commercially saleable SOP.

In light of this, management appears confident that the Beyondie SOP Project will be operating at an approximate 80,000 tonnes per annum SOP production run rate by the first quarter of calendar year 2023.

After which, the company expects to reach its targeted 120,000 tonnes per annum run rate around 18 months later.

In addition, Kalium Lakes revealed that its SOP purification plant commissioning is proceeding as planned, with equipment testing well advanced and continuing in June and July.

Finally, management advised that discussions with debt providers and key offtake partner, K+S, are advancing in relation to funding initiatives and SOP deliveries, respectively.

Kalium Lakes’ Chief Executive Officer, Len Jubber, commented:

We are very pleased that through recent equipment testing and the production of SOP we have been able to validate the overall process chemistry and plant design. We are now focussed on systematically addressing the remaining bottlenecks in the plant and progressively increasing production.

Plant operations during 2022 will be variable taking into account our need to conduct further mechanical debottlenecking activities and build KTMS inventory. Kalium Lakes is the first SOP producer in Australia, and we look forward to selling our first commercial production into the current extremely strong SOP price environment. We believe the Company has an exciting future and we would like to thank all stakeholders, including shareholders, for their patience.

The post Here’s why the Kalium Lakes share price is rocketing 25% higher today appeared first on The Motley Fool Australia.

More reading

• Interest rates have mugged shares… for now
• 3 ASX mining shares billionaire John Hancock is buying for rising inflation and the energy transition
• Here’s why I’m going to invest in more Soul Pattinson shares in June
• Why these 2 ASX 200 shares are undervalued opportunities: WAM
• Buy these 2 impressive ASX 200 shares in June 2022: experts

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/4mHV50z