Let the good times roll!

The S&P/ASX 200 Index (INDEXASX: XJO) has been a great place to have your money over the past 3 months. Since 23 March, the ASX 200 has appreciated more than 30%. But as the weeks of this bull market stretch into months, I think investors should use an ever-growing sense of caution to avoid making ASX mistakes. 

Last week I wrote about how signs of dangerous investor behaviours are growing. Today, I’m suggesting 3 simple things to avoid in this bull market.

ASX mistake 1: Don’t try and make a quick buck

There have been a lot of signs that some investors are trying to make a quick buck in this bull market. Whether its buying distressed companies like Webjet Limited (ASX: WEB) or taking punts on the price of oil through the BetaShares Crude Oil Index ETF (ASX: OOO),  these kinds of movements are nothing more than gambling in my view. If you know this is what you’re doing, then go for it. It’s a free country. Just recognise that these kinds of trades can backfire very easily and even lose you 100% of your capital. If you want to actually invest rather than speculate, stick to buying businesses that you think will return your cash and more over the long-term.

2: Stay away from options trading

Options are financial derivative products that use leverage to ‘make a bet’ on which way a share price will go. They have been increasingly popular in recent months, particularly over in the United States. If you’re an experienced investor that knows what they’re doing, options can be a great way to make a small speculative investment or hedge your positions. But for most investors, I think staying away from options is a good idea. They are highly risky investments that rely on the whims of the share market. As such, I think the risk-reward ratio for most investors is skewed against them. As such, I would caution the use of options for most people out there.

3: Don’t chase hype trains

In my view, investing is about finding quality businesses that you can feel comfortable investing in over many years, hopefully at a great price. Jumping into growth shares like Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) or Splitit Ltd (ASX: SPT) just because they have been going up isn’t a great long-term strategy in my view. It concerns, not excites me when I see something like Splitit go up more than 100% in a few days.

I think this attitude is far more conducive to good long-term returns than risking a major ASX mistake by jumping on something that looks to be shooting the moon, just so you can catch some of the potential stars.

More reading

• The CBA share price is down 13% this year. Is it a cheap buy?
• Why the CSR share price is falling today
• Top brokers name 3 ASX 200 shares to buy today
• How to get rich by investing in ASX shares
• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Altium Limited (ASX: ALU)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $40.00 price target on this electronic design software company’s shares. Morgan Stanley notes that Altium expects to fall short of the market’s revenue expectations (US$192 million) in FY 2020 because of the pandemic’s impact on sales this month. While this is disappointing, the broker believes that investors should be focusing on its very positive long term outlook. I agree with Morgan Stanley and feel it is well worth sticking with Altium.

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

Analysts at Morgans have retained their add rating and lifted the price target on this banking giant’s shares to $21.00. According to the note, the broker believes the bad debt damage being factored into its share price is overdone. It doesn’t expect the bad debt experience from the current crisis to be as bad as the global financial crisis because of central bank and Federal Government action. I agree with Morgans and think ANZ is a good option for investors right now.

Woolworths Group Ltd (ASX: WOW)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this conglomerate’s shares to $40.50. The broker made the move after Woolworths released a trading update which revealed strong sales growth for its Food, Liquor, and Big W businesses. And while its Hotels business continues to weigh on its performance, the broker is optimistic this headwind will start to ease now that venues are reopening. I think Macquarie makes some great points and Woolworths could be a blue chip to buy.

More reading

• The CBA share price is down 13% this year. Is it a cheap buy?
• Why the CSR share price is falling today
• Bull market! Avoid these 3 ASX mistakes if you don’t want to lose money
• How to get rich by investing in ASX shares
• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. The Motley Fool Australia owns shares of Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mayne Pharma Group Ltd (ASX: MYX) share price is climbing today after revealing its E4/DRSP drug is one step closer to commercialisation.

At the time of writing, Mayne Pharma shares have jumped 4.6% to 38.7 cents after rallying as much as 8.1% in morning trade.

What did Mayne Pharma announce?

This morning, Mayne Pharma revealed the new drug application (NDA) for E4/DRSP to prevent pregnancy has been accepted for review by the US Food and Drug Administration (FDA).

The NDA submission includes results from two phase 3 clinical studies conducted in more than 3,725 women aged 16 to 50.

E4/DRSP is a novel combined contraceptive pill that contains 15mg of estetrol (E4) and 3mg of drospirenone (DRSP). 

The drug is being developed by strategic partner Mithra Pharmaceuticals SA, a biotech based in Belgium.

Mayne signed a 20-year exclusive supply and license agreement with Mithra in October 2019 to commercialise E4/DRSP in the US. This was followed by a similar agreement for the Australian market announced in May.

What is the market opportunity for E4/DRSP?

If approved, E4/DRSP would be the first contraceptive product containing E4. It would also be the first new estrogen introduced in the US for contraceptive use in approximately 50 years.

Mayne believes the US contraceptive market is valued at US$5.4 billion. The short acting combined hormonal oral contraceptives component of the market is estimated at US$4 billion, with approximately 135 million units sold annually.

Meanwhile, Mayne states that the Australian contraceptive market is valued at $130 million, with approximately 14 million short acting combined hormonal oral contraceptives sold annually.

Management commentary

Commenting on today’s update, chief executive Scott Richards said:

“This is another important milestone for E4/DRSP and brings us one step closer to providing women in the US with a new contraceptive that we believe will be effective, safe and well-tolerated. We look forward to working with the FDA and Mithra during the ongoing review of our application.” 

“In parallel, we continue to advance our US commercial strategy and infrastructure to ensure we are well positioned to support the potential launch of E4/DRSP in the first half of calendar 2021,” Mr Richards added.

Mayne has plans to file E4/DRSP with the Australian Therapeutic Goods Administration this calendar year.

More reading

• These 5 ASX shares saw the biggest losses last week
• ASX 200 Weekly Wrap: ASX back in the green
• These were the worst performers on the ASX 200 last week
• ASX 200 finishes higher by 0.8%, Carsales share price driven up by FY20 guidance
• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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