The S&P/ASX 200 (ASX: XJO) fell by 1.9% today. Overnight the Dow Jones Industrial Average (DJI) fell by 6.9% on fears of a second wave of COVID-19.

This week the Federal Reserve boss Jerome Powell said: “This is going to take a whole lot of time. There are just a lot of people that are unemployed and it seems quite likely there will be a significant group, even after a lot of strong jobs growth, that will still be struggling to find jobs.” 

But there was some good news for Australians today. The federal government has announced it’s working on rules with the states to allow stadiums with 40,000 seats to hold crowds of up to 10,000 people. Bigger stadiums could be allowed to fill a quarter of the seats. These changes could come in July.

Major ASX banks retreat

The share prices of each of the big four ASX banks went backwards today.

The Commonwealth Bank of Australia (ASX: CBA) share price dropped 1.2%, the Westpac Banking Corp (ASX: WBC) share price fell 3.1%, the Australia and New Zealand Banking Group (ASX: ANZ) share price declined 2.8% and the National Australia Bank Ltd (ASX: NAB) share price dropped 2.2%.

However, they remain higher than where they were a month ago. 

Big falls in the ASX 200

Thankfully the ASX 200 actually recovered some lost ground – it was down over 3% this morning. However, whilst some shares like Afterpay Ltd (ASX: APT) managed to reverse the decline, others ended the day down heavily.

The Platinum Asset Management Ltd (ASX: PTM) share price went down 12%.

The oOh!Media Ltd (ASX: OML) share price dropped 9.8%.

Southern Cross Media Group Ltd (ASX: SXL) saw its share price decline 9.1%.

ASX 200 engineering business Monadelphous Group Limited (ASX: MND) suffered a share price decline of 8.9%.

The Unibail-Rodamco-Westfield (ASX: URW) share price went down 8.8%.

Zip Co Ltd (ASX: Z1P) announces May 2020 trading update

The buy now, pay later (BNPL) ASX 200 business said that it grew its monthly revenue to $15.6 million, an increase of 78% year on year. Zip’s monthly transaction volume increased by 63% to $189.3 million.

Zip said its receivables figure was up 85% compared to a year ago to $1.2 billion.

Customer and merchant numbers were also up by a significant amount. Customers increased by 63% to 2.1 million. It added 65,000 new customers over the course of the month. Merchant numbers increased by 46% year on year to 23,600.

In terms of net bad debts and monthly arrears, the ASX 200 said it was doing very well. Net bad debts of 2.16% were in-line with management expectations, Zip said this significantly outperformed the market. Monthly arrears reduced from 1.57% in April to 1.47% in May. Monthly arrears are seen as a forward indicator of future losses.

The ASX 200 business said that customer repayment success rates are higher or on par with pre COVID-19 rates. Monthly repayments as a percentage of opening receivables increased to 16%, up from 15% in April.

Pleasingly, there has been no material change to the number of requests for hardship assistance, which peaked at the end of March 2020 at less than 0.08% of receivables.

Zip reminded investors of the acquisition of QuadPay. Management are looking to accelerate Zip’s global expansion strategy. Zip also re-iterated to investors it has reached an agreement to raise up to $200 million from US-based Susquehanna International Group to further drive growth.

The Zip managing director and CEO Larry Diamond said that the BNPL business remains on track to hit its FY20 target of $2.2 billion in annualised transaction volume set at the beginning of the year.

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• Down 20% in 7 trading hours… Worse to come?
• The latest ASX shares to be hit by broker downgrades to “sell” today
• What would I rather buy today: TPG or Telstra shares?

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended oOh!Media Ltd. 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.

The post ASX 200 falls 1.9%, big 4 ASX banks retreat appeared first on Motley Fool Australia.

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If you’re looking to add a bit of international exposure to your portfolio, then it is remarkably easier than you might think.

This is thanks to the emergence of exchange traded funds (ETFs). Through just a single investment, ETFs can provide investors with exposure to a wide range of international indices and themes.

Two ETFs that I think would be great additions to a balance portfolio are listed below:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

If you’re a fan of tech shares then you might want to look at the BetaShares NASDAQ 100 ETF. This ETF gives investors exposure to the 100 largest non-financial shares on the famous NASDAQ index. Among its biggest holdings you’ll find tech giants Apple, Microsoft, Amazon, Facebook, and Google. Whereas some of its smaller holdings include online conferencing company Zoom, Chinese search engine giant Baidu, and eBay. On the whole, I believe the majority of companies on the NASDAQ 100 are well-placed to grow at a quicker than average rate. This could drive strong returns for investors in this ETF.

Vanguard US Total Market Shares Index ETF (ASX: VTS)

Another option to consider buying is the Vanguard US Total Market Shares Index ETF. If you want a more balanced ETF with less of a focus on tech shares, then this ETF could be the one for you. It provides investors access to approximately 3,500 shares listed on the U.S. stock market. While this means it gives investors exposure to many of the tech giants listed above, it also gives investors access to blue chips such as Berkshire Hathaway, Johnson & Johnson, Proctor & Gamble, and Visa and Mastercard. And as many of these companies pay dividends, it also provides investors with a source of income. At present the ETF offers a trailing 2% dividend yield.

More reading

• Tech shares! Should we even invest in anything else?
• 3 of the best ETFs to give ASX investors international exposure
• Are Macquarie Group shares worth investing part of $3,000 into this June?
• 3 top ETFs you can easily diversify your portfolio with immediately
• Where to invest $10,000 into ASX shares immediately

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. 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.

The post 2 ASX ETFs I would buy for diversification and strong long term returns appeared first on Motley Fool Australia.

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“If we as a society stopped and thought about it for a minute, we’d blow the whole finance industry up.”

That was me, talking to a good mate this morning.

(And because we live in reactionary, call-out times, let me be clear I’m talking metaphorically and holistically — I’m clearly not suggesting actual explosions or harm!)

With that out of the way, back to my point.

My mate called me to laugh about the recent bout of market volatility, with the US market down some 6% overnight.

Laugh, not because we were both making losses, but because the whole thing is just silly.

Here, some travel stocks have lost 20% in little more than 7 trading hours over the past two days.

Twenty per cent.

Because?

Well, you can make up your own mind. 

In theory, it seems to be because of a more sober outlook from the US Fed and an uptick in coronavirus cases in the US.

Okay, fine.

But let me put that another way.

If you think Flight Centre Travel Group Ltd (ASX: FLT)’s total future earnings — from here to eternity — are  worth 20% less because of those two inputs, I don’t think you have any business investing.

Here’s why:

First, eternity is a long time. Coronavirus is either transitory or endemic, but in either case, discounting the entire future earnings of Flight Centre by 20% on the basis of two transitory data points is, as they say in Yes, Minister, ‘courageous’.

Second, if that’s your view, you implicitly thought Flight Centre was worth 20% more on Wednesday just because you expected the Fed to be more bullish, and COVID cases to fall in a 24hr period.

Which means you were betting 20% of the value of that position on what a Fed Chief might say, and the ultra-short-term trajectory of an inherently unknowable and volatile data series: COVID case counts.

And when I say ‘you’, I don’t just mean you, dear reader.

I mean the sum total of all investors buying and selling (and, implicitly, choosing to neither buy nor sell) over the past couple of days.

In short, the finance industry.

These are people who extract billions of dollars in fees from people like you and me every year.

Because, apparently, they’re the experts.

They know what’s going on.

They’re not silly enough to take part in a market that drops 38% in a matter of weeks, then climbs the best part of 20%, before falling 6% in a couple of days.

I mean, that’d be crazy, right?

Who’d seriously invest that way.

And who, in their right minds, would pay fees to people who invested that way?

Oh.

I see.

Us?

Yep. Us.

Billions and billions of dollars every year, across the globe.

Can you imagine if your accountant worked that way?

Your mechanic?

Your doctor?

Now, I have to say, I shouldn’t hate on it too much.

After all, as long as we can separate ourselves from the seemingly manic activity, it can be an opportunity.

I’ve been telling you that I think it’s been a good idea to keep buying, if you want to make money.

(If you don’t like money, I have a PayPal account you can donate to!) 

Not because I knew what the skittish market would do next, but because my (and I hope your!) time horizon is different.

From a wealth-building perspective, I genuinely don’t care what the market does next.

Because I’m not cashing out tomorrow. Or next week. Or next month. Or next year.

Nor are you.

Even if you’re retired or about to retire, you almost certainly don’t need to ‘go to cash’ this week.

Maybe you can live on dividends. Maybe you need to slowly liquidate your portfolio over many years.

Either way, today’s movements are noise.

All of this volatility reminds me of an old joke:

A bloke is worried about whether his blinkers are working, and asks his mate to stand behind the car and check.

His mate calls out ‘They’re working… they’re not working… they’re working… they’re not working… they’re working…’.

It’s not a bad metaphor for investing.

Investing doesn’t stop working just because some knuckleheads get temporarily overexcited or temporarily disappointed.

Investing wasn’t a great idea on Wednesday, but a terrible idea yesterday.

(Sounds kinda obvious when you put it that way, doesn’t it?)

Was the market seriously ever worth 38% less in March, compared to February, because of a pandemic?

Nope.

Just as it wasn’t worth less because of wars, recessions or anything else in the past.

Because the value of each company’s shares are the full sum total of profits over the long term — not just this week or this month, or even this year.

To be blunt, Flight Centre cannot have been worth $16.85 per share on Wednesday at 4pm and $13.32 at 11am today. The company’s future just hasn’t swung that wildly in 7 trading hours.

Maybe — maybe — one of them was right.

But probably not.

Still, if we’re generous, and say one of them was right, then the market has been right half the time.

Half.

(And both are still probably wrong.)

Now you know that, are you still going to put value in the daily recitations of the value of the S&P/ASX 200 Index (ASX: XJO)?

Do you still reckon the billions doled out in fees to financial types are value for money?

Are you really going to let the daily movements of share prices tell you how to think and how to feel?

I hope not.

Short term movements are noise.

Distraction. Misdirection. Rubbish.

—-

A small aside: As I write this on Friday morning, an alert just popped up on my phone. Apparently US futures are up 100 points.

Up. Down. Up.

It’s laughable.

—–

Fair dinkum. If you’re still letting the market dictate your moods, or your actions, I hope this piece helps you sleep a little better.

I hope it helps you realise that the charade of ‘control’ that lets the finance industry rake in exorbitant fees is, well, just that — a charade.

I hope it makes you ask that eternal question, first voiced by someone when a stockbroker showed him his brand new boat: “… But where are all the customers’ yachts?”.

Yes, there are some good eggs. They’re trying their best. You’ll know them, because they’re the ones who are happy to say ‘I don’t know’, and to prick the pompous bubble of the industry.

The others? Well, decide for yourself.

Just take their prognostications with a huge dose of salt. And their fees the same.

In the meantime?

I’m never particularly happy when my portfolio is worth less than it was yesterday. I’m only human, too.

But it’s the response that counts far more.

Mine? 

I’m not selling. I’m not panicking. And I’m sure as hell not asking the market what I should think.

I’ll probably buy shares next week, I think. (I have a decent Achilles’ heel: our internal trading rules mean I’m not allowed to buy or sell shares within 2 full business days of mentioning them in public or to our members. So my ‘restricted’ list is usually longish and ever-changing!).

And my prediction? I’m sticking with the words of John Pierpont Morgan who famously said, when asked to give a prediction on what would happen to the index: “It will fluctuate”.

Everything else is vanity, pretence or willing obfuscation.

Over the long term, though? History has delivered meaningful long-term compound gains for the patient.

Invest accordingly. Please.

Fool on!

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• ASX 200 falls 1.9%, big 4 ASX banks retreat
• The latest ASX shares to be hit by broker downgrades to “sell” today
• What would I rather buy today: TPG or Telstra shares?

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group 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.

The post Down 20% in 7 trading hours… Worse to come? appeared first on Motley Fool Australia.

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