Category: Stock Market

1) It continues to be a tough old grind for those – like myself – who are not invested in the resources sector. 

Fund manager reports for November are just coming out, with QVG Capital saying the Small Resources Sector was up 11.6% in the month.

“With limited exposure to Resources, we did not keep up with the benchmark.”

Rather than jump into a resources sector which they say “usually lacks the earnings certainty of through-the-cycle return on invested capital (ROIC) we desire,” QVG Capital is sticking with industrials such as fast growing Johns Lyng Group Ltd (ASX: JLG) and even faster growing Lovisa Holdings Ltd (ASX: LOV).

Although not traditionally cheap – fast fashion jewellery retailer Lovisa shares trade at around 40 times earnings –  with sales up 60% for the first 19 weeks of FY23, it won’t take too long for the company to grow into its premium valuation.

As QVG Capital reminds us, over longer timeframes, share prices follow earnings. If Lovisa can keep up its breakneck global store opening pace in conjunction with double digit comparable store sales, the future looks bright.

2) Put simply, equity markets are facing two major headwinds…

1. Higher interest rates.
2. Slower economic growth. 

The Reserve Bank of Australia (RBA) today raised interest rates by another 25 basis points, bringing the cash rate to 3.1%. 

Whilst this inflicts more pain on variable-rate mortgage holders, long-suffering savers are finally able to earn a decent return on their cash balance, with some savings accounts paying close to 4%.

A no-risk 4% compares pretty well to the 3.6% fully franked dividend yield on offer for Commonwealth Bank of Australia (ASX: CBA) shares, and very well to the 2.7% fully franked dividend yield on offer for Woolworths Group Ltd (ASX: WOW) shares. Given those two companies are both growing slowly and trading on premium valuations, given the choice, I’d happily park my cash in the bank.

No wonder industrial sector equities are on struggle-street.

3) The economy is not the stock market, and so although 2023 is likely to see slower or even negative growth for some companies, shares could perform well.

In a recent article on Livewire titled “Why 2023 could be the biggest buying opportunity since the GFC,” J.P. Morgan Asset Management’s global team believes “2023 will see the traditional 60/40 portfolio record its best year since 2010. In their view, average forecast returns for both equities and bonds will continue to climb even if a global recession hits.”

The team is tipping both developed and emerging market equities to rebound, and although the S&P/ASX 200 Index (ASX: XJO) has outperformed its developed market peers, they are projecting it to return 7%+ per annum over the next 10-15 years.

In a world fixated on the next monthly move by the RBA or the next inflation print or the next jobs report, you’ve got to love their long-term perspective. 

A 7% per annum return compounded over 10 years will roughly double your money. Not exciting like the tech-stock boom (RIP) some of us recently enjoyed, but very good, especially when compared to just about every other asset. Can you imagine your $1 million investment property doubling in value by 2032? It would require someone taking on an astronomical monthly repayment to take that property of your hands. 

No wonder property prices are falling.

4) So which stocks will be beneficiaries in 2023?

If only we knew. The J.P. Morgan boffins referenced above have a preference for defensive sectors, including healthcare and banking stocks.

I’m happy to pass on bank shares. 

Quality large-cap ASX 200 healthcare stocks like CSL Limited (ASX: CSL), Ramsay Health Care Limited (ASX: RHC) and Cochlear Limited (ASX: COH) all trade on nose-bleed valuations. I’ll pass on them too, thank you very much.

No wonder stock picking is hard.

5) One sector that is cheap is energy, despite many shares having already had a great run so far this year.

Interviewed in the AFR, SG Hiscock portfolio manager Hamish Tadgell says his fund is positioned for higher inflation and the energy transition, with a top three holding being Woodside Energy Group Ltd (ASX: WDS) shares.

The Woodside share price has already gained more than 60% so far in 2022, but Tagell’s still a fan, saying in terms of balance sheet, “it’s got good growth options through Scarborough and the West Australian developments it’s looking at. And that’s in a world where I think there’s clearly an increased demand for gas.” 

Woodside shares trade at just eight times trailing earnings. Add in a trailing 9% fully franked dividend yield and you can see the attraction. 

The post 5 popular ASX 200 stocks I’m avoiding, plus one that still looks dirt cheap appeared first on The Motley Fool Australia.

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More reading

• What’s in store for the Woolworths share price in December?
• Is Core Lithium the hottest stock on the ASX 200 right now?
• Buy Xero and this ASX growth share for 2023: analysts
• Is the CSL share price set to take off in December?
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Bruce Jackson 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 CSL, Cochlear, Johns Lyng Group, and Lovisa. The Motley Fool Australia has recommended Cochlear, Johns Lyng Group, Lovisa, and Ramsay Health Care. 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 S&P/ASX 200 Index (ASX: XJO) was down 0.6% in early morning trade before recouping most of those losses to be trading down a slender 0.1% at 2:30pm AEDT.

The ASX 200 had marched higher during the course of the day despite a steep drop in US stock markets overnight.

At 2:30pm, the Reserve Bank of Australia (RBA) released its interest rate decision.

The RBA announced a 0.25% hike in interest rates, bringing the official cash rate to 3.10%. This was broadly in line with expectations, though some analysts had been tipping a more dovish stance in the face of softening inflation.

Atop today’s cash rate hike, the RBA board also increased the interest rate on Exchange Settlement balances by another 0.25%, taking that to 3.00%.

Investors reacted by sending the ASX 200 down to a 0.3% intraday loss in the minutes following the release of the decision.

December now marks the eighth consecutive month of interest rate hikes from the central bank.

It may be hard to believe, but 3 May marked the first rate increase of this tightening cycle. Seven months ago, the official cash rate stood at 0.10%. And it was the first time the RBA had raised rates since November 2010.

What did the RBA report on today’s interest rate increase?

Explaining the bank’s decision to tighten yet again, RBA governor Philip Lowe pointed out that inflation in Australia “is too high”.

Inflation through the year to October has been running at 6.9%.

Lowe said much of this is due to global factors.

However, he added, “Strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply.”

And inflation figures for the full year are expected to come in still higher, likely pressuring the ASX 200 today.

According to Lowe:

A further increase in inflation is expected over the months ahead, with inflation forecast to peak at around 8% over the year to the December quarter. Inflation is then expected to decline next year.

The RBA forecasts that CPI inflation will slow “over the next couple of years”. In 2024 it expects CPI inflation will be “a little above 3%”.

As for the Aussie economy, Lowe noted it’s still growing solidly, which is broadly good news for ASX 200 shares.

But the RBA expects growth to moderate in 2023 “as the global economy slows, the bounce-back in spending on services runs its course, and growth in household consumption slows due to tighter financial conditions”.

The RBA is forecasting growth of around 1.5% in both 2023 and 2024.

The central bank also noted that the labour market “remains very tight”. The unemployment rate in October fell to 3.4%, the lowest level since 1974. That’s seen wages growth “continuing to pick up from the low rates of recent years”.

Hoping to avoid a “prices-wages spiral”, the RBA does expect wages to continue rising.

Lowe stressed that “The Board’s priority is to re-establish low inflation and return inflation to the 2–3% over time.”

Perhaps also giving ASX 200 investors the jitters was Lowe’s admission that “the path to achieving the needed decline in inflation and achieving a soft landing for the economy remains a narrow one”.

What can ASX 200 investors expect next

ASX 200 investors should take note that the RBA “expects to increase interest rates further over the period ahead”.

However, Lowe said this “is not on a pre-set course” as the bank monitors the range of forces impacting inflation Down Under.

“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” Lowe concluded.

The post ASX 200 slips as RBA lifts interest rates for the eighth month running appeared first on The Motley Fool Australia.

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More reading

• Morgans names 2 more of the best ASX shares to buy in December
• Qantas share price takes off despite ACCC warning
• Why I think this ASX 200 share is high-risk, but also high-reward
• Why Domino’s, New Hope, PolyNovo, and Telstra shares are pushing higher today
• Why are ASX 200 lithium shares taking a lashing today?

Motley Fool contributor Bernd Struben 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.

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The team at Morgans has been busy picking out its best ASX share ideas for December.

These are the shares that its analysts think offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

The first two shares we looked at can be found here. Read on for the next two:

ResMed Inc (ASX: RMD)

This sleep treatment focused medical device company has been named as one of Morgans’ best ideas.

Morgans likes ResMed largely due to its strong position in digital health. It is expecting the company’s portfolio of cloud-connected products to be a key driver of growth in the future. The broker explained:

While we expect the next few quarters to be volatile as COVID-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.

Morgans currently has an add rating and $37.00 price target on ResMed’s shares.

Westpac Banking Corp (ASX: WBC)

If you’re looking for banking sector exposure then Morgans thinks that Westpac could be the way to do it.

The broker believes that Australia’s oldest bank is well-placed to deliver the strongest return on equity improvement thanks partly to its major cost cutting plans. Its analysts expect this to support attractive dividend yields. It commented:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

Morgans has an add rating and $25.80 price target on the bank’s shares.

The post Morgans names 2 more of the best ASX shares to buy in December appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Will the RBA raise rates again next week? Here’s what Westpac expects
• Buy Westpac and this ASX dividend share: broker
• Why did the Westpac share price lag the ASX 200 in November?
• The 3 best-performing ASX 200 bank shares in November revealed

Motley Fool contributor James Mickleboro has positions in Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Westpac Banking. 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 Qantas Airways Limited (ASX: QAN) share price is in the green this afternoon amid the competition watchdog’s warning to Aussie airlines.

On announcing that the price of discounted economy airfares hit a 15-year high in September, the Australian Competition & Consumer Commission (ACCC) warned airlines it will be watching to ensure they don’t withhold capacity in a bid to keep revenues high.

The news might have turned the market’s attention to the Qantas share price today. Right now, the airline’s stock is swapping hands for $6.21, 0.32% higher than its previous close.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.15% at the time of writing.

Let’s take a closer look at the news that might have put the national airline in the spotlight on Tuesday.

ACCC vows to keep an eye on Aussie airlines

The Qantas share price is lifting off amid news demand for air travel soared last quarter.

The latest ACCC Airline Competition in Australia report found domestic airfares surged beyond pre-pandemic levels in that period. The average revenue per passenger came in 27% higher in October 2022 than in October 2019.

Airfares were buoyed by strong demand amid constrained supply brought about by high jet fuel costs and operational challenges, ACCC commissioner Anna Brakey said.

The segment impacted the greatest was discounted economy fares. The watchdog noted that strong demand meant airlines didn’t need to offer discounts to fill planes.

Indeed, an index of discounted economy fares across Australia’s top 70 domestic routes in November 2022 came in at more than double April’s 11-year low. The same index hit a 15-year high in September.

The findings lead Brakey to warn airlines that the watchdog will be keeping an eye on them:

Historic lows and highs for discount airfares in the same year illustrate how changeable this market has been as the industry recovers from the pandemic.

We accept that the airlines are still experiencing some pandemic-related resource challenges, but the ACCC will be monitoring them closely to ensure they return capacity to the market in a timely manner to start easing pressure on airfares.

We would be concerned if airlines withheld capacity to keep airfares high.

Qantas tied with Regional Express Holdings Ltd (ASX: REX) in cancelling the fewest flights in October, just 2.2%. The flying kangaroo also boasted the best on-time performance, with 25.8% of its flights landing late – compared to the industry total of 30.7%.

Its budget leg, Jetstar, however, posted the worst performance in both measures. It cancelled 8.8% of flights while 35.6% arrived late.

Qantas share price snapshot

Recent news Qantas expects to post an underlying pre-tax profit of $1.35 billion to $1.45 billion for the current half bolstered its share price late last month.

The stock is now trading for 20% more than it was at the start of 2022. It has also gained 24% since this time last year.

Comparatively, the ASX 200 is down 4% year to date but up 1% over the last 12 months.

The post Qantas share price takes off despite ACCC warning appeared first on The Motley Fool Australia.

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More reading

• Can the Qantas share price fly even higher in December?
• Why did the Qantas share price take off in November?
• Why is the Qantas share price smashing the ASX 200 on Tuesday?
• The Qantas share price is flying again. Why this fundie is concerned
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Brooke Cooper 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.

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When it comes to investing, it’s important to invest in ASX shares that meet your risk profile.

As well as making sure you sleep soundly each night, doing so means that you’re not putting your financial well-being at risk.

Generally speaking, your risk profile lowers as you age. When you first start out investing, you might be able to put some of your funds in high-risk shares because if you get burned, you’ve got plenty of time to try to recover your losses. However, when you’re nearing retirement, I don’t believe it is wise to risk your nest egg in a meme stock like Brainchip Holdings Ltd (ASX: BRN) for example.

But that doesn’t necessarily mean you should just only buy high-risk ASX shares when you’re young.

I would suggest you build a balanced portfolio filled with high-quality, blue chip shares and dedicate a smaller portion of it to higher-risk options.

How do you decide which high-risk ASX share to buy?

Investors should look to identify high-risk shares that have high-reward potential.

After all, there’s no point investing in an ASX share if you stand to gain 10% but risk losing 50%. You might find better odds at a casino!

With that in mind, I would avoid companies that have unproven business models and limited revenue, such as the aforementioned Brainchip. Particularly if they operate in industries dominated by multinational giants. This puts the odds firmly against them succeeding and you could end up losing most, or even all, of your investment.

Instead, I would look for companies that are generating meaningful revenue and growing it each year.

My high risk/high reward pick

One high-risk ASX share that ticks the box for me is Megaport Ltd (ASX: MP1). It is a leading provider of cloud connectivity and networking solutions across data centres globally.

Megaport’s software layer provides users with an easy way to create and manage network connections. Through its network, businesses can then deploy private point-to-point connectivity between any of the locations on Megaport’s global network infrastructure.

Thanks to the cloud computing boom, this is proving to be very popular with end users and has underpinned solid revenue growth in recent years. For example, during the first quarter of FY 2023, Megaport reported revenue of US$23 million. This was up 5% from the fourth quarter and annualises to US$93 million.

But the good news is that this revenue is nothing in comparison to its total addressable market (TAM).

Goldman Sachs has previously stated that Megaport’s “opportunity for further growth is immense (GSe A$129bn p.a. spent on fixed enterprise networking across MP1 geographies)”. This is being driven by “two structural tailwinds that accelerated through COVID-19, including: (1) The adoption of public cloud & multi-cloud usage; and (2) The growth in Networking as a Service (NaaS)”.

And thanks to its first-mover advantage in the industry, Goldman believes it is well-placed to capture a big slice of this huge market. In the near term, its analysts are forecasting the following:

Year	FY 2023	FY 2024	FY 2025
Revenue ($m)	A$151.1	A$203.8	$264.5

[Goldman Sachs estimates]

Major upside potential

In light of this, it will come as no surprise to learn that its analysts currently rate Megaport’s shares as a buy with a $9.50 price target.

Based on the current Megaport share price of $6.70, this implies a potential upside of approximately 42% for investors over the next 12 months.

I think this makes it a top high-risk/high-reward share for investors to consider today if their risk profile allows it.

The post Why I think this ASX 200 share is high-risk, but also high-reward appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
• Why are ASX tech shares having such a cracking run on Thursday?
• Here are the 10 most shorted ASX shares
• ‘Over 100% gain next year’: Expert picks 3 best ASX shares for 2023
• Here are the top 10 ASX 200 shares today

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 positions in and has recommended Megaport. The Motley Fool Australia has recommended Megaport. 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 S&P/ASX 200 Index (ASX: XJO) is out of form on Thursday. In afternoon trade, the benchmark index is down 0.1% to 7,318.3 points.

Four ASX shares that aren’t letting that hold them back today are listed below. Here’s why they are pushing higher:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price is up 2% to $68.35. This morning analysts at Morgans reiterated their add rating with an improved price target of $90.00. It said: “Recent positive share price movements in the global QSR sector, combined with the accretive impact of the [German joint venture] transaction, result in our target price increasing from $88 to $90. We retain an ADD rating.”

New Hope Corporation Limited (ASX: NHC)

The New Hope share price is up 2% to $5.77. Investors have been buying New Hope and other coal miner shares on Tuesday. They appear to be betting on coal prices remaining higher for longer, which is likely to underpin bumper profits and dividends in the near term.

Polynovo Ltd (ASX: PNV)

The Polynovo share price is up over 1.5% to $1.96. This appears to have been driven by a bullish broker note out of Macquarie. According to the note, the broker has retained its outperform rating and lifted its price target on the medical device company’s shares to $2.30. Macquarie believes PolyNovo is well-placed for growth following its recent capital raising.

Telstra Group Ltd (ASX: TLS)

The Telstra share price is up 1.5% to $4.07. This is despite there being no news out of the telco giant. However, it is worth noting that Morgan Stanley spoke positively about the company on Monday. According to the note, the broker has retained its overweight rating and lifted its price target to $4.75. Morgan Stanley suspects that a major share buyback could be undertaken if Telstra’s restructure leads to assets being sold off.

The post Why Domino’s, New Hope, PolyNovo, and Telstra shares are pushing higher today appeared first on The Motley Fool Australia.

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More reading

• Where will Telstra shares be in 5 years?
• 5 things to watch on the ASX 200 on Tuesday
• Leading brokers name 3 ASX shares to buy today
• Here are the 10 most shorted ASX shares
• Buy Telstra and this ASX dividend share: experts

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PolyNovo. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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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ASX lithium shares are falling harder than the benchmark index and materials sector today.

Lithium shares trading lower this afternoon include:

• Piedmont Lithium Inc (ASX: PLL), down 2.87%
• Core Lithium Ltd (ASX: CXO), down 0.76%
• Sayona Mining Ltd (ASX: SYA), down 1.09%
• Pilbara Minerals Ltd (ASX: PLS), down 0.33%
• Liontown Resources Ltd (ASX: LTR), down 2.96%
• Lake Resources N.L. (ASX: LKE), down 2.5%
• Allkem Ltd (ASX: AKE), down 1.14%

For perspective, the S&P/ASX 200 (ASX: XJO) is 0.08% in the red.

What’s happening?

ASX lithium shares are broadly underperforming the materials index today. The S&P/ASX 200 Materials Index (ASX: XMJ) is down 0.19% at the time of writing.

On US markets, multiple lithium giants fell overnight. The Livent Corp (NYSE: LTHM) share price tumbled 6.18%, while Sociedad Quimica y Minera de Chile (NYSE: SQM) shares fell 4.72%. The Albemarle Corporation (NYSE: ALB) share price also shed 6.7%.

Speculation on lithium demand from China could be impacting sentiment in the lithium sector.

News emerged that Tesla Inc (NASDAQ: TSLA) could cut electric vehicle (EV) output from its Shanghai plant by more than 20% in December, Bloomberg reported.

But late on Monday in the US, a Tesla spokesperson described the report as “false news”, Reuters reported.

Last week, the South China Morning Post reported EV battery production will exceed domestic electric car makers’ demand threefold by 2025. EV battery makers are set to lift capacity by six times between this year and 2025, according to the report.

ASX lithium shares that have signed lithium supply agreements with Tesla include Liontown Resources and Piedmont Lithium.

Core Lithium negotiated with Tesla on an offtake agreement earlier this year. However, the date for concluding the term sheet passed in late October without any final agreement. Core Lithium CEO Gareth Manderson said at the time:

I want to thank Tesla for the time taken to negotiate with Core and look forward to maintaining an open and ongoing dialogue.

The post Why are ASX 200 lithium shares taking a lashing today? appeared first on The Motley Fool Australia.

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More reading

• Is Core Lithium the hottest stock on the ASX 200 right now?
• The Sayona Mining share price went backwards in November. What now?
• Can ASX 200 lithium shares come charging back in December?
• Why Arafura, Mayne Pharma, Pilbara Minerals, and Tyro shares are dropping today
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Monica O’Shea 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.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory but has fallen just short. At the time of writing, the benchmark index is down slightly to 7,321.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Beach Energy Ltd (ASX: BPT)

The Beach Energy share price is down 5% to $1.80. Investors have been selling Beach Energy and other energy producers on Tuesday after oil prices tumbled overnight. Traders were selling oil amid concerns that the US Federal Reserve will cause a recession with its interest rate hikes.

Block Inc (ASX: SQ2)

The Block share price is down 4.5% to $95.11. This follows a similarly sharp decline by the payments giant’s NYSE listed shares overnight. Investors were selling tech shares on Wall Street amid concerns that interest rates will now rise more than expected.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price is down 3% to $9.23. This has been driven by the release of the fund manager’s latest funds under management (FUM) update. That update revealed that Magellan recorded a further $2.5 billion fund outflow during the month of November. Magellan’s FUM is now down approximately 57% since this time last year.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 5.5% to 64.7 cents. Investors have been selling this gold miner’s shares after the price of the precious metal fell overnight. This was driven by higher interest rate expectations. It isn’t just St Barbara dropping today. The S&P/ASX All Ordinaries Gold index is down 1.9% this afternoon.

The post Why Beach, Block, Magellan, and St Barbara shares are dropping appeared first on The Motley Fool Australia.

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• Guess which gold share is being booted out of the ASX 200
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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 positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. 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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So, my day job is picking stocks.

I run three different services here at The Motley Fool, each with some incredibly smart, dedicated people.

Together, our job is to find ASX- (and US-) listed companies that we hope can, over the long term, deliver on the stated goal of each service.

But it’s not all I do.

And it’s probably not even the most value I add, for our members or our readers.

Most of the value I hope I add actually comes in the soft stuff.

Huh?

See, I’ve written before that research has shown two things:

1. Most managed funds underperform the market; and, more worryingly

2. Most fund investors underperform the average fund.

That’s pretty damning.

But I’m going to add a third, unproven, statement:

3. Most people don’t invest, at all, or give up early.

See, when I’m picking stocks, I’m trying to find the cream of the crop.

I’m trying to do better than the market.

But that’s just the cherry on top.

That’s the extra 1% or 2%, per annum, that I’m trying to find for our members.

But the cake itself?

That’s the 9% or so, per annum, that investors can get just from earning the average market return (speaking historically, at least).

Literally all you needed to do was buy an exceedingly low-fee index-tracking ETF and go fishing (or shopping, or clubbing, or golfing, or gardening. You get the idea.)

And yet.

And yet, most people don’t.

Which is a crying bloody shame.

How much of a shame?

Well I’ve told you before that over the 30 years to June 2022, you could have turned $10,000 into $130,000 (before fees and taxes) just by investing in an ASX index fund.

That much!

Seriously, it was there for the taking.

A 13x return.

Was it guaranteed? Nope. Nothing in life is, let alone investing returns.

But that return wasn’t meaningfully different to the decades before it, so I’d argue it was pretty likely, give or take 1% or so, per annum.

Hell, even if your return was half of that, you’d have ended up with $70,000.

We can argue about specific returns, but that’d be missing the forest for the trees, don’t you reckon?

And if you think it riles me up, you’re right.

I hate the fact the doom-and-gloomers dissuade people from investing.

I hate the fact that the conmen and shysters give investing a bad name.

I hate the fact that market volatility scares people away from investing.

And I hate the fact our evolution makes it hard to save and invest, because we don’t naturally think in terms of compound returns.

Don’t believe me?

Okay, here’s a question: What’s the difference in total return between 9% per annum and 10% per annum, over 40 years?

50% more!

Yep. 1% per year is 50% difference over 40 years.

And between 8% and 10% per annum?

More. Than. Double.

Let’s try a different one.

The difference between 10 years and 20 years at 9% per annum?

136%

And 30 years?

Not double.

Not triple.

You’ll have 5.5 times as much money as you did after 10 years.

And that’s why this is such an important topic.

And why it can be so frustrating.

Historically, there has been extraordinary wealth created by those who simply invested.

And even more by those who invested, then invested again. And again. Adding money regularly, like clockwork.

You didn’t have to be smarter than the other guy.

You didn’t need any special insights.

You didn’t even need to pick stocks.

You just had to invest, then leave well enough alone.

Literally, that was it.

Will the future be the same?

Again, I can’t – morally or legally – make you any promises or offer you any guarantees.

But I see no reason it won’t be.

But – as I said above – even if those future returns are half of what they were in the past, investing will be astonishingly worthwhile.

And if they’re similar to the past? Even more so.

And so, as Lara Bingle might ask, where the bloody hell are you?

Why aren’t you investing?

And if you are, why aren’t you investing more?

Yes, that’s a rhetorical question. There are lots of reasons.

I can’t lower your bills (actually, I can help: #getabetterrate!).

I can’t offer you a pay rise.

And some people just won’t be able to find the extra cash to invest.

But if you can?

I think you really, really should.

Because I think your future self will thank you.

And that’s the most value I can offer, today.

I hope our stock picks can add value to your investing.

But the two more powerful forces are:

1. Starting earlier; and

2. Saving and investing more.

And they’re up to you.

Today’s the day.

What are you waiting for?

Fool on!

The post What really cheeses me off appeared first on The Motley Fool Australia.

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• What’s in store for the Woolworths share price in December?
• Why is the Xero share price being trashed on Tuesday?
• ‘I want to explain’: Why did the Bank of Queensland share price pop then drop on Tuesday?
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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.

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It’s been a rather wild and woolly year for the Woolworths Group Ltd (ASX: WOW) share price in 2022 so far. Year to date, Woolworths shares remain down a painful 9.88% at the current pricing. The supermarket giant started the year at $38.47 a share but is going for just $34.68 each today.

During 2022, the Woolworths share price has been as high as $39.50 and as low as $31.67, with plenty of swings along the way, as you can see here:

This shaky performance from Woolies might come as a surprise. After all, 2022 was supposed to be a year dominated by concerns over inflation and rising interest rates. And as a consumer staples giant, Woolies has a reputation as an inflation-resistant investment.

And yet, it has vastly underperformed the broader market. While Woolworths is down by 9.88% this year, the S&P/ASX 200 Index (ASX: XJO) has only lost 3.7% over the same period.

But perhaps Woolworths is set for a Santa rally. After all, the Christmas period is traditionally a strong one for supermarkets like Woolworths. And the grocer has just banked a very pleasing November. So could Woolies shares be worth buying in December?

Will you get your Woolies worth with Woolworths shares this Christmas?

Well, one ASX broker certainly thinks so. As my Fool colleague James recently covered, ASX broker Goldman Sachs is excited about Woolworths shares right now. The broker gave the grocer a coveted ‘conviction buy’ rating, complete with a 12-month share price target of $41.70.

If realised, that would give investors an upside of more than 20% from the current share price.

Goldman cites Woolworths’ strong market position and digital leadership for its bullish views, predicting it can lift Woolworths’ market share going forward.

Goldman is also pencilling in large dividend rises over the next couple of years. It has a forecast of $1.02 in dividends per share for FY2023, rising to $1.13 per share for FY2024.

No doubt that will be a very welcome view for Woolworths shareholders today.

At the current Woolworths share price, this ASX 200 supermarket share has a price-to-earnings (P/E) ratio of 27.4, with a dividend yield of 2.65%.

The post What’s in store for the Woolworths share price in December? appeared first on The Motley Fool Australia.

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• Is Core Lithium the hottest stock on the ASX 200 right now?
• The Sayona Mining share price went backwards in November. What now?
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• Up 30% in a month, is it time to cash in some chips on Fortescue shares?
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Motley Fool contributor Sebastian Bowen 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.

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