Category: Stock Market

The Bank of Queensland Ltd (ASX: BOQ) share price suffered yesterday when it was announced that the CEO George Frazis had left the bank.

Frazis, who had been in charge of the bank for a few years, left on the day of the announcement. He’ll still get his entitlements in accordance with the terms of his contract of employment.

But, it’s now the BOQ chair Patrick Allaway who is in charge after becoming the executive chair while the company looks for a new CEO.

The choice of Allaway as the leader is “designed to retain stability and will ensure that the executive leadership team can stay focused on their current roles and responsibilities”.

It was decided by the bank’s board that different leadership was required to ensure that BOQ can “continue to build a stronger and more resilient bank through future cycles”.

Growth is still seen as important, but it wants to focus on strengthening its financial and operational resilience, invest in building a cloud-based digital and data-led scalable bank, and optimise performance through simplification and productivity.

Is this an opportunity with the BOQ share price?

It’s an interesting question. How much value does a CEO add to a business?

Arguably, not that much. In times of worsening economic times, a bank would supposedly want its loan book to perform as well as it can. There’s not much point achieving growth with a 2% lending margin, or 2% net interest margin (NIM), if that loan goes bad.

It may be worthwhile to be prudent during difficult times.

The CEO is gone, but the BOQ share price is down more than 5% since the announcement.

The broker UBS didn’t change its price target on BOQ after this news. A price target is where the broker thinks the valuation will be in 12 months. UBS’ price target on BOQ is $8, implying a possible rise of 12%.

Credit Suisse is also neutral on the banking business, with a price target of $7.50. That implies a possible rise of around 5%. The broker’s price target was a sizeable cut from before.

Morgan Stanley, another broker, is equal-weight on the BOQ share price. But, the price target is $8.30 – that suggests a mid-teen rise for the business. The broker noted that this could lead to investor uncertainty about the bank’s long-term strategy.

Using Morgan Stanley’s numbers, the BOQ share price is valued at 8x FY23’s estimated earnings with a possible grossed-up dividend yield of 10.4%.

The post Are Bank of Queensland shares a buy following the CEO’s shock ousting? appeared first on The Motley Fool Australia.

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More reading

• Why Bank of Queensland, Bubs, City Chic, and Liontown shares are sinking
• Why is the Bank of Queensland share price sinking over 6% today?
• The Bank of Queensland upsized dividend is being paid out today. Here’s the lowdown
• ASX 200 bank shares: fundie picks winners and losers of the big four
• Top fund manager sounds alarm bells for bank shares

Motley Fool contributor Tristan Harrison 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 Lynas Rare Earths Ltd (ASX: LYC) share price is trading higher on Tuesday.

Lynas shares are up 2.04%, currently fetching $8.52 apiece. For perspective, the S&P/ASX 200 Index (ASX: XJO) is up 0.28% at the time of writing.

Let’s take a look at how this ASX rare earths producer is performing today.

What is happening at Lynas?

Lynas is not the only ASX rare earths share in the green today. The Peak Rare Earths Ltd (ASX: PEK) share price is up 1.06%, while Arafura Rare Earths Ltd (ASX: ARU) shares are 2.47% higher. The S&P/ASX 200 Materials Index (ASX: XMJ) is also up 1.73% in late afternoon trade.

Today, Lynas held its annual general meeting. In a presentation, the company’s CEO Amanda Lacaze highlighted demand is continuing to grow for rare earths used in electric vehicles and for wind energy.

The company showed a slide revealing another five kilotonnes (kt) of Neodymium-Praseodymium (NdPr) oxide is required for 10 million hybrid electric vehicles. And a further seven kt of NdPr oxide is needed for 10 million battery electric vehicles.

Lynas said it is targeting concentrate feedstock of 12,000 tonnes per annum of NdPr products in 2024.

The company shared a YouTube video of its global operations. Lynas said the Mt Weld mine in Western Australia is “one of the world’s best rare earths resources”. It also showed vision of Lynas Malaysia where rare earths are refined into products, highlighting:

Lynas Malaysia is the world’s largest single rare earths processing plant.

In June, the company signed a contract with the US Defense Department for a $120 million heavy rare earths separation facility in the United States. The company is also constructing a rare earths processing facility in Kalgoorlie, Western Australia.

Commenting on the year overall, chair Kathleen Conlon said 2022 was an “excellent year for shareholders”. She added:

Rare earths market prices and demand for NdFeB magnets were robust throughout the 2022 year. The recognition of Lynas as a leading supplier of rare earth materials meant that we experienced strong demand for the NdPr product family and mixed Heavy Rare Earth compound (known as SEG) and this was a key contributor to our excellent results.

Lynas reported a net profit after tax (NPAT) of $540.8 million in FY22 and sales revenue of $920 million.

Share price snapshot

Lynas shares have climbed just 0.24% in the past year, while they have fallen 16% year to date. In the past month, Lynas shares have risen 5%.

For perspective, the ASX 200 has climbed 0.06% in the last year.

Lynas has a market capitalisation of about $7.7 billion based on the current share price.

The post Why is the Lynas share price leaping higher today? appeared first on The Motley Fool Australia.

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More reading

• Why has the Novonix share price crumbled 19% in 2 weeks?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• How to make $56,000 in passive income by investing $500 a month in ASX shares
• Profit down 57%, share price up 12%. What’s with this ASX 200 healthcare stock today?
• Bought $1,000 of ANZ shares 10 years ago? Here’s how much dividend income you’ve received

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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The S&P/ASX 200 Index (ASX: XJO) is on course to bounce back with a small gain on Tuesday. In afternoon trade, the benchmark index is up 0.3% to 7,250.1 points.

Four ASX shares that are climbing more than most are listed below. Here’s why they are charging higher:

Ainsworth Game Technology Limited (ASX: AGI)

The Ainsworth Game Technology share price is up over 9% to $1.21. Investors have been buying this gaming technology company’s shares following the release of an update at its annual general meeting. Management advised that it expects to achieve approximately $18 million in profit before tax pre-currency and one-offs for the six months ending 31 December 2022.

BHP Group Ltd (ASX: BHP)

The BHP share price is up 2.5% to $45.00. The catalyst for this gain appears to have been a rebound in iron ore prices during Asian trade. According to the Singapore Exchange, iron ore futures are up 3% to US$100.40 per tonne. Rio Tinto Ltd (ASX: RIO) shares are rising by a similar margin for the same reason. The potential easing of restrictions in China has boosted prices.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price is up 10% to $21.18. This follows the release of the medical device company’s half year results this morning. Although Fisher & Paykel Healthcare reported a 57% decline in net profit after tax to NZ$88.85 million, this was in line with expectations. The prior corresponding period benefited greatly from COVID demand for respiratory care devices.

Leo Lithium Ltd (ASX: LLL)

The Leo Lithium share price is up 6% to 51 cents. Leo Lithium and a number of other lithium shares are rebounding strongly today after recent declines. This may have been driven by speculation that China may ease COVID restrictions despite soaring cases. China is holding a COVID briefing later today.

The post Ainsworth Game Tech, BHP, Fisher & Paykel, and Leo Lithium shares are charging higher appeared first on The Motley Fool Australia.

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More reading

• Here’s what’s boosting these ASX 200 mining giants today
• Profit down 57%, share price up 12%. What’s with this ASX 200 healthcare stock today?
• Mike Henry has sold $650k of BHP shares in the past week. What’s going on?
• Almost ready to retire? How to generate $70k per year of passive income from ASX dividend shares
• Does an investment in Fortescue shares provide the ‘healthiest’ ASX exposure to iron ore?

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.

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The S&P/ASX 200 Index (ASX: XJO) iron ore giants are trouncing the benchmark’s return in late afternoon trade on Tuesday.

At the time of writing, the ASX 200 is up 0.3%.

Meanwhile:

• BHP Group Ltd (ASX: BHP) shares have gained 2.3%
• Rio Tinto Ltd (ASX: RIO) shares are up 3.2%
• Fortescue Metals Group Limited (ASX: FMG) shares are up 2.7%

Considering the outsized weighting the three mining stocks have on the ASX 200, the benchmark owes much of its gains today to their strong performance.

What’s piquing investor interest?

Investors have been bidding up the ASX 200 miners today after a boost in iron ore futures prices.

The industrial metal leapt 3% to US$100.40 (AU$149.80) per tonne. That’s up from just over US$81 per tonne on 1 November. And it’s the highest price the industrial metal has fetched in two months, since 29 September.

The increased iron ore price, and resultant lift in the ASX 200 miners, may come as a surprise following the past few days of news centred around China’s COVID zero policies.

With new infections still soaring in China, analysts are expecting the world’s second-biggest economy to struggle amid continuing rolling lockdowns.

Atop the economic hit, social unrest has broken out over those restrictions. Over the weekend and into Monday, China witnessed almost unheard of mass protests from citizens demanding a return of freedom of movement.

All this bodes poorly for metals demand from the Middle Kingdom, throwing up headwinds for the ASX 200 miners.

However, these fears look to have been trumped amid fresh news that Chinese regulators have upped their efforts to aid China’s floundering, iron ore-hungry property sector.

Aside from boosting the iron ore price, China’s SSE Composite Index is up 2.2% in mid-day trading.

How have the ASX 200 miners performed in 2022?

Despite some big price swings, it’s been a good year to be invested in the ASX 200 miners.

Since the opening bell on 4 January, the BHP share price is up 21%, Rio Tinto shares have gained 7%, and the Fortescue share price is up 2%.

For some context, the benchmark index is down 5% for the calendar year.

The post Here’s what’s boosting these ASX 200 mining giants today appeared first on The Motley Fool Australia.

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More reading

• Ainsworth Game Tech, BHP, Fisher & Paykel, and Leo Lithium shares are charging higher
• Can the Rio Tinto dividend maintain its high yield of 9.9%?
• Did Fortescue just lose out on this multi-billion dollar green hydrogen project?
• Up 30% in a month, why the Fortescue share price could have further to run: fundie
• Mike Henry has sold $650k of BHP shares in the past week. What’s going on?

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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There are many Australians that have no investments at 40, apart from some superannuation funds, and perhaps, if lucky, a house. If you fall into this category, don’t despair, there’s still plenty of time to right your ship of wealth. After all, the legendary investor Warren Buffett only became a billionaire at age 50.

Today, he’s worth over US$108 billion, meaning he has made 99% of his fortune after the age of 50. And his company Berkshire Hathaway is worth close to US$700 billion.

Now, I’m not saying that you too can become a billionaire in just ten years. There’s only one Warren Buffett.

But we can still use his principles to harness the amazing effects of compound interest in building wealth.

Here are three Buffett principles that an investor at 40 could use:

Start at the bottom

One cannot build wealth from a position of weakness. So the first thing to do is to get your financial house in order. A good way to start might be to eliminate any unnecessary debts from your life.

Car loans, credit cards and anything that isn’t borrowed against an appreciating asset (i.e. property) is kryptonite for wealth building. Get rid of the debt and stay debt free.

After this, an aspiring investor needs to make sure that they have surplus cash to be able to invest. So if you’re spending more than you are making each week, fortnight or month, it’s time to rectify this situation.

Building wealth starts with finding the money you can invest consistently. So maybe it’s time to run a ruler through your expenses and find some savings. One could also try and boost your income.

Buffett invests judiciously. We should do the same

Buffett once said this:

I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it, so that you had 20 punches — representing all the investments that you got to make in a lifetime.

And once you’d punch through the card, you couldn’t make any more investments at all… you’d really have to think carefully about what you did, and you’d be forced to load up on what you really think about. So you’d do much better.

He also once (even more famously) told us that the first (and only) rule of investing is “don’t lose money”.

Using these two quotes, we can conclude that all investors should be extremely thrifty with their investment dollars, and only put cash into the very best ideas.

This might be difficult for an investor who has never invested before. So there’s no harm in starting out with an index fund. That’s an idea Buffett has also endorsed in the past.

Be patient and stick to the plan

Harnessing compound interest is what successful investing is all about. But its effects take time and are not always obvious at first. Buffett’s right-hand man Charlie Munger once said, “the first rule of compounding: Never interrupt it unnecessarily”.

If you invested $30,000 into an investment returning 7% per annum, you would only have $42,529 after five years. But after 15, you’d have $85,468.

If you invested an extra $200 a month, that would grow to $148,861. Double it to $400 a month, and you’d be looking at $212,253.

Investing doesn’t work if you are constantly dipping in and out of markets or taking your profits to go and buy a new TV. You need to have a plan and stick to it over a long period of time.

That’s what Buffett has done, and that’s what we all should do to harness the power of compound interest by investing in shares.

The post Without any investments at 40, I’d apply the Warren Buffett method to help me build wealth! appeared first on The Motley Fool Australia.

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More reading

• Why has the Novonix share price crumbled 19% in 2 weeks?
• Why Bubs, City Chic, Collins Foods, and Queensland Pacific Metals are sinking today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Does this ASX All Ordinaries share really have a dividend yield of 29% right now?
• Who needs nuance?

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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 Novonix Ltd (ASX: NVX) share price has been suffering over the past fortnight, tumbling 18% in that time.

Indeed, things have been mostly downhill since the share hit its November peak on the first session of this month. That saw the battery material and technology company’s stock swapping hands for $2.77 apiece.

Today, the Novonix share price is $2.19. That’s 76% lower than it was at the start of 2022 and 80% lower than it was this time last year.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 1% over the last two weeks. It has also fallen 5% year to date and is trading flat over the last 12 months.

So, what might be weighing on the Novonix share price? Let’s take a look.

What’s been dragging the Novonix share price lower lately?

The Novonix share price has plummeted over the last fortnight despite silence from the company. Interestingly, the broader S&P/ASX 200 Information Technology Index (ASX: XIJ) hasn’t suffered the same decline.

In fact, the sector – housing Novonix and its tech peers – has lifted 2.5% in that time.

Looking deeper, Novonix’s short position has remained relatively unchanged over the last few weeks – remaining at around 3.6%. That’s down from its September peak of around 5.8%.

However, there is one notable factor to consider when contemplating the stock’s recent suffering. That is its brilliant October performance.

The Novonix share price leapt 52% in October amid news of a US$150 million grant from the US government. The most recent news from the embattled ASX 200 tech stock also concerned the grant. That was released on 3 November.

Thus, its recent tumble may well be a prolonged market correction following a bout of investor confidence. Though, things are rarely so simple on the ASX.

The post Why has the Novonix share price crumbled 19% in 2 weeks? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• How to make $56,000 in passive income by investing $500 a month in ASX shares
• Profit down 57%, share price up 12%. What’s with this ASX 200 healthcare stock today?
• Bought $1,000 of ANZ shares 10 years ago? Here’s how much dividend income you’ve received
• 5 things to watch on the ASX 200 on Tuesday

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.3% to 7,248.5 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is down a further 3.5% to 29 cents. Investors have been selling this infant formula company’s shares after a disappointing update at yesterday’s annual general meeting. Bubs’ under-fire CEO, Kristy Carr, revealed that revenue is expected be flat during the first half. That’s despite its revenue growing 29% during the first quarter and management hyping up its US expansion.

City Chic Collective Ltd (ASX: CCX)

The City Chic share price is down a further 15% to 63 cents. This latest decline means the struggling plus sized fashion retailer’s shares are now down 54% over the last three trading sessions. Investors have been hitting the sell button following a very disappointing trading update. City Chic’s sales are down and its margins are being crunched. It also expects to finish the first half with inventory of $168 million to $174 million. That’s more than its currently market cap!

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price has sunk over 18% to $8.19. Investors have been selling this quick service restaurant operator’s shares following the release of its half year results. While Collins Foods delivered strong sales growth, its margins are being hit by cost inflation. In addition, the company revealed that it was pausing the Taco Bell expansion amid its deteriorating performance. It also took an $11.9 million non-cash impairment of eight Taco Bell restaurants.

Queensland Pacific Metals Ltd (ASX: QPM)

The Queensland Pacific Metals share price is under pressure again and down a further 6% to 11.7 cents. Investors have been selling this energy chemicals company’s shares this week after it released the results of the advanced feasibility study on stage 1 of the Townsville Energy Chemicals Hub (TECH) project. The company expects stage one’s capital expenditure to be $1.9 billion. This is almost 10x Queensland Pacific Metals’ market capitalisation.

The post Why Bubs, City Chic, Collins Foods, and Queensland Pacific Metals are sinking today appeared first on The Motley Fool Australia.

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More reading

• Why has the Queensland Pacific Metals share price crashed over 30% so far this week?
• Here’s why this ASX 200 share is crashing 17% today
• Why Bank of Queensland, Bubs, City Chic, and Liontown shares are sinking
• Why is the Bubs share price tumbling 9% to a 52-week low on Monday?
• Why has this ASX All Ordinaries share crashed 45% in 2 days?

Motley Fool contributor James Mickleboro has positions in Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods Limited. The Motley Fool Australia has recommended BUBS AUST FPO and Collins Foods Limited. 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) seems to be on the road to recovery so far this Tuesday after a dismal start to the trading week yesterday. At the time of writing, the ASX 200 has gained an additional 0.22%, lifting the index down to just under 7,250 points.

But let’s dig deeper into these share market gains by taking stock of the shares currently topping the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Tuesday

Evolution Mining Ltd (ASX: EVN)

Our first cab off the rank today is an ASX 200 gold mining share. Evolution has had a chunky 15.27 million of its shares trade hands on the stock market so far this Tuesday. We haven’t had any meaningful news or announcements out of Evolution today.

But the gold miner has had a rough time of it share price wise. At present, Evolution shares are down by 0.56% at $2.66 each. But this morning saw the company descend as low as $3.55, a loss of around 4%. This comes after some falls in the gold price itself overnight. It’s probably this drop this morning (and partial recovery) that is behind the volumes we see.

Core Lithium Ltd (ASX: CXO)

Next up today is the ASX 200 lithium share Core Lithium. This session has had a decent 19.89 million Core Lithium shares find a new home thus far. There hasn’t been any fresh news out of Core Lithium either. But the Core Lithium share price has certainly had a bumpy rise today, which is the likely cause of these high volumes.

Core Lithium shares opened in the red this morning at $1.26 each after closing at $1.29 yesterday. But investors have flooded back in over today’s session, with the company now up a healthy 1.32% at $1.31 a share.

Pilbara Minerals Ltd (ASX: PLS)

Finally this Tuesday we have another ASX 200 lithium share in Pilbara Minerals. So far today, a large 23.49 million Pilbara shares have made their way across the ASX boards. It seems like there is a similar situation to Core Lithium happening here. We’ve also seen some big volatility in the Pilbara share price.

But this involved Pilbara spiking to $4.62 a share this morning before returning to a lower price. At present, the lithium producer is going for $4.46 a share, up by 1.02%. All of this bouncing around is the likely cause of the elevated trading volumes on display here.   

The post Here are the 3 most heavily traded ASX 200 shares on Tuesday appeared first on The Motley Fool Australia.

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More reading

• How to make $56,000 in passive income by investing $500 a month in ASX shares
• Is China responsible for decimating your ASX 200 lithium shares?
• Profit down 57%, share price up 12%. What’s with this ASX 200 healthcare stock today?
• Bought $1,000 of ANZ shares 10 years ago? Here’s how much dividend income you’ve received
• 5 things to watch on the ASX 200 on Tuesday

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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Shut the front door. There’s no way an ASX All Ordinaries Index (ASX: XAO) share has a 29% dividend yield right now… is there? Well, time to check out the Base Resources Ltd (ASX: BSE) share price to find out.

Base Resources is an ASX resources share specialising in the production of mineral sands. It has operations in a few countries, including Australia, Kenya, and the United States.

Today, Base Resources is trading at 20.5 cents per share at the time of writing, down a nasty 4.65% so far this session.

This company has paid out two dividends over the past 12 months. The first was the interim dividend of 3 cents per share from March. The second was the final dividend worth 3 cents per share that investors received in September. Neither payment came with franking credits. So that’s an annual total of 6 cents per share for Base Resources.

On today’s share price of 20.5 cents, this does indeed give Base Resources a trailing dividend yield of 29%.

Hallelujah! So we should all run out and buy Base Resources shares right now? Who wouldn’t want their capital back after just three-and-a-bit years, after all?

Is Base Resources really offering a 29% dividend yield right now?

Well, not so fast.

A trialling dividend yield is always just that – trailing. It reflects only the past, not the future. The reality is that no Base Resources investor has enjoyed a 29% dividend yield over the past year.

That’s because the Base Resources share price has plummeted by almost 38% in 2022. It was at more than 33 cents per share back in early January, a far cry from the 20.5 cents we see today.

So we can probably conclude that the market is predicting that Base Resources will not be able to fund dividends at 2022’s levels going forward. Otherwise, it wouldn’t have sent Base Resources shares down to a level that gives the company a trailing dividend yield approaching 30% – a level that is obviously well above a conventional yield.

We’ll have to see if the market is right on this. If this company pays out 6 cents per share in dividends next year, it will be very interesting to see where the Base Resources share price goes.

The post Does this ASX All Ordinaries share really have a dividend yield of 29% right now? appeared first on The Motley Fool Australia.

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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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I have a pretty good working knowledge of behavioural psychology.

No, not in a clinical or academic sense, but as a practitioner, of sorts, as an investor and investment advisor.

In fact, I’m convinced that, once you know the investing basics, the vast bulk of most people’s returns are influenced more by behavioural psychology than their ability to analyse businesses.

Exhibit A: Study after study shows that most managed funds fail to beat the index. But they keep trying.

Exhibit B: The average managed fund investor underperforms those very managed funds! Generally, because they can’t leave well enough alone, switching funds and trying to time the market.

But that’s not all.

Our biology, and our pack instinct, lead us to generally eschew nuance and uncertainty, in favour of black-and-white answers and ‘taking sides’.

And then, once we’ve done that, we tend to stop listening to counter arguments or, perhaps worse, we stop looking for flaws in our own thinking.

We’ve chosen a side, and we’re sticking with it, goddamnit!

There have been a lot of examples in this area in recent times.

Take the recent electric vehicle subsidy legislation. So sure are EVs’ proponents that EVs are the answer, that any policy – no matter how ineffectual or suboptimal – must be good.

Giving new EV buyers a $2,000 taxpayer subsidy to buy a $75,000 car is hailed as ‘progress’. Which it undoubtedly is.

A bit.

See, if you’re spending $75,000 on a new car, you have a choice of dozens of cars in that price bracket, including Teslas, but also BMWs, Audis, Mercedes’ and more.

Let’s say the BMW is $75,000 but the Audi is $73,000. Which do you choose?

The vast bulk of people will say the price is essentially the same, and just go with the one they like most.

Exactly.

So, the vast, vast bulk of people won’t buy the Tesla (or any other manufacturer’s EV) just because it’s $2,000 cheaper.

Worse, most those people who end up buying the EV would have bought one anyway!

Meaning the $2,000 is changing almost no-one’s behaviour. And costing the taxpayer a small fortune.

But you can’t say that – or, if you do, no-one listens.

“But EVs are good!” they say.

And they’re dead right. Lowering transport emissions is really important.

But that doesn’t mean every EV policy is smart, effective or efficient.

Worse, the money being wasted here could have been used on a more effective program, elsewhere, instead.

Have I offended everyone yet?

No? Okay, let’s see who else I can annoy.

I think we should decarbonise the world economy as quickly as possible. The science is clear.

(There goes some of my readers.)

But I also think there’s zero reason to ban Australian coal exports, if some other country is simply going to pick up that trade.

(There goes another chunk.)

Let’s work hard to stop all coal-burning around the world. But, while we do it, giving up economic opportunities for no net climate change gain is… silly.

But – and here’s the key point – you can think both of those things (that we should decarbonise and we should sell coal while there’s a market) at the same time.

Nuance.

We don’t have to be in one intransigent camp. We can hold two thoughts in our minds at once.

Next, let’s get rid of whatever readers remain.

Let’s talk RBA Governor Lowe’s apology for getting his interest rate forecasts wrong.

Here, three things can be true.

1. Governor Lowe didn’t say ‘rates won’t go up until 2024’. He was misreported; but

2. He should have corrected that misreporting, and he didn’t; but

3. There’s no reason, other than bloodlust, that the ‘Governor Lowe should resign’ campaign should succeed.

Let’s break that down.

In case you didn’t know, the RBA essentially said ‘we don’t think rates will go up until wages and prices do, and we don’t think that’ll happen until 2024’.

Which was reported as ‘Lowe says rates won’t rise until 2024’.

Now, I wrote at the time about that misreporting.

But, as much as I’d like to believe everyone hangs on my every word, apparently they don’t!

So, Lowe and the RBA had an opportunity – and an obligation – to correct the record, but they didn’t.

And so?

So, the pitchforks are out for Governor Lowe, because he, and the RBA, got it wrong.

A decent chunk of the media – a few mainstream and a lot of social – are demanding Lowe resign.

But I think that’s an unfortunate view.

Lowe made a mistake. He, and the RBA board, got it wrong.

But why should he resign?

To make us feel better?

To satisfy a little bloodlust?

Nah.

Either he’s the best person for the job, or he’s not.

If he is, mistake or not, he should keep the job. If anything, he’ll now be doubly careful not to make another one.

If he’s not, he should go, whether or not he made a blue.

Literally that’s it.

Anything else is just action for its own sake. And for bloodlust.

To bring it back to investing, should Warren Buffett have resigned from Berkshire Hathaway because he bought a business that subsequently went broke?

Because his company’s share price lagged the S&P 500 in 1999? Or almost halved in 1974?

Of course not.

We love a ‘heads should roll’ outcome. It makes us feel like justice has been done.

Turns out, we’re not that evolved, after all.

As the old saw has it: “There’s always an easy solution to every human problem—neat, plausible and wrong.”

It’s a bad idea, for public policy.

And it’s a bad idea for your investing.

No company is above criticism.

No CEO is perfect.

No investment thesis is bulletproof.

No investing strategy is going to outperform in all markets.

We must leave room for doubt. We must expect the occasional SNAFU.

We are not perfect. Nor is anyone else.

My suggestion?

Get comfortable with nuance.

Make your peace with ambiguity.

Quieten down the parts of your brain that want easy answers. And revenge.

Realise that your tendency – and mine – will be to want to ignore facts that could prove us wrong.

Embrace that, instead.

Oh, and give yourself a break when you try, but still make mistakes.

At the end of the day, we’re all human.

Fool on!

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More reading

• Why has the Queensland Pacific Metals share price crashed over 30% so far this week?
• How to make $56,000 in passive income by investing $500 a month in ASX shares
• CSL share price ‘ticks all the defensive boxes’: fundie
• Why is the Qantas share price smashing the ASX 200 on Tuesday?
• Can the Rio Tinto dividend maintain its high yield of 9.9%?

Motley Fool contributor Scott Phillips has positions in Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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