Category: Stock Market

ASX shares and global shares have been punished in 2022. However, I think there are a few quality exchange traded funds (ETFs) that could be effective investments in this environment.

With share prices down so much across a wide variety of sectors, it may be hard to know which opportunity to go for.

ETFs give us the opportunity to buy a whole index, like the S&P/ASX 200 Index (ASX: XJO), or perhaps to increase an allocation to a specific sector or investing style.

‘Quality’ can mean many different things to different investors. But, if businesses tick multiple boxes, then I believe they have a good chance of doing well over the longer term.

With that in mind, here are two leading quality ETFs that I’d buy in August.

Betashares Global Quality Leaders ETF (ASX: QLTY)

The QLTY ETF looks much more attractive after falling just over 20% in 2022.

As BetaShares says, the ETF is invested in 150 of the world’s highest-quality companies.

But how are those businesses judged to be high-quality? There are quality rankings for a few different factors: return on equity, debt to capital, cash flow generation ability, and earnings stability. When you put those four elements together, a business that scores well on all four has a decent chance of producing solid returns.

Despite falling 23.5% over the six months to 30 June 2022, the fund’s average return per annum of 8.1% over the prior three years was stronger than the 7.83% per annum return of the MSCI World ex-Australia Index over the same time period.

While there isn’t much investment concentration in the fund, with the biggest holding only having a 2.1% weighting, these are some of the biggest allocations: Visa, Accenture, Automatic Data Processing, Cisco Systems, Intel, Johnson & Johnson, Microsoft, Novartis, and Novo Nordisk.

I like the combination of quality and geographic diversification with this ETF. Only 60% of the portfolio is invested in US shares, compared to 70% for the global share market benchmark.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This is another quality ETF focused on businesses in the US.

However, there are fewer businesses in this portfolio. On 30 June 2022, there were a total of 50 positions.

Let’s look at the ETF’s biggest holdings: Kellogg, Veeva Systems, Gilead Sciences, Biogen, Ecolab, Western Union, Polaris, Microsoft, Masco, and 3M.

A key focus of this ETF is on quality US companies that have “sustainable competitive advantages”, which can also be described as “wide economic moats”.

Competitive advantages can come in a number of different forms including brand power, intellectual property, costs, and so on.

The analysts at Morningstar believe the companies in this quality ETF can maintain their competitive advantages for at least the next decade and perhaps for two decades or more.

The MOAT ETF has outperformed the S&P 500. Since June 2015, the ETF has returned an average of around 14% per annum compared to an average return per annum of 11.8% from the S&P 500.

The post 2 quality-focused ETFs I’d load up on in August appeared first on The Motley Fool Australia.

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More reading

• 3 popular ASX ETFs for investors to buy
• Here are 3 fantastic ETFs for ASX investors to buy now
• I think these 2 ETFs are too good to miss in July 2022
• 3 quality ETFs for ASX investors to buy next week

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 positions in and has recommended Cisco Systems, Gilead Sciences, Intel, Microsoft, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended 3M and Johnson & Johnson and has recommended the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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 Polynovo Ltd (ASX: PNV) share price is down heavily on Monday. At the time of writing, it is around 12.2% IN THE RED.

That’s significantly worse than the S&P/ASX 200 Index (ASX: XJO) which is only down by 0.1%. Meanwhile, the S&P/ASX Small Ordinaries Index (ASX: XSO) is down by 0.75%.

Small-cap ASX shares are hurting more than their larger counterparts.

The business hasn’t released any news today. Indeed, it has been around a month since the company announced anything.

There are many other smaller ASX shares that are also down heavily. For example, the Appen Ltd (ASX: APX) share price is down 15.3%, the Cettire Ltd (ASX: CTT) share price is down 14.1%, the Sezzle Inc (ASX: SZL) share price is down 11.7%, the Archer Materials Ltd (ASX: AXE) share price is down 11.2% and the Praemium Ltd (ASX: PPS) share price has dropped around 11%.

Why is the Polynovo share price hurting?

Sometimes there isn’t an explainable reason. There isn’t any company-specific news.

However, when looking at the Polynovo share price, it is only back down to where it was last week.

Over the past month, it is still up by 16% despite today’s decline. So, this could simply be some investors taking short-term profit off the table.

Reporting by the Australian Financial Review indicates that there is going to be a “global economic slowdown” as business activity was weaker than expected in the US and Europe. With strong inflation ongoing, this could mean central banks aren’t able to create a “soft landing” for the global economy.

The post Why is the Polynovo share price down over 12%? appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares
• The Polynovo share price has popped 32% in a month. What’s going on?
• These are the 10 most shorted ASX shares
• Why are short sellers targeting PolyNovo shares?
• These are the 10 most shorted ASX 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 positions in and has recommended Appen Ltd, Cettire Limited, POLYNOVO FPO, and Praemium Limited. The Motley Fool Australia has recommended Cettire Limited and Praemium 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) has started the week in a subdued fashion. In afternoon trade, the benchmark index is down a few points to 6,788.5 points.

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

Appen Ltd (ASX: APX)

The Appen share price is down 14% to $5.65. This follows weakness in the tech sector, concerns over demand from social media customers, and a broker note out of Citi. The latter has seen the broker warn investors that Appen’s first half earnings could fall short of estimates. It also has concerns over management’s expectation for a big jump in revenue in the second half.

EML Payments Ltd (ASX: EML)

The EML share price is down 22% to 93 cents. Investors have been selling this payments company’s shares following news that the Central Bank of Ireland has not approved the remediation programme for its European operations. The bank identified “shortcomings” in components of the programme, principally the sequencing and approach taken to the risk assessment of its distributors, corporates and customers.

Imugene Limited (ASX: IMU)

The Imugene share price is down 9% to 23.2 cents. This morning this biotech company released its quarterly update and revealed an operating cash outflow of $10.15 million. Though, the company remains in a strong financial position with a cash balance of approximately $100 million.

Nanosonics Ltd (ASX: NAN)

The Nanosonics share price is down 8% to $4.24. This follows the release of the infection prevention company’s business update this morning. Although that update revealed sales ahead of consensus estimates, the lack of commentary around costs appears to have spooked investors. There are concerns that the company’s margins could be crunched by its sales model transition in North America.

The post Why Appen, EML, Imugene, and Nanosonics shares are sinking appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• These are the 10 most shorted ASX shares
• Why is the Appen share price sinking 15% today?
• ASX 200 midday update: EML crashes, Flight Centre jumps on guidance upgrade
• EML share price crashes 22% on Ireland warning

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 Appen Ltd, EML Payments, and Nanosonics Limited. The Motley Fool Australia has positions in and has recommended EML Payments and Nanosonics 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) is having a very bumpy start to the trading week this Monday.

At the time of writing, the ASX 200 is essentially flat, down by a weak 0.07% at 6,787 points. This comes after the ASX 200 had played jump rope with the breakeven line all day, with stints in both positive and negative territory so far.

But rather than trying to decipher those moves, let’s instead look deeper at the ASX 200 shares currently at the top of the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Monday

South32 Ltd (ASX: S32)

Mining company South32 is our first ASX 200 share to take a glance at this Monday. So far today, a notable 16.56 million South32 shares have been dug up and sold to investors. This volume has probably been pushed along by the release of South32’s quarterly update this morning.

As we covered at the time, South32 reported some pleasing results. These included higher production of aluminium, copper, manganese, nickel, and zinc. South32 shares have put on 0.71% to $3.555 so far today.

Zip Co Ltd (ASX: ZIP)

The second ASX 200 share worth checking out today is buy now, pay later (BNPL) share Zip. This Monday has seen an impressive 17.2 million Zip shares trade on the markets thus far. This looks to have been sparked by the volatility we have seen with Zip shares today.

The BNPL share is currently down by 0.57% at 87.5 cents a share. But it has been as low as 80 cents and as high as 92 cents over just this trading day alone. Such bouncing around is always going to promote higher volumes, and that looks like what is happening with Zip presently.

EML Payments Ltd (ASX: EML)

EML payments is our third and final ASX 200 share experiencing elevated trading volumes this Monday. So far today, a sizeable 17.34 million EML shares have been bought and sold on the market. Unfortunately for investors, this looks like a consequence of this company’s precipitous share price drop today.

The payments company is currently down a nasty 22% to 93 cents a share. This drop seems to be caused by the company’s announcement this morning that the Central Bank of Ireland remains unhappy with EML’s remediation program.

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

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More reading

• Why is the AFIC share price outperforming on Monday?
• Experts predict 2 companies heading for the ASX 20 (and 2 that will get kicked out)
• These are the 10 most shorted ASX shares
• Swings and roundabouts: What’s with the Zip share price today?
• ASX 200 midday update: EML crashes, Flight Centre jumps on guidance upgrade

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

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

A company’s leadership is certainly one of the most important factors in its success. The decisions made by C-suite executives quite literally have million- and even billion-dollar implications for the business.

And without a doubt, Amazon‘s (NASDAQ: AMZN) leadership over the years has been one of the best in business.

If you want to find companies with Amazon-like leadership teams, consider these three qualities that have driven the company’s dominance.

1. A culture of experimentation

Recently, I dived into Amazon’s storied history and unpacked just how important optionality has played in the company’s success. This optionality comes from a culture of experimentation.

In a 2014 interview, founder Jeff Bezos once said, “What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence.”

The focus on innovation through trial and error is well-documented throughout Bezos’ many shareholder letters. While many companies claim to prioritize innovation, Bezos recognized true innovation meant there would be big failures.

One of Amazon’s biggest failures was the Fire Phone. The company invested over $170 million into the product in 2014, and it completely whiffed, selling just 35,000 units in the first month after the launch.

In the 2019 shareholder letter, Bezos explained why he’s OK with massive failures like this, saying: “This kind of large-scale risk-taking is part of the service we as a large company can provide to our customers and to society. The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.”

Without embracing potential flops, Amazon would likely have never produced some of its best products and services, like the Echo or Amazon Web Services.

You can get a sense of how much emphasis a management team places on experimenting and innovation by listening to earnings calls or reading through shareholder letters.

2. Customer obsession

Amazon’s leadership team uses a strategy they call “working backwards”. Instead of starting with competitor products or those with the highest margins, they simply consider, “What does the customer want?” and then work backward from there to design exceptional products and services.

This obsession with the customer has driven decades of great decision-making by the leadership team. And Bezos has long attributed it as the primary reason for Amazon’s success, saying, “The No. 1 thing that has made us successful by far is obsessive-compulsive focus on the customer as opposed to obsession over the competitor.”

At the end of the day, customers drive revenue, and companies that maintain an intense focus on customer service have a knack for winning over the long run.

3. Publicly-stated, ambitious goals

Excellent companies are very often led by management teams with ambitious goals. Amazon’s first slogan was “the world’s largest bookstore”. Despite Barnes & Noble taking offense to this and suing the company back in 1997, this slogan represented the grandeur of Bezos’ vision for the company.

He could have used a simple slogan like “the first online bookstore”, but he publicly stated his global ambition even in the company’s early days.

Amazon’s mission statement today is “to be Earth’s most customer-centric company” and it has a corporate vision statement “to be Earth’s best employer and safest place to work”, in response to harsh criticism of brutal working conditions in its distribution centers.

Notice the global theme in the company’s goals. This ambition is critical to achieve even a fraction of the growth and dominance of Amazon.

Another public company with an eccentric (and often polarizing) CEO that has stated very ambitious goals is electric vehicle maker Tesla, led by Elon Musk.

The company’s mission is “to advance the world’s transition to sustainable energy”. With the recent expansion of its “gigafactories” into China and Europe and its industry-leading deliveries, Tesla appears to be executing on this ambitious goal.

Studying Amazon makes you a better investor

Identifying the next Amazon is no easy task as it’s clearly a generational company. But studying this e-commerce juggernaut provides a treasure trove of insights into the qualities shared by other great companies.

When analyzing businesses, look for management teams that embrace experimentation (and failure), have a deep focus on the customer, and are public about their ambitious goals for the future.

Incorporating these qualities into your management analysis can lead you to discover the next market-beating stock.

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

The post Want to invest in management teams like Amazon’s? Here’s what to look for appeared first on The Motley Fool Australia.

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More reading

• 2 important investing metrics you won’t find on a financial statement
• Amazon is bowing to regulators. Here’s what it means for shareholders
• Amazon earnings: What to watch on July 28
• What’s in store for the BetaShares NASDAQ 100 ETF in the next 12 months?
• Better advertising stock: Alphabet vs. Amazon

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Mark Blank has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Tesla. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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It’s been a rather dreary start to the trading week for the S&P/ASX 200 Index (ASX: XJO). At the time of writing, the ASX 200 has lost an anaemic 0.05% and is back under 6,800 points. But it’s a different story for the Australian Foundation Investment Co Ltd (ASX: AFI), or AFIC, share price today.

The AFIC share price is currently up a more robust 0.62% at $8.13 this Monday after opening at $8.08. This move comes after the listed investment company (LIC) reported its preliminary full-year results for the 2022 financial year this morning.

What did the company report?

• Net profit of $360.6 million, up 53.4% from the previous year (FY2021)
• Revenue from operating activities of $393.4 million, up 49.7% from FY2021.
• Earnings per share (EPS) of 23.3 cents
• A final and fully franked dividend of 14 cents per share

What else happened in FY2022?

As an LIC, AFIC manages a portfolio of underlying shares on behalf of its investors. Over the financial year just gone, AFIC’s net tangible assets (NTA) per share fell from $7.45 per share to $6.63 (before allowing for the final dividend).

However, AFIC has maintained its full-year dividend payments at 24 cents per share, fully franked. That’s the same level it funded over FY2021. However, 10 cents out of the 14-cent final dividend will be “sourced from capital gains, on which the Group has paid or will pay tax”.

AFIC also reported that the net profit of $360.6 million includes a (non-cash) dividend of $74.9 million that has resulted from the merger of BHP Group Ltd (ASX: BHP)’s petroleum division with the old Woodside Petroleum Limited (WPL). Otherwise, AFIC declared that the large increase in profitability from FY2021 “was driven by higher dividends received from investee companies”.

What did management say?

Here’s some of what AFIC’s management had to say on these results:

Short-term portfolio performance was impacted by adjustments in the market resulting from geopolitical events and rising interest rates which produced a fall in many growth companies trading on high valuations.

These conditions also produced fluctuations in the more cyclical stocks, where AFIC is generally underweight given its long-term investment focus. Portfolio return for the year was negative 6.8%, including franking. The return for the S&P/ASX 200 Accumulation Index, was negative 5.1%, including franking.

What’s next?

AFIC is not too optimistic about its own prospects in the immediate future. It declared that “the uncertain environment that produced a fall in equity markets during the financial year is unlikely to be materially different in the short term”.

However, it also stated that “in this environment we are comfortable with the current portfolio settings and can afford to be patient with our capital until attractive opportunities present themselves”.

AFIC share price snapshot

The AFIC share price has been struggling in recent months. The LIC remains down by 4.59% over the year to date. However, that is not nearly as painful as the ASX 200’s 10.5% loss over the same period.

At the current AFIC share price, the Australian Foundation Investment Co has a trailing dividend yield of 2.96%.

The post Why is the AFIC share price outperforming on Monday? appeared first on The Motley Fool Australia.

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More reading

• Experts predict 2 companies heading for the ASX 20 (and 2 that will get kicked out)
• ASX 200 midday update: EML crashes, Flight Centre jumps on guidance upgrade
• Up 10% so far in July, is the CSL share price heading back above $300?
• 5 things to watch on the ASX 200 on Monday
• Is Adairs considered an ASX 300 dividend share?

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a small decline. At the time of writing, the benchmark index is down 0.1% to 6,787.6 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising today:

Damstra Holdings Ltd (ASX: DTC)

The Damstra share price is up 16% to 22 cents. This follows the release of the integrated workplace management solutions provider’s fourth-quarter update. Damstra had its best quarter of the financial year, delivering revenue of $8 million. This underpinned a 25.2% half on half increase in revenue during the second half. Damstra also achieved its first quarter of positive operating cash flow.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is up over 3% to $17.69. This morning the travel agent upgraded its guidance for FY 2022. Management revealed that a strong finish to the financial year means that it expects to record an underlying EBITDA loss of between $180 million and $190 million in FY 2022. This is an 11.9% improvement on the mid-point of the company’s initial FY 2022 guidance.

Insurance Australia Group Ltd (ASX: IAG)

The IAG share price is up almost 6% to $4.45. This appears to have been driven by the release of a number of broker notes that rate the insurance giant’s shares as a buy. One of those is Citi. Although the broker was disappointed with IAG’s FY 2022 update, it sees enough value to maintain a buy rating with a $5.10 price target.

Pantoro Ltd (ASX: PNR)

The Pantoro share price is up 3% to 18.5 cents. Investors have been buying this gold explorer’s shares following an update on drilling on stage two of the open pit plan at Green Lantern at the Norseman Project. Management advised that drilling continues to increase confidence in the ore geometry and controls on mineralisation.

The post Why Damstra, Flight Centre, IAG, and Pantoro shares are pushing higher appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• Why are ASX 200 travel shares having such a stellar session?
• Why is the IAG share price lifting 6% higher today?
• ASX 200 midday update: EML crashes, Flight Centre jumps on guidance upgrade
• Flight Centre share price storms 5% higher on guidance upgrade

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 Damstra Holdings Ltd. The Motley Fool Australia has positions in and has recommended Insurance Australia Group Limited. The Motley Fool Australia has recommended Damstra Holdings Ltd and Flight Centre Travel Group 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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This year has been rough on the Evolution Mining Ltd (ASX: EVN) share price. The S&P/ASX 200 Index (ASX: XJO) gold producer’s stock was rocked in late June when the company downgraded its production guidance while upping its expected production costs. And a falling gold price hasn’t helped at all.

At the time of writing, the Evolution share price is $2.40. That’s 41% lower than it was at the start of the year.

Comparatively, the ASX 200 has slumped around 10% in that time while the VanEck Gold Miners ETF (ASX: GDX) has shed 15%.

But has the Evolution share price’s poor performance presented a buying opportunity? Let’s see what experts are saying.

Is the embattled Evolution share price a buy?

The Evolution share price has been recently battered by an earnings downgrade and a falling gold price.

While the yellow metal is often spruiked as an inflation hedge, it doesn’t pay interest. That means rising rates may have encouraged investors to move away from gold. At the same time, a stronger US dollar makes the metal more expensive for those trading in other currencies, as my Fool colleague Zach Bristow reported last week.

But is there light at the end of the tunnel for the Evolution share price? Well, that depends on who you ask.

Atlas Funds Management chief investment officer Hugh Dive is reportedly bullish on Evolution – just. The fundie told Livewire it’s a “very soft buy” in his books, adding:

Evolution’s production issues are not insurmountable. The gold price could go up, and if they get their production back together, its [share price will] go up.

The publication also heard the far more bearish opinion of Investors Mutual Limited’s Hugh Giddy. Giddy believes the stock is a ‘hold’ amid negative sentiment on the price of gold.

And there appears to be mixed opinions all round. The Motley Fool Australia reported on brokers’ outlooks for the Evolution share price earlier this month.

Then, seven brokers believed the stock was a buy, eight had slapped it with a ‘hold’ rating, and two were tipping it as a ‘sell’.

However, the consensus price target was $3.30 – representing a potential 44% upside.

The post Is the Evolution share price a buy after falling 40% this year? appeared first on The Motley Fool Australia.

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More reading

• Evolution share price lifts as results fall ‘in line’ with forecasts
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• What’s the outlook for Evolution Mining shares in FY23?

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

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

While cryptocurrency is an exciting emerging asset class, not every cryptocurrency is a buy. Crypto investors are constantly bombarded with information on what cryptocurrency to buy next before it “goes to the moon”.

Let’s take a look at some cryptocurrencies that readers would be better off avoiding. It may be because of a lack of utility, questionable value, or the fact that it’s being made obsolete by developments elsewhere in the crypto space. Three cryptos to avoid are Bitcoin Cash (CRYPTO: BCH), Dogecoin (CRYPTO: DOGE), and Hex (CRYPTO: HEX).

1. Bitcoin Cash

RJ Fulton (Bitcoin Cash): Bitcoin Cash was created as the result of a hard fork from Bitcoin in 2017. Its original purpose was to solve some of Bitcoin’s shortcomings, like high fees and slow speeds. However, new innovations in blockchain technology have caused Bitcoin Cash to potentially become obsolete. 

One of the primary differences between Bitcoin Cash and Bitcoin comes down to the block size. Bitcoin Cash’s block sizes are 32 times larger than Bitcoin’s. The thinking goes that larger blocks are capable of holding more data. Subsequently, transaction speeds are faster and fees are lower since block sizes are more efficient.

At first glance, it would seem that Bitcoin Cash has an advantage. Yet in recent years, new technology now allows Bitcoin to become just as efficient as Bitcoin Cash without sacrificing any of the security or decentralization that makes Bitcoin unique. 

Known as the Lightning Network, this solution helps Bitcoin transactions to be fulfilled faster and more cheaply. The Lightning Network processes transactions in batches separately from the main Bitcoin blockchain.

Without getting too much in-depth, the Lightning Network creates channels between users to send transactions. These channels keep a running tab of balances. Once a user cashes out, the channels are closed. Then transactions are bundled up and added to the main Bitcoin blockchain.

Over the course of last year, the Lightning Network grew by more than 300%. Thanks to integrations with mobile apps like CashApp, Strike, and even Twitter, the Lightning Network can now reach hundreds of millions of users. 

Think of the Lightning Network as turning Bitcoin from a two-lane county road into a six-lane highway. Before the Lightning Network, it wasn’t unheard of for a Bitcoin transaction fee to cost more than the transaction itself. Now, with the Lightning Network, you can avoid those high fees and slow speeds to use Bitcoin for everyday purchases like your cup of coffee.

Consequently, this new solution may have ended the one use case that Bitcoin Cash had over its original predecessor. Rather than hoping that Bitcoin Cash can catch up to Bitcoin in popularity and value, investors should steer clear of this cryptocurrency that might be on its last leg. 

2. Dogecoin 

Neil Patel (Dogecoin): Despite rising more than 10% over the past week, Dogecoin is still down 91% (as of July 19) from its peak price of $0.74 set in May 2021. That’s an eye-popping drawdown in such a short timeframe, but it underscores the fact that investors should stay far away from this dog-inspired meme token. As of this writing, Dogecoin had a market cap of $9.2 billion, making it the 10th most-valuable cryptocurrency network in the world. 

Founded in 2013 by Billy Markus and Jackson Palmer, Dogecoin was created as a casual and fun competitor to the largest cryptocurrency, Bitcoin (CRYPTO: BTC). But while Bitcoin, which is slowly becoming accepted as a legitimate store of value, has the longest operating history in the space with a deep developer network and a growing list of financial infrastructure supporting it, Dogecoin’s primary use thus far has been as a tipping mechanism on sites like Reddit and Twitter. 

There’s no real competitive edge that Dogecoin possesses among the more than 20,000 cryptocurrencies out there. To make matters worse, DOGE is meant to be an inflating digital asset, meaning there’s no cap on the supply of tokens. In fact, 10,000 new DOGE are mined every single minute, making price appreciation even more difficult to achieve.  

Dogecoin’s price did skyrocket in the spring of 2021 for no real reason other than the hype it received on social media. As part of the meme-stock craze that propelled otherwise struggling companies like AMC Entertainment and GameStop to new heights, Dogecoin benefited from renewed interest among younger speculators. Believing in the community might be the only bull argument for Dogecoin, but even this factor may have already peaked. 

The token’s most prominent supporter, Tesla CEO Elon Musk, has been known to occasionally tweet about DOGE, which unsurprisingly causes the crypto’s price to pop, albeit for a short time. Mark Cuban, the billionaire owner of the National Basketball Association’s Dallas Mavericks, is also a well-known supporter of Dogecoin. Both of these businessmen have even gone so far as to allow their respective organizations to accept payment in Dogecoin for certain items. I see no objective for this other than to use the token’s popularity to drive interest as a publicity stunt. 

Hoping for renewed interest from the crypto community to push DOGE’s price higher in the hopes of making a quick profit is not a worthwhile investment strategy. For this reason, it’s best to avoid Dogecoin altogether. 

3. Hex 

Michael Byrne (Hex): For a coin just outside of the top 200 tokens in market cap, Hex (CRYPTO: HEX) is garnering a lot of attention on social media and beyond. This is largely thanks to its charismatic founder and extensive advertising lauding the returns investors can make and the high yields they can earn by holding Hex. The advertising makes bold claims such as, “Hex is designed to go up 10,000x in only the first 2.5 years” and compares it to investing in Bitcoin at $1.

I’m wary of the fact that the Hex website states that it’s “like Bitcoin, but better”. The section that asks, “Is Hex a Ponzi, pyramid scheme, MLM, scam, or security?” with the simple answer “No,” also raises eyebrows.

Hex users essentially send Ethereum to a wallet address and receive Hex tokens in return. They can then leave these tokens on the Hex blockchain, where Hex advertises that staking them leads to average returns of 38% a year.

This is purportedly akin to a blockchain version of a certificate of deposit where holders are paid for locking their money in for a period of time. However, the Hex tokens they earn can just be created by Hex whenever they want and are inflationary in nature, offering little in the way of utility or revenue generation.

I also don’t like the idea of investors sending their hard-earned Ethereum to an unknown wallet. The better strategy would be to simply hold on to Ethereum as the Ethereum network readies itself for exciting developments like The Merge.

As we have seen with countless projects offering high yields that have imploded over the past few months, the high yields are not usually sustainable and are best treated with caution. Hex is down from a high of just under 50 cents that it hit in September 2021, and today it trades at just 5 cents. Like many smaller cryptos, Hex may find it difficult to return to previous highs during the crypto winter.

In addition to the concerns above, there’s also the simple question of opportunity cost. In the current market environment, investors can accumulate positions in blue chip cryptos like Bitcoin or Ethereum at a steep discount to where they were just a few months ago.

The crypto market is speculative and volatile. It’s probably wiser to add to positions in the top assets at these levels, rather than speculate on tokens with a more questionable future or use case like Hex and Dogecoin, or ones that are becoming obsolete, like Bitcoin Cash.

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

The post 3 cryptos to avoid no matter what appeared first on The Motley Fool Australia.

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More reading

• Did Elon Musk’s comments support or hurt meme tokens?
• Why Bitcoin, Ethereum, and Dogecoin are falling today
• Does this crypto rally have legs?
• Here’s why the Bitcoin and Dogecoin prices are rocketing
• Shiba Inu, Dogecoin, Solana surge higher: Where are meme coins headed from here?

Michael Byrne has positions in Bitcoin and Ethereum. Neil Patel has positions in Bitcoin and Ethereum. RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Ethereum, Tesla, and Twitter. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) continues to be the most shorted ASX share despite its short interest easing to 15.8%. Short sellers will have been disappointed to see the travel agent’s shares jump today following a guidance upgrade.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest soften to 11.9%. This appears to be due to valuation concerns. The betting technology company’s shares trade on lofty multiples.
• Nanosonics Ltd (ASX: NAN) has short interest of 11.7%, which is down slightly week on week again. Short sellers will be pleased to have seen this infection prevention company’s shares tumble on Monday following a business update. There are ongoing concerns about a potential jump in costs relating to a sales model change.
• Block Inc (ASX: SQ2) has short interest of 11.4%, which is up slightly week on week again. There’s also a similarly high level of short interest for the payments company’s shares on Wall Street.
• Lake Resources N.L. (ASX: LKE) has short interest of 9.2%, which is down week on week. This month this lithium developer was hit with a short attack from J Capital. Prior to that, the company’s CEO left with immediate effect, without comment, and sold all his shares.
• EML Payments Ltd (ASX: EML) has short interest of 9.1%, which is down meaningfully week on week. The short sellers that didn’t close positions will have been celebrating today after the payments company’s shares crashed lower following an update on regulatory issues facing its European operations.
• Regis Resources Limited (ASX: RRL) has short interest of 9.1%, which is up week on week. This gold miner’s shares have been under-fire this year amid production issues.
• PolyNovo Ltd (ASX: PNV) has seen its short interest ease to 8.5%. One short seller previously revealed that it was targeting the medical device company’s shares due to the belief that they have been valued incorrectly by the market.
• Kogan.com Ltd (ASX: KGN) has seen its short interest soften to 8.4%. Poor inventory management, supply chain headwinds, higher marketing costs, and increasing competition from Amazon are all weighing on sentiment.
• Zip Co Ltd (ASX: ZIP) has returned to the top ten with short interest of 8.1%. Short sellers don’t appear confident that this buy now pay later provider will achieve its profitability targets.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 travel shares having such a stellar session?
• Why are ASX 200 tech shares having such a lousy start to the week?
• Swings and roundabouts: What’s with the Zip share price today?
• ASX 200 midday update: EML crashes, Flight Centre jumps on guidance upgrade
• EML share price crashes 22% on Ireland warning

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 Betmakers Technology Group Ltd, Block, Inc., EML Payments, Kogan.com ltd, Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has positions in and has recommended Block, Inc., EML Payments, Kogan.com ltd, and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd and Flight Centre Travel Group 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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