Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Maple-Brown Abbott portfolio manager Phillip Hudak explains how the coming period will be far more challenging for ASX shares than the preceding decade, but there are pockets of opportunities.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Phillip Hudak: My name is Phillip Hudak and I’m co-portfolio manager for the MBA Australian Small Companies Fund. The fund is an all-weather Australian small-cap strategy that is designed to outperform in most market environments. 

We define ourselves by our earnings drives share prices philosophy. We go where the earnings go and are happy to invest in resources, in industrials and not bucketed into any particular or specific investment style like value or growth — and this is particularly important in the current market environments.

We focus on companies with improving fundamentals, all the way through to the upgrade cycle. We are looking to construct a portfolio of undervalued Australian small-cap companies that have idiosyncratic exposures.

MF: Fantastic. And it’s a new product, isn’t it? It only opened a couple of months ago?

PH: Yes. It was launched in June of this year. However, the investment philosophy and the investment process is identical to our previous employer, which has over a nine-year track record.

MF: So the big question on everyone’s lips right now is where do you reckon the market might be heading? How’s the state of play now and where it is going?

PH: I’m not a macro person and don’t make market predictions. I’d rather focus on stock-specific factors. However, what is clear is the future market environment is going to be more challenging for investors than what we’ve seen in the past. Economic and business models that relied on cheap debt and low cost inputs typically flourished in a non-inflationary environment and it looks like that period may be ending. 

The current geopolitical tensions, and I suppose hangover from COVID, have suggested that globalisation and cheap inputs may be a thing of the past. There’s no question that lead indicators imply softening inflation. However, tightening financial conditions continue to be required to contain the inflation genie, which is currently happening at the expense of some market dislocations that are happening here domestically.

The key question for investors is what will be the impact on companies of high interest rates and rising living costs? Is Australia just behind the rest of the world or are we still “the lucky country”? The sectors that the market has been most worried about, including domestic cyclicals, appear so far to be more resilient than market expectations so far. However, it is clear that market expectations for financial year 2023 are too elevated and expect those to continue to pull back. 

The key challenges for investors is whether or not companies invested have adequate moats, defensive earning streams and/or levers to pull to offset these emerging input costs and financial pressures that are emerging in the Australian marketplace.

Australian small caps have experienced significant multiple de-rates so far this calendar year to date, and have almost been indiscriminate across many stocks and valuations are definitely looking more attractive. We see upside risk for select companies with sustainable business models that have strong medium term outlooks. 

In summary, there is the potential for more challenging sort of market conditions for investors and the expectations that investors will need to rely more on alpha sources to achieve overall return objectives with the Australian small-caps market continuing to be a fertile ground for return duration.

MF: For a new investor who’s joined you in the last couple of months, it’s a pretty reasonable time to get into the market, isn’t it?

PH: Oh definitely. And particularly with small caps, given the breadth and depth of opportunities available, you’re able to actually find good, sound investment ideas that are able to grow earnings irrespective of the market environment which we’re currently in.

The post ‘Fertile ground’: Fundie reveals where to find the best ASX shares right now appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Monday
• Why did the Novonix share price jump 50% in October?
• Could this help or hurt the Endeavour share price?
• Morgan Stanley tips how to pick the market bottom, but should you wait to buy ASX shares?
• Experts name 2 ASX 200 dividend shares to buy next week

Motley Fool contributor Tony Yoo 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.

from The Motley Fool Australia https://ift.tt/1yJd8f0

On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a decent gain. The benchmark index rose 0.5% to 6,892.5 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to jump

The Australian share market looks set to start the week strongly after a good session on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is expected to open the day 91 points or 1.3% higher this morning. On Wall Street, the Dow Jones was up 1.3%, the S&P 500 rose 1.35%, and the NASDAQ climbed 1.3%. The latest US jobs data sparked hopes that the Federal Reserve could slow its rate hikes.

Oil prices jump

Energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a great start to the week after oil prices charged higher on Friday night. According to Bloomberg, the WTI crude oil price was up 5% to US$92.61 a barrel and the Brent crude oil price rose 4.1% to US$98.57 a barrel. News that China could soon get rid of its COVID zero policy boosted oil and other commodity prices.

Westpac full year results

The Westpac Banking Corp (ASX: WBC) share price will be on watch on Monday when the banking giant releases its full year results. According to a note out of Goldman Sachs, its analysts expect Westpac to report a 10.3% decline in total revenue to $18,866 million and a 4% decline in cash earnings (before one-offs) to $5,140 million. A full year dividend of $1.23 per share is expected, up from $1.18 per share in FY 2021. Goldman is forecasting a net interest margin of 1.85% in FY 2022 and an improvement to 1.96% in FY 2023.

ANZ shares go ex-dividend

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price could have a subdued start to the week. That’s because this big four bank’s shares are due to trade ex-dividend on Monday. Eligible shareholders can look forward to receiving ANZ’s fully franked 74 cents per share dividend next month on 15 December.

Gold price rises

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a good start to the week after the gold price rose strongly on Friday. According to CNBC, the spot gold price was up 2.8% to US$1,676.6 an ounce during the session. Hopes that the US Fed could slow its rate hikes boosted the precious metal.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Morgans names 2 more of the best ASX shares to buy in November
• Hotels, hurt feelings, and HR hassles, but Fortescue’s biggest shareholder still got richer this week
• Is there any good news in sight for the gold price and ASX 200 gold shares?
• Is the Vanguard Australian Shares ETF fighting off inflation?
• How did Pendal shares fare today amid takeover talk and an earnings update?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/5Fk4zdP

The Novonix Ltd (ASX: NVX) share price was in sensational form in October.

During the month, the battery materials and technology company’s shares jumped a massive 52%.

This was many times greater than the strong 6% gain recorded by the ASX 200 index over the same period.

Why did the Novonix share price rocket higher?

The main driver of this gain was the release of an announcement which revealed that Novonix could receive some major government funding.

According to the release, Novonix’s Anode Materials division was selected to enter negotiations to receive US$150 million (A$240 million) in grant funding from the US Department of Energy (DOE). Under the terms of the grant, the government funds must be at least matched by the recipient.

If successful, these funds would be dedicated to the construction of a 30,000 tonnes per annum (tpa) US manufacturing facility, including site selection, plant layout, and engineering design with capability for additional expansion.

Novonix’s co-founder and CEO, Dr Chris Burns, believes this would be a big boost to its aim of accelerating the domestic battery supply chain. He said:

We are proud to have been selected to negotiate this funding in recognition of our readiness to accelerate the domestic battery supply chain and meet growing global demand from the electric vehicle and stationary grid storage markets.

Can its shares keep rising?

Despite its stellar gains, the team at Morgans sees value in the Novonix share price at the current level. Though, only for investors with a higher tolerance for risk.

It currently has a speculative add rating and $3.11 price target. This compares to the latest Novonix share price of $2.60, implying potential upside of 20% over the next 12 months.

The post Why did the Novonix share price jump 50% in October? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is the Novonix share price gaining today?
• Why is the Novonix share price tanking 5% today?
• A major shareholder sold off most of its Novonix shares last week. What’s happening?
• Novonix shares go for a swim after burning through $25 million
• Why $6.5b Argo Investments is backing these ASX 200 lithium shares

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.

from The Motley Fool Australia https://ift.tt/YXxLGSq

The Endeavour Group Ltd (ASX: EDV) share price has seen plenty of volatility over 2022. It’s actually up slightly over the year, but the company is down close to 17% since mid-August.

This is the business that was separated out of Woolworths Group Ltd (ASX: WOW). Endeavour has poker machines, hotels, and liquor retailers in its portfolio.

Government regulation and changes to the gambling industry could have an impact on Endeavour shares.

So, it’s important that investors know about what the New South Wales government is proposing.

Cashless gambling card on the cards?

The NSW government’s Racing Minister Kevin Anderson had introduced legislation to parliament according to reporting by the ABC, and various other media outlets.

The Crime Commission’s report into money laundering in pubs and clubs found that “dirty money was being funnelled through the gaming rooms of suburban pubs and clubs and recommended a cashless gaming card”.

Crossbench MP Alex Greenwich “planned to introduce an amendment to the legislation so it would include a cashless gaming card to address problem gambling and money laundering”, according to the ABC.

The original legislation didn’t have a proposal for a cashless gaming card.

There has reportedly been opposition in the industry to cashless cards, as well as from some within the government.

Greenwich was quoted by the ABC:

NSW is the gambling harm capital of the world, and clubs have become mini casinos where money laundering is rife.

Urgent action is needed, and that includes a transition to cashless cards in all gaming venues in NSW.

The ABC reported that it understands the plan is for the response to the commission’s report to be produced ahead of the March election, but won’t be in time to make legislative changes.

One particular measure would allow gamblers to set a ‘spending limit’ and “create a paper trail for criminals if they deposit the proceeds of crime into a bank account”.

NSW Crime Commissioner Michael Barnes suggested that the card should be mandatory.

The ABC reported that the Australian Hotels Association of NSW (AHA NSW) said the introduction of mandatory cashless gaming cards would be “unjustified overreach”, because the NCC found the use of poker machines to wash money was not widespread.

A three-month trial of a cashless gaming system was launched in Newcastle in October.

What does this mean for Endeavour?

According to reporting by NABTrade, the broker Jefferies said that if cashless gambling cards are implemented by the NSW government then the implications would be “impossible to estimate”.

Jefferies said cashless cards could increase Endeavour’s revenue because they are associated with increased expenditure.

The broker estimates that NSW accounts for around a fifth of Endeavour’s hotel earnings before interest and tax (EBIT).

It’s rated as a buy, with a price target of $8.20. However, a cashless card with pre-commitment and low default loss limits could have “material implications” for revenue and earnings. A change to regulations could also mean other states change their laws as well.

Endeavour share price snapshot

Over the last month, Endeavour shares are down around 2.5%. They are also down around 2% over the past 12 months but are up by a similar amount this year to date.

The post Could this help or hurt the Endeavour share price? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is the Endeavour share price having such a great start to the week?
• Why Endeavour shares could offer access to an ‘attractive asset’: expert

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.

from The Motley Fool Australia https://ift.tt/zHugk2O

This year has been a difficult one for many investment markets, including the ASX share market.

What’s the best time to buy during this volatility? If we had a crystal ball, that’d make it obvious where the bottom of the decline is.

Some readers may have heard of the phrase about trying to catch a falling knife. Something that has fallen by 50% from $1 to 50 cents could easily fall another 20% to 40 cents. Just because something has fallen heavily doesn’t mean it can’t keep falling.

One investment expert has shared a couple of tips on how to identify when we could have reached the bottom.

Are we there yet?

Lisa Shalett is the chief investment officer of wealth management at Morgan Stanley.

She believes that we are “not quite” at the bottom. Morgan Stanley’s global investment committee believes this latest bounce is “temporary, driven by technical factors, and that the bear-market bottom is still to come”.

Shalett pointed out that the decline in valuations we’re seeing is because of central banks increasing interest rates, rather than an economic crisis. This matters, in her opinion, because monetary policy was able to be used as an antidote to prior bear markets like the COVID-19 crash and the GFC.

This type of bear market tends to be “more prolonged”.

What could help drive a recovery for the (ASX) share market?

There were “at least two” necessary conditions for reaching the bottom.

Shalett explained:

First, inflation needs to reach a viable peak. We may reach that soon. Although uncertainty remains, we see solid indications of both softer demand and more supply, suggesting that inflation is poised to decelerate in the months ahead.

Importantly, while peak inflation, and in turn, peak policy rates, may be sufficient to bring the bond market to a bottom, that likely won’t be the case for stocks.

Stocks may need to fall farther, based on a sober assessment of year-ahead corporate earnings potential.

In other words, overly optimistic stock investors and Wall Street analysts must realistically factor in the potential depth and breadth of an economic slowdown and the consequent hit to employment and consumer demand. That forecast reset has just begun, yet the 2023­–2024 earnings picture is still far from clear.

Where are the opportunities?

Shalett said that investors should “remain patient” and avoid chasing index-level bear market rallies.

She suggested that businesses in healthcare, financials, energy, industrials and defensive, which have above-average dividend yields, could be promising.

However, investors might be missing out on opportunities by waiting too long, as the Motley Fool’s Bruce Jackson pointed out. He also warned about the folly of trying to predict when news stories (macro factors) are going to impact the share market, and thinking that can inform people about when to “jump in and out of the market”.

Jackson wrote:

Would your macro “analysis” have told you to jump back into stocks on October 1st, in advance of the big rally for that month?

And would your analysis now tell you to stay in, get in, get out or something in between?

I’d suggest it’s a futile exercise at best, and likely a sub-optimal investing strategy.

If you invest in the stock market, you should make it a lifelong endeavour, not something you jump into and out of depending on your mood, the market’s mood, or the macro environment.

In other words, if an investor sees an opportunity with an ASX share, it may be worth jumping on it. That bargain may not always be there. Plus, time in the market beats timing the market.

For me, a name like Wesfarmers Ltd (ASX: WES) could be something to like, with its diversified business operations, good dividend yield, investing in new areas for growth (lithium and healthcare) and its 25% decline this year.

The post Morgan Stanley tips how to pick the market bottom, but should you wait to buy ASX shares? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Experts name 2 ASX 200 dividend shares to buy next week
• Should you buy the dip in the Wesfarmers share price?
• Up 6% in October, is this factor why the Wesfarmers share price performed?
• Amazon stock just tanked. Could this be a canary in the coal mine for ASX 200 retail shares?
• Why I think the Wesfarmers share price is a buy after this week’s AGM

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 positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/EQUadTr

It’s been a rough year for markets worldwide, and while the ASX has held up better than others, the downturn has likely left plenty of quality dividend shares trading for cheap prices. That’s good news for those looking to build passive income.

Of course, as with any investment, there are risks involved with holding shares.

But if I was about to retire, I’d be hunting for cheap ASX shares offering dividends right now.

Why I would invest in cheap ASX dividend shares for retirement

Investing in ASX dividend shares is a relatively reliable way to build a passive income, particularly if they can be found in the bargain bin.

Finding value ASX shares that also pay dividends can sometimes be a hard ask. However, they can provide both capital and dividend returns for a comparatively low initial investment when they are found.

Most ASX dividend shares pay shareholders twice a year, though some provide quarterly offerings.

Dividends generally represent a portion of a company’s profits for a particular period. Thus, they tend to grow alongside a business.

That means dividend shares can be a hedge against inflation.

It also means that, if I were about to retire, I would want to buy shares in companies that not only pay dividends, but also have plenty of room to grow.

That way, I could sit back and enjoy receiving regular payouts without worrying about actively managing my portfolio.

Here’s how I would search for cheap ASX dividend shares to help fund my lifestyle in retirement.

How I would seek out value dividend stocks

I would start by searching for cheap ASX dividend shares in sectors known to be undervalued that also boast clear future growth prospects.

From there, it would be wise to consider which shares I truly believe represent quality businesses.

Whether a business is ‘good quality’ is very subjective. However, quality companies generally boast strong balance sheets, a competitive edge, and a loyal customer base. That way, they’re likely to make the most of the good times and push through tough times.

I would also focus on de-risking my portfolio as much as possible. And by de-risking, I mean diversifying. Diversification is one of the most reliable ways to protect a portfolio from downturns in individual sectors or companies.

Finally, I would look for shares paying consistent dividends with sustainable yields.

Investing in cheap ASX dividend shares for retirement often means buying shares to hold for many years and decades. Therefore, it’s likely a green flag if a company has been paying decent dividends for years or decades gone by.

Additionally, while it might be tempting to buy shares with gigantic dividend yields, it’s worth remembering that such yields are hard to sustain in the long term.

The post Almost ready to retire? I’d buy cheap ASX dividend shares for passive income appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Experts name 2 ASX 200 dividend shares to buy next week
• 3 reasons to tell yourself it’s okay to make financial mistakes in 2023
• Analysts name the ASX growth shares to buy
• Can you actually retire a millionaire with ETFs alone?
• 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.

from The Motley Fool Australia https://ift.tt/G78ht9q

Fortunately for income investors, the ASX 200 index is home to plenty of companies that pay dividends to their shareholders.

Two that could be top options for income investors to buy right now are listed below. Here’s what you need to know about these ASX 200 dividend shares:

Bank of Queensland Limited (ASX: BOQ)

Bank of Queensland could be an ASX 200 dividend share to buy.

It is the challenger bank behind the eponymous Bank of Queensland brand and the ME Bank and Virgin Money Australia brands.

The team at Citi is very positive on the company and believes the market has been wrong about its net interest margin improvement potential. It recently commented:

[M]anagement dispelled these modest expectations, with bullish commentary on the exit NIM. While costs were a slight disappointment, proportionally they will be much less than revenue upgrades, and as a result we think consensus moves higher.

The broker is expecting this to lead to fully franked dividends per share of 58 cents in FY 2023 and then 60 cents per share in FY 2024. Based on the current Bank of Queensland share price of $7.29, this will mean big yields of 8% and 8.2%, respectively.

Citi also sees plenty of upside for its shares with its buy rating and $8.75 price target.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 dividend share that could be a buy is Wesfarmers.

Wesfarmers is the conglomerate behind a collection of quality businesses across several sectors. These include retailers such as Bunnings, Kmart, Priceline, and Officeworks, as well as industrial businesses Coregas and Covalent Lithium.

Morgans is a fan of the company and believes it is well-placed for growth. It commented:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. We believe WES’s businesses, which have a strong focus on value, remain well-placed for growth despite softening macro-economic conditions.

In respect to dividends, Morgans is forecasting fully franked dividends per share of $1.82 in FY 2023 and $1.89 in FY 2024. Based on the current Wesfarmers share price of $45.23, this will mean yields of 4% and 4.2%, respectively.

Morgans currently has an add rating and $55.60 price target on its shares.

The post Experts name 2 ASX 200 dividend shares to buy next week appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Should you buy the dip in the Wesfarmers share price?
• Is Bendigo Bank the best bet for dividends out of all the ASX 200 bank shares?
• Up 6% in October, is this factor why the Wesfarmers share price performed?
• Here’s how the NAB share price has fared in October
• Amazon stock just tanked. Could this be a canary in the coal mine for ASX 200 retail shares?

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 positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/8oTQwrU

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

Most of us do everything within our power to avoid making a mistake. Whether it’s forgetting to get a report turned in on time or calling a colleague by the wrong name, mistakes are embarrassing. And when it comes to financial mistakes, there’s an added layer of angst. Not only do we kick ourselves because we got things wrong, but we worry about the financial fallout of our misstep. 

If you’re someone who feels frozen in fear because you want to avoid mistakes, now may be the time to look at them from a slightly different angle. Here are three reasons it’s okay to make financial mistakes as we move into 2023. 

1. It’s good for your brain

Psychologist Jason Moser found something interesting while studying what happens to the human brain when we make mistakes. Rather than shrivel up and die (like we sometimes believe we will), any time we make a mistake, synapses fire. A synapse is an electrical signal that darts from one part of the brain to another when learning occurs. 

When you were a kid and learning how to ride a bike, synapses fired. When you learned about the War of 1812 or how to bake the perfect chocolate chip cookie, synapses fired. All that firing made your brain grow, and it continues to do so throughout your life.

You don’t even have to go back and correct a mistake to benefit. In fact, you don’t even have to be aware you’ve made a mistake. The error itself was enough to spark synapses. 

When you think about it, it makes sense. Since the beginning of humanity, we’ve learned what to do — and what not to do — by messing up. When we were toddlers, falling taught us that we should not try to run before we learned to walk. As adults, mistakes teach us what to do the next time around to avoid making the same mistake. 

Will investing mistakes happen? Probably. And that’s okay. As long as you’re investing for the long term, you can afford missteps and errors. In the meantime, those mistakes are exercising your brain in the best possible way. 

2. Anxiety is the enemy

Let’s face it; trying to avoid mistakes is anxiety-inducing. 

From a nervous child during a spelling bee to a professional baseball ballplayer going through ritualistic superstitions while heading the batter’s box, anxiety makes itself known in a variety of ways. And while anxiety is a normal part of the human experience, it can be incredibly harmful. 

Prolonged anxiety is not only uncomfortable, but it’s also bad for our health. Continued anxiety can trigger the body’s central nervous system, sending the hormone cortisol into overdrive. In turn, this can lead to a boost in sugar levels and triglycerides. Then, like a snowball rolling downhill, more physical ailments follow, including short-term memory loss, digestive disorders, a lowered immune system, sleep disturbances, elevated blood pressure, and in rare cases, a heart attack. 

If that weren’t enough to convince us that we must find ways to relax, anxiety also interferes with our decision-making process and leads us to make bad decisions. 

Like all decision-making, financial decisions are made in the prefrontal cortex of the brain (the front part). According to The Journal of Neuroscience, activity in the prefrontal cortex decreases when we’re anxious. The last thing any of us want or need when we’re trying to make a decision is for our brains to slow down. 

For some, the slowdown in prefrontal cortex activity leads to indecision. For others, it leads to quick, rash decisions in an effort to avoid feeling anxious. It can also lead us to make the “safe” choice, which typically leads to low-risk, low-reward investing. 

If you’re too anxious to invest with confidence, take a deep breath. Once you’ve calmed down, take the time you need to learn everything you can about the investment under consideration. The more you learn, the more confident you’re likely to feel. 

Investing is never a sure thing and money can be lost, but due to inflation, storing your money away in a savings account or under your mattress is a sure way to lose out. 

3. History has your back

As 2022 has illustrated, the stock market is like a Coney Island roller coaster with ups, downs, twists and turns — and those ups and downs are scary. However, investing is about buying and holding over the long term.

Over the past 100 years, the average yearly return for the S&P 500 Index (SP: .INX) has been about 10%. Some years, it’s going to be less, but then, some years, it’s bound to be more. What history has shown us is that the people who feared mistakes so much that they withdrew from the market were the ones who lost out.

From running into a fire hydrant with your 1974 Volkswagen Beetle as you learn to drive a manual transmission to picking a loser or two in the stock market, mistakes are part of life. They’re also a great tool for learning and refining our technique. 

The post 3 reasons to tell yourself it’s okay to make financial mistakes in 2023 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Analysts name the ASX growth shares to buy
• Can you actually retire a millionaire with ETFs alone?
• Top brokers name 3 ASX shares to buy next week
• Why did the A2 Milk share price go backwards in October?
• Morgans names 2 more of the best ASX shares to buy in November

Dana George 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.

from The Motley Fool Australia https://ift.tt/CdFxuj9

Looking for a growth share or maybe two to buy? If you are, you may want to look at the two listed below.

Here’s why these ASX growth shares are rated highly right now:

Altium Limited (ASX: ALU)

The first ASX growth share for investors to look at is Altium.

Altium is a software company that focuses on electronics design systems for 3D PCB design and embedded system development.

Its products are found everywhere from world leading electronic design teams to the grassroots electronic design community. The former includes the likes of BAE Systems, Dell, Microsoft, NASA, and Tesla.

The good news is that despite being a leader in the industry, management isn’t resting on its laurels and is targeting strong subscription and revenue growth in the coming years. In respect to the latter, Altium is aiming to achieve US$500 million in revenue by 2026. This will be more than double FY 2022’s revenue of US$220.8 million.

Jefferies is a fan of the company. It currently has a buy rating and $38.13 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX growth that has been named as a buy is Xero.

Xero is a global small business platform which provides its 3.3 million global subscribers with a core accounting solution, as well as payroll, workforce management, expenses and projects solutions. In addition, Xero provides access to financial services, an ecosystem of more than 1,000 connected apps, and more than 300 connections to banks and other financial institutions.

The good news for investors is that Goldman Sachs highlights that even with 3.3 million subscribers, Xero still only scratching at the surface of its global market opportunity of ~45 million+ subscribers. It is partly because of this “compelling global growth story” that Xero is the broker’s “preferred large cap technology name in ANZ.”

Last week, Goldman Sachs reiterated its buy rating on Xero’s shares with a $112.00 price target.

The post Analysts name the ASX growth shares to buy appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• US$10 billion was just wiped from the value of Atlassian. How are ASX 200 tech shares responding?
• What’s the outlook for the Xero share price in November
• How are ASX 200 tech shares faring after the overnight NASDAQ plunge?
• Top ASX shares to buy in November 2022
• Analysts name 2 ASX growth shares to buy next week

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 Altium and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/9dMSXar

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

If exchange-traded funds (ETFs) like the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) or the SPDR Dow Jones Industrial Average ETF Trust (NYSEMKT: DIA) just aren’t your thing as an investor, you’re not alone. Putting your money into individual stocks is considerably more exciting, as each one offers you the chance to plug into a particular company’s growth story. Conversely, ETFs are just big baskets of equities bundled into logical groupings, and their results can be weighed down by their laggards as much as they’re lifted by their leaders.  

Don’t assume, though, that this lack of excitement means they’re destined to be subpar performers. Exchange-traded funds generally perform just as well as most portfolios of hand-picked stocks do — if not better — and are just as capable of turning your consistent stream of moderate investments into a million-dollar retirement stash.  

In fact, ETFs may actually be better suited for the task of retirement investing than individual stocks are.

The broad market is bullish enough

Most investors inherently understand that ETFs such as the aforementioned SPDR S&P 500 ETF Trust and the SPDR Dow Jones Industrial Average ETF Trust reflect the performances of the S&P 500 (SNPINDEX: ^GSPC) and Dow Jones Industrial Average (DJINDICES: ^DJI), respectively. For better or worse, they’re meant to match the performance of the broad market rather than beat it.

What you may not fully appreciate, however, is just how well the broad market performs over time. Even after this year’s bear market sell-off, the S&P 500 is 50% higher than where it was five years ago, and is up by more than 180% over the past 10 years. Over the past couple of decades, it’s up more than 300%.

Those results are in line with the market’s long-term averages. When factoring in reinvested dividends, the S&P 500’s average compound annual return for the past 100 years stands just above 10%. Some years are better, and some are worse. Some years are even losers. Given enough time, though, a well-diversified portfolio of stocks can reasonably be expected to gain on the order of 10% per year.            

In practical terms, this means that if you make moderate-sized annual investments of $5,000 into an S&P 500 fund within a tax-deferred account, your balance should be about $1 million after 31 years. While it could be tougher in some years than others to scrape together that $5,000, even for those living on average incomes, becoming a millionaire by the time you retire is certainly possible.

This leads to an obvious question: If booking “market average” results can do that, wouldn’t chasing after the market’s best “story stocks” offer you an even easier shot at building an even bigger fortune? Maybe. But, the data says don’t count on it.

Stock picking is just plain hard to do well

For the record, the majority of professional stock pickers do not consistently beat the market. Most of their actively managed portfolios produce returns below those of benchmarks like the S&P 500, in fact.

Standard & Poor’s keeps tabs on the performance of each and every mutual fund available to U.S. investors, and publishes updated information on their results every few months. Like every other update thus far, the one posted in September — for results through June — indicates that most large-cap funds failed to beat the S&P 500 over the past 12 months. Specifically, more than 55% of large-cap funds trailed the index.

So 45% did outperform it, which is … not terrible. But that factoid requires a major footnote. The fund industry as a whole fared relatively better than usual through the first half of the year — most likely because the market suffered losses that were largely expected by the pros, who shifted some assets out of stocks in anticipation. Not being fully invested in stocks helped their comparative performances. Looking back at the past five years reveals more typical results: More than 84% of U.S. funds underperformed the S&P 500. And over the past 10 years, 90% of mutual funds sold to investors in the United States trailed the S&P 500’s net gain.

Those lagging performances are largely the result of fund managers’ efforts to beat the market.

It’s not just the mainstream mutual fund industry with a performance problem either. Most hedge funds lag the overall market as well. In the same vein, the average short-term “day trader” also regularly misfires. While performance estimates regarding traders in this category should be taken with a grain of salt in light of how little data is actually collected from them, it’s believed that between 70% and 90% of retail, non-buy-and-hold stock speculators end up losing money rather than making it.

All of these poor performances ultimately reflect how unlikely it is that individuals will manage to pick strategies that consistently outperform the market. And when you’re trying to beat the averages by guessing what is essentially unguessable, it’s easy to slowly nickel and dime your portfolio to death.

When investing in ETFs, however, people typically do so with plans to hold those stakes through the good times and bad, and add to them regularly to take advantage of dollar-cost averaging. This makes ETFs well-suited to a strategy that largely relieves you of two hazardous temptations — the urge to lock in short-term gains by selling, and the urge to hold off on putting money into the market until there’s a major low. By dodging those market-timing snares, you avoid playing the version of the investing game that even most professionals lose.

You can still beat the market with ETFs

If, after reading all that, you’re still interested in hunting for investment options that at least give you a fighting chance at outperforming the S&P 500 — no problem. While the SPDR S&P 500 ETF Trust is a go-to pick as a low-fee foundational portfolio holding, there are many other exchange-traded funds that feature different approaches. For example, mid-cap funds like the iShares Core S&P Mid-Cap ETF (NYSEMKT: IJH) and the Technology Select Sector SPDR Fund (NYSEMKT: XLK) both have long histories of S&P 500-beating performance. Both are also easy to hold for the long haul, even during periods when things get rocky.

The bottom line is investing in ETFs can turn you into a millionaire just as readily as buying individual stocks can. Better yet, they can give you a path to that outcome that doesn’t require the sort of active investing that often ends up doing more harm than good.   

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

The post Can you actually retire a millionaire with ETFs alone? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Analysts name the ASX growth shares to buy
• Top brokers name 3 ASX shares to buy next week
• Why did the A2 Milk share price go backwards in October?
• Morgans names 2 more of the best ASX shares to buy in November
• Should investors buy the dip on Amazon stock?

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.

from The Motley Fool Australia https://ift.tt/I91APXb