ASX 200 investors love an ‘exciting’ share. Every year it seems, we have a new success story that investors are chasing for eye-watering returns and a big slice of the future.

This year has seen ASX lithium shares like Pilbara Minerals Ltd (ASX: PLS) or AVZ Minerals Ltd (ASX: AVZ) fill this role. In years gone by, it has been everything from Afterpay and Zip Co Ltd (ASX: ZIP) to WiseTech Global Ltd (ASX: WTC) and Pro Medicus Limited (ASX: PME).

But sometimes, the exciting shares don’t bring home the bacon when it comes to long-term returns. Just look at the current Zip share price to see this in action.

Sometimes, it’s the ‘boring’ companies that are the most exciting to hold over a long period of time. That’s especially the case during periods of high inflation. This is what we are starting to see across the global economy.

Inflation means the price of everything rises. So, for a company to succeed in this difficult environment, it must also have enough pricing power to pass these rising costs onto its customers. So let’s see which ‘boring’ companies this ASX fund manager is identifying as pricing-power winners today.

Fundie names 3 ASX 200 shares with pricing power

Michael Maughan of Tyndall Asset Management recently sat down with Livewire. There, he discussed the ASX shares with pricing power that he is looking at today.

Maughan identifies insurers as a good place to look. He reckons the “larger brands” such as Suncorp Group Ltd (ASX: SUN) and Insurance Australia Group Ltd (ASX: IAG) are the best stocks in this space.

Maughan said:

While repair costs are rising [with insurers], the pricing environment means they can be absorbed, and longer-term margin goals met. Whatever claims inflation the general insurers are seeing has already been priced into higher premiums, and we see potential for further increases.

This current inflationary environment has seen bond yields rise and expectations increase for significant cash rate rises. This means that the interest earnings on the premium float of insurers are rising and will add meaningfully to profits.

Maughan names supermarkets as having inflationary pricing power, too. He reckons Coles Group Ltd (ASX: COL) is worth a look.

Maughan said:

Coles… and Woolworths… are increasing prices with food inflation, and all of our channel checks suggest there is more of this to come as supplies continue to be disrupted by war, plagues, and floods. The evidence so far suggests that no one in the industry is sacrificing their margins to take market share… We expect supermarkets will continue to be key defensive havens as inflation accelerates.

So, these are the sectors that this fund manager is looking to in this brave new world of higher inflation. Pricing power is the key, and it seems that ‘boring’ shares like IAG, Suncorp, and Coles are the ASX shares that this expert reckons will do just fine.

The post Fundie reveals 3 ASX 200 shares with major pricing power to counter inflation appeared first on The Motley Fool Australia.

More reading

• How do ASX shares typically perform following a demerger?
• How might the IAG share price fare with another ‘catastrophe’?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• The IAG share price has tumbled 27% in 5 years. Have the dividends been worth it?
• Here’s why the Coles share price is tumbling 5% today

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 positions in and has recommended Pro Medicus Ltd., WiseTech Global, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET, Insurance Australia Group Limited, Pro Medicus Ltd., and WiseTech Global. 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 future could be tough for S&P/ASX 300 Index (ASX: XKO) retail shares. Morgan Stanley has reportedly warned Australia’s retail sector could face similar headwinds to those recently impacting US retail giants.

That could be dire for ASX 300 retail shares such as Nick Scali Limited (ASX: NCK), JB Hi-Fi Limited (ASX: JBH), City Chic Collective Ltd (ASX: CCX), and Eagers Automotive Ltd (ASX: APE).

Let’s take a closer look at why the financial services provider is reportedly wary of the retail sector.

Are ASX 300 retail shares about to face headwinds?

ASX 300 retail shares beware. Morgan Stanley warns Australia’s retail sector may face the same consumer trends that recently dinted some US retail monoliths.

Target Corporation (NYSE: TGT)’s stock tumbled nearly 25% on the back of a trading update last week. Within the release, the company announced fewer sales had forced it to discount merchandise to clear inventory.

That, and a similar story over at Walmart Inc (NYSE: WMT), helped spark a sell-off among US-listed retail shares.

And Morgan Stanley equity strategists believe such happenings could soon make it to Aussie shores, according to The Australian.

“US retail experience around wallet shift, cost pressures, and inventory overbuild raise questions for our market,” Morgan Stanley equity strategists, led by Chris Nicol, were quoted by the publication as saying.

They said US retailers were caught off guard as consumers moved away from durables and towards consumables due to rising inflation. That came alongside higher fuel prices, leading to greater costs for retailers.

“These effects are also building in Australia and are arguably not reflected in consensus sales and earnings estimates that in aggregate have only seen positive revision momentum during Covid boosts and reopening benefits.”

One red flag for Morgan Stanley is ASX 300 retail shares building up inventories due to supply chain challenges. This could backfire and lead to discounting.

City Chic was among the retailers deliberately bolstering its inventory last half. It was doing so in an attempt to ward off stock shortages during key sales periods.

Australia’s 13.6% savings rate will likely protect the sector for now. But Morgan Stanley is reportedly wary it might not translate to greater spending.

[M]uch of this savings drawdown is centred in recovering services categories, as well as absorbing headwinds from rising costs of living and higher interest rates.

Should consumers hedge future impact with caution in other categories this would also inhibit the level and pace of the ultimate drawdown in savings – with discretionary goods most vulnerable to spending adjustment.

The post What’s the outlook for ASX 300 retail shares in June? appeared first on The Motley Fool Australia.

More reading

• 2 ASX growth shares to buy this month: experts
• Why are ASX 200 retail shares getting hammered on Thursday?
• ASX 200 midday update: Aristocrat’s earnings beat, Webjet flops, retailers smashed
• Why is the JB Hi-Fi share price being slashed 8% today?
• Why Boral, Eagers Automotive, PolyNovo, and Serko shares are dropping

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 recommended Target. 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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Woolworths Group Ltd (ASX: WOW) has revealed how it plans to counteract higher wages. Woolworths shares are currently trading at $34.16, a 2.59% fall. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is down 0.5% in late afternoon trade.

Additionally, Coles Group Ltd (ASX: COL) shares are sliding 2.22%, while Wesfarmers Ltd (ASX: WES) shares are dropping 1.76%. The S&P/ASX 200 Consumer Staples (ASX: XSJ) index is 2.39% in the red today.

Let’s take a look at how Woolworths plans to deal with potentially higher wages in the future.

Boost productivity

Woolworths plans to improve productivity and invest in technology to combat rising wages, the Australian Financial Review reported. A spokesperson for the company told the publication:

Like all good retailers, we will continue to focus on productivity across our business including looking at process improvement opportunities and investment in technology to sustainably reduce the effort required by our teams.

These productivity changes could include improving the efficiency of the Direct to Boot Groceries service, improving scanner technology for home delivery, and a new internal app to help staff swap shifts.

In the company’s third-quarter sales results in early May, CEO Brad Banducci expressed support for wage increases for staff. He said:

We also support the Australian Retailers Association’s position for an increase in team member wages that keeps pace with underlying cost-of-living increases.

Incoming Labor Prime Minister Anthony Albanese said before the election he supports a wage rise of 5.1%, in line with inflation.

In comments reported by Sky News he said: “We think no one should go backwards. People should be at least keeping up with the cost of living.”

Woolworths share price snapshot

The Woolworths share price has fallen by 7.5% in the past year, while it is down 10% in the year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned less than 1% in a year.

Woolworths has a a market capitalisation of nearly $42 billion based on today’s share price.

The post Own Woolworths shares? Here’s how the retailer plans to combat rising wage costs appeared first on The Motley Fool Australia.

More reading

• How do ASX shares typically perform following a demerger?
• How safe is the Woolworths dividend?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Leading brokers name 3 ASX shares to buy today
• Is the Woolworths share price a buy following the latest acquisition or a no deal?

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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One thing that investors might want to look for when picking investments is a quality management team. Particularly in the current economic environment which is throwing all sorts of spanners into the works.

Two companies that have management teams that analysts at Morgans rate highly are listed below. Here’s what you need to know about them:

Treasury Wine Estates Ltd (ASX: TWE)

This wine company could be an ASX 200 share to buy according to Morgans. The broker has been pleased with the way management has transformed its operations after being shut out of China and believes it is well-placed for double-digit growth over the coming years.

TWE owns much loved iconic wine brands, the jewel in the crown being Penfolds. We rate its management team highly. The company recently reported an impressive 1H22 result despite facing a number of material headwinds. The foundations are now in place for TWE to deliver strong double-digit growth from 2H22 over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

Morgans has an add rating and $13.93 price target on the wine company’s shares. Based on the current Treasury Wine share price, this implies 19% upside for investors.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 share which has a highly rated management team is Wesfarmers. It is the owner of a high quality portfolio of retail brands and industrial businesses. Morgans is a fan of the company and believes it could be a top option for investors.

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. While COVID-related staff shortages are a challenge, the core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes. We see the recent pullback in the share price as a good entry point for longer term investors.

The broker currently has an add rating and $58.50 price target on the company’s shares. Based on the current Wesfarmers share price, this suggests potential upside of 27%.

The post Experts name 2 ASX 200 shares with high quality management teams to buy appeared first on The Motley Fool Australia.

More reading

• How do ASX shares typically perform following a demerger?
• Guess which ASX 200 shares UBS just added to its ‘best ideas’ list
• These 3 ASX shares have plunged this year: Expert reveals what to do
• Top brokers name 3 ASX shares to buy today
• Could the new Labor Government herald better days for Treasury Wine 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 Australia has recommended Treasury Wine Estates 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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Are TerraUSD (CRYPTO: UST) and Terra (CRYPTO: LUNA) really making a comeback?

That depends on who you ask.

Some crypto enthusiasts, particularly we’d imagine those still holding LUNA and UST, are buoyed by the resuce plan put forth by the, erm, stablecoin’s founder Do Kwon.

We’ll look at that plan shortly.

But first, the reason you may be hearing about a big comeback for Terra’s Luna and UST tokens is that both saw their prices surge over the past 24 hours.

Though both have given some or all of those gains back in recent hours.

How’s this for volatility?

Both Terra tokens saw some more wild volatility over the past 24 hours. A speculator’s delight, perhaps, with the potential to make, or lose, big bucks in a matter of hours.

But hardly in line with the long-term investing philosophy embraced by The Motley Fool.

Here’s what we mean.

Since this time yesterday, UST traded as high as 32 US cents and as low as 7 US cents. It’s currently trading for just under 10 US cents.

And remember, this is supposedly the stablecoin that was meant to consistently be worth US$1. Which it more or less was. Right up until that peg snapped as confidence in Terra evaporated two weeks ago, on 12 May.

As for Terra’s LUNA, the token which was intended to help the algorithmic UST maintain its peg by enabling people to swap UST for US$1 worth of LUNA at any point, it got absolutely trampled as crypto investors rushed for the exits.

LUNA hit record highs just over two months ago, trading for US$119 on 5 April, according to data from CoinMarketCap.

It’s currently trading for 0.017 cents after hitting a peak of 0.020 cents overnight.

That’s about as close to down 100% from April’s highs as you can get with some US$40 billion having gone up in virtual thin air.

What’s all this about a Terra LUNA rescue plan?

Do Kwon is determined to try to get his project – backed by Terraform Labs – back on track.

A rescue measure he put forth, supported by 65% of voters in the Terra community, will see the blockchain split off from the original to be called Terra Classic. LUNA will be rebranded as LUNA Classic (CRYPTO: LUNC). The new blockchain won’t support UST.

Existing LUNA holders can expect to receive their Classic LUNC tokens inside the next 24 hours.

Kwon reported that will happen via what’s known as an ‘airdrop’.

The post Are Terra UST and Terra Luna really making a comeback? appeared first on The Motley Fool Australia.

More reading

• Why is the Race Oncology share price in a trading halt?
• Can the AMP dividend yield really push to 15%?
• Why I’d buy the iShares S&P 500 ETF right now for instant diversification
• Here are the 3 most traded ASX 200 shares on Thursday
• Sick of the ASX falls? Me too!

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 Race Oncology Ltd (ASX: RAC) share price edged higher before being frozen today.

This comes after the pharmaceutical company requested its shares be placed in a trading halt.

At the time of writing, Race Oncology shares are on ice at $1.735 apiece.

It’s worth noting the company’s shares have fallen 28% in the past month following a drop-off in investor sentiment.

Why is the Race Oncology share price halted?

During mid-afternoon trade, the company requested the Race Oncology share price be halted while it prepares an announcement.

The request for the voluntary trading halt is in relation to the “release of clinical results for the dose escalation phase of the 1b/2 Zantrene AML trial in Israel”.

While the results remain unknown, investors will have to wait until on or before Monday 30 May to find out. It is expected once the announcement is provided to the ASX, the trading halt will be lifted.

More on Zantrene

Race Oncology is currently in a phase 1b/2 relapsed/refractory (R/R) acute myeloid leukemia (AML) Zantrene trial at the Chaim Sheba Medical Centre in Israel.

The team is analysing clinical patient samples from the ongoing Zantrene study for FTO and related biomarkers. FTO refers to the fat mass and obesity-associated (FTO) gene, which mostly influences the body mass index (BMI).

Overexpression of FTO has been shown to be the genetic driver of a diverse range of cancers.

Race is exploring the use of Zantrene as a new therapy for melanoma and clear cell renal cell carcinoma which is a type of kidney cancer.

About the Race Oncology share price

Since this time last year, the Race Oncology share price has declined by 45% in value.

However, in 2022, the company’s shares are further down, registering a loss of 52%.

Based on valuation grounds, Race Oncology has a market capitalisation of roughly $274.37 million.

The post Why is the Race Oncology share price in a trading halt? appeared first on The Motley Fool Australia.

More reading

• Can the AMP dividend yield really push to 15%?
• Why I’d buy the iShares S&P 500 ETF right now for instant diversification
• Here are the 3 most traded ASX 200 shares on Thursday
• Sick of the ASX falls? Me too!
• Action aplenty: Here’s why the Appen share price has now been halted

Motley Fool contributor Aaron Teboneras 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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Shares of AMP Ltd (ASX: AMP) are rangebound on Thursday and now trade less than 1% in the red at $1.08 apiece.

AMP has copped its fair share of flack in the past 12 months with its share price oscillating heavily across the period. Yet, it still holds a 2% gain in that time following a 7% lift in 2022.

One firm sees a huge lift in AMP’s dividend

Analysts at Bloomberg Intelligence have turned bullish on AMP and reckon the insurance giant can post a dividend yield well above what the consensus is pricing in for 2022.

In a recent note, Bloomberg Intelligence analysts Matt Ingram and Jack Baxter are constructive on AMP’s capital position and reckon this could bode in well for total shareholder return.

“AMP may achieve 15% dividend yield this year vs. consensus’ 3%, despite stating it’s not in a position to resume regular payouts to ‘hold a strong capital position’,” the pair wrote.

“This curbs our expected A$1 billion 2022 payout and more than 20% yield,” they added.

Yet yield will get a boost on its plan to return of a majority of proceeds from the sale of Collimate Capital businesses, which we think could top A$500 million

The analysts continued on by saying that AMP’s restructuring is aligned with the sale of the global equities and fixed income division from AMP Capital back in March.

This should free up additional capital, they say, that could ultimately be re-routed back to shareholders in the form of dividends.

Should the pair’s forecasts eventuate then AMP shareholders are in for a certain treat come the time of AMP’s next earnings announcement.

AMP share price snapshot

The AMP share price has managed to hold a 7% gain this year to date following a 3% gain in the past month of trade.

Shares have cooled off in recent weeks however, with the stock falling from a high of $1.21 on 5 May.

The post Can the AMP dividend yield really push to 15%? appeared first on The Motley Fool Australia.

More reading

• The board has acknowledged a ‘disappointing experience’ in relation to the AMP share price. What now?
• The ONE THING that could rock ASX shares from the election result: expert
• Why missing the market bottom is okay: expert
• When might the dividend drought break for AMP shares?
• What was the highest ever AMP share price?

Motley Fool contributor Zach Bristow 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 has been a lot of volatility in 2022 so far. As such, I think it could prove to be a good time to invest in the iShares S&P 500 ETF (ASX: IVV).

For readers that haven’t heard of this exchange-traded fund (ETF) before, it’s an investment that gives exposure to the US share market. As the name may suggest, it’s invested in 500 of the largest and most profitable companies in the US.

Why I think iShares S&P 500 ETF is an opportunity today

The first five months of 2022 have been rough for plenty of shares. ASX shares and ETFs alike have seen declines.

The iShares S&P 500 ETF has fallen by around 15% since the start of the 2022 calendar year.

A lower price is attractive in my opinion, particularly for an ETF as diversified as this one.

I’ve already mentioned that it has 500 holdings. That reduces the individual company risk.

But it also has diversification across a number of sectors.

These are the weightings of the industries with an allocation of more than 5%:

• Information technology (27.3%)
• Healthcare (14.2%)
• Consumer discretionary (11.4%)
• Financials (10.9%)
• Communication (8.6%)
• Industrials (7.8%)
• Consumer staples (6.8%)

As you can see, IT and healthcare have the biggest weightings. But I think that’s a good thing – I think they are two of the most promising sectors. IT is where a lot of growth is (or was) happening and healthcare is seen as a defensive sector.

Compared to the S&P/ASX 200 Index (ASX: XJO), I think the S&P 500 has a much more diversified and preferred spread of sector allocation.

Quality holdings

There are 500 businesses in the portfolio, but many of the largest holdings display a lot of quality characteristics.

I think names such as Apple, Microsoft, Amazon.com, Alphabet, and Berkshire Hathaway are some of the strongest businesses in the world.

Quality metrics don’t necessarily lead to strong returns, but I think names like the above ones can do well over the long term.

Low fees

Another key reason why iShares S&P 500 ETF is an attractive option to me is that the management fees are extremely low.

The annual management fee is just 0.04%, which is almost zero. I like that because the fees aren’t being taken by fund managers, instead, the money is being left in the hands of investors. It helps the net returns of the fund.

Final thoughts

While timing the market may not be the right long-term investment strategy for investing in the iShares S&P 500 ETF, I think it makes sense to buy (more) of the ETF at this lower price.

It’s certainly possible that the share market could fall further and the ETF could become even better value, but my crystal ball isn’t working at the moment to know what’s going to happen next.

The post Why I’d buy the iShares S&P 500 ETF right now for instant diversification appeared first on The Motley Fool Australia.

More reading

• VGS: Were you better off buying the S&P 500 ETF?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and Microsoft. 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), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and iShares Trust – iShares Core S&P 500 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 S&P/ASX 200 Index (ASX: XJO) is having yet another topsy-turvy kind of trading day this Thursday.

The ASX 200 initially opened in the green this morning, but descended into negative territory just before midday. The index is now nursing a 0.54% loss at around 7,115 points at the time of writing.

But rather than trying to figure all of that out, let’s instead take a look at the ASX 200 shares that are topping the market’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Thursday

Tabcorp Holdings Ltd (ASX: TAH)

Tabcorp once again makes an appearance on this list today. So far this Thursday, a sizeable 19.44 million Tabcorp shares have found a new home. This ASX 200 gaming company has been in the news all week after its blockbuster spinoff of The Lottery Corporation (ASX: TLC) went into effect on Tuesday.

But the company has been struggling since then and has copped another loss of 3.24% so far today to below $1 a share. It’s this fall, as well as ongoing gyrations following the demerger, which is probably responsible for Tabcorp’s presence here.

Whitehaven Coal Ltd (ASX: WHC)

ASX 200 coal miner Whitehaven is our next cab off the rank today. So far, we’ve seen a hefty 19.53 million Whitehaven shares bought and sold on the ASX share market. There’s been no news out of Whitehaven today.

However, this company has been on the receiving end of a nasty share price sell-off. Whitehaven shares are presently down by 4.9% at $5.03 each. This comes after some big falls on commodity markets over the past day or two.

Pilbara Minerals Ltd (ASX: PLS)

Our third, final and most traded share of the day goes to ASX 200 lithium stock Pilbara Minerals. We’ve so far seen a whopping 21.3 million Pilbara shares change hands as it currently stands. Again, there has been no news out of Pilbara today to speak of.

But we have had a solid share price performance from this lithium producer this Thursday. Pilbara shares are currently up 1.08% at $2.80 each today. But saying that, the company has done a fair bit of bouncing around, and even went into negative territory at one point. It’s likely that this volatility has sparked the elevated trading volumes we are seeing with this ASX 200 share.

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

More reading

• How do ASX shares typically perform following a demerger?
• Why Catapult, Costa, Endeavour, and Whitehaven Coal shares are dropping
• Why are ASX coal shares sliding today?
• Are newly-listed Lottery Corp shares worth buying? ASX brokers weigh in
• ASX 200 midday update: Appen rockets, Westpac super update

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 am so sick of down days on the ASX.

I’ve had enough.

So, I’m going to…

… just keep investing, anyway, because these things happen sometimes (unfortunately) but the overall direction of the market is still likely to be up — strongly — over the long term

That’s pretty much it.

That’s the formula.

It’s not secret.

It’s not magic.

But I will add something I’ve said before, to add some emphasis:

“The ASX has never yet failed to regain, then surpass, its previous highs.”

That’s not a guarantee, but unless we’ve seen the all-time peak for the ASX, I think it’s something that’s likely to happen again and again.

And if that’s true, here’s what the numbers say:

The All Ordinaries Index (ASX: XAO) closed at 7926.8 points on 4 January, this year.

As I type this, it’s at 7362.9 points.

If I’m right, and it goes back above its previous high – as it’s done every time – it’ll add 8% to get back there.

Then, in all likelihood, more from there.

Sure, it might fall first.

Maybe even by a lot. Or not.

We don’t know and can’t know.

But that’s just noise.

There’s 8% on offer, just to do something it’s always done.

And if it does fall further in the meantime?

Well, the gain, as we return to past highs – assuming that happens – will be even greater.

And if it doesn’t?

Well, we get to lock in that gain.

But what about individual companies?

It’s true that some have fallen by more.

A lot more.

Honestly, it depends.

If you own something that was stupidly overpriced in the past, your odds of making back that loss might be long.

Markets regularly get too excited (as well as too pessimistic) about some companies – particularly the ‘hot stocks’ that everyone is talking about.

Lithium? Maybe.

BNPL? Probably.

But others? Some will bounce out of their share price funk, once investors realise they have strong business models and bright futures.

No, I can’t tell you with certainty which is which.

Nor can I tell you how long it might take.

So you need to be diversified, and know what you’re buying and the risks you’re taking.

More often than not, the moonshots with huge upside potential also have a decent chance of exploding on the launchpad.

Those companies whose growth stories depended on them raising ever more capital from shareholders might be in for a rude shock as interest rates go up and risk appetites wane.

But some will do very, very well.

Now, some of those moonshots won’t explode on launch. And some profitable businesses with good cash flows might flounder.

The trick is to know what you’re buying, what you’re expecting, and your risk appetite.

Frankly, some companies whose shares have plunged 40%, 60% or 80% will be screaming bargains right now, with the benefit of hindsight.

Some will flame out.

If you’re a risk-seeking investor, that’s where I’d be shopping, as long as you have a seriously cast-iron stomach for volatility and you don’t mind a low success rate.

If not, I’d be looking at companies whose business models and cash generation are every bit as good, today, as they were six months ago, even though their share prices may have cratered.

This is not an ad, but for what it’s worth, we’re recommending one such company to members of Motley Fool Share Advisor this afternoon.

For all I know, the shares could fall tomorrow.

Maybe next week.

Maybe next month.

Or for the next few months.

Or not.

But if the cash generation capabilities of this company (and its ilk) are good enough, we’re happy to buy and wait for the market to come to its senses.

You don’t see too many entrepreneurs who sell out of their businesses just because of six or twelve month periods where buyers dry up.

You don’t buy and sell your home, multiple times a year, because the local real estate agent tells you there is fluctuating interest from buyers.

And yet, many of us are only too quick to let the market tell us what to think about the businesses we’re part-owners of.

Woolworths Group Ltd (ASX: WOW) shares were almost $32 a pop in 2014.

They fell to around $17.50 in 2016.

They were back to $41 by late last year.

And that doesn’t include dividends.

At $17.50, investors were probably pretty worried.

Some were, by definition, because they sold shares at that price.

Some held.

Others bought, or bought more.

Woolies paid 94c in dividends in the last 12 months.

That’s a 5.4% yield, plus franking credits, on the 2016 price.

Plus a rough doubling of the share price, between then and now.

It was easy to buy Woolies shares when the price was going up.

It was hard to buy Woolies shares when the price was falling.

It was hard to buy when the company’s Masters chain was bleeding cash and the company was shuttering supermarket stores.

And yet, we know how that ended.

I can almost guarantee – the Good Lord willing and the creeks don’t rise – that I will be writing about some of the 2022 laggards in five or six years’ time.

And in 2028, it’ll be obvious that we should have been buying shares in those companies, rather than fretting over the falls.

So, while others fret, I’m going shopping for shares.

Not because it’s comfortable. Not because this is (necessarily) the bottom.

But, as Warren Buffett has told us, again and again, we should be greedy when others are fearful.

Fool on!

The post Sick of the ASX falls? Me too! appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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