Although it’s faring better than the US markets, the ASX is nevertheless very volatile at the moment.

The uncertainty about the COVID-19 Omicron variant seems to be making investors jittery. Will it be resistant to vaccines? Will it cause more lockdowns?

“Markets will remain watchful of Omicron developments, with a seemingly inevitable further surge in global reported cases likely,” said BetaShares chief economist David Bassanese.

“Another uncomfortably high US consumer price index report on Friday will be the other big market focus this week.”

Nervous times call for a stiff drink and maybe a flutter.

If you want to literally back those habits, Morgans has helpfully picked out 3 drinking and gambling ASX shares among its “best ideas” for December.

“Our best ideas are those that we think offer the highest risk-adjusted returns over a 12-month timeframe supported by a higher-than-average level of confidence,” said analyst Andrew Tang.

A demerger that will provide value

Tabcorp Holdings Limited (ASX: TAH) shares have done well this year, climbing 27% while giving out a 2.86% dividend yield.

Tang reckons there is more to come in the coming year as it separates out the Lotteries and Keno business.

“At current levels, we think Lotteries and Keno is trading on ~15x EBITDA and think this multiple can re-rate to between 16x and 20x on a standalone basis over time, supported by offshore peer comps and domestic infrastructure names.”

Drinking shifts from home to pubs

Supermarket giant Woolworths Group Ltd (ASX: WOW) spun off its alcohol retailers as its own company Endeavour Group Ltd (ASX: EDV), which listed back in June.

Endeavour’s operations include recognisable brands like Dan Murphy’s and BWS.

The shares have dipped 5.45% in the past couple of weeks, which might present a buying opportunity.

The team at Morgans is confident further growth will come as Australia shifts to a post-pandemic mode.

“While Endeavour’s retail division has benefited greatly from lockdowns and higher at-home consumption, its hotels business has been negatively impacted by closures and restrictions,” said Tang.

“The reopening of venues in NSW and VIC should be positive for Endeavour overall, despite likely weakness in retail as at-home consumption normalises, given hotels is a higher margin business.”

Recovery from China ban

Shares for winemaker Treasury Wine Estates Ltd (ASX: TWE) were devastated last year in the wake of the Chinese government slapping retaliatory tariffs on Australian imports.

Since then the company has worked hard to diversify its target markets.

“TWE has the China reallocation risk and it will take 2-3 years to recover these earnings in new markets,” said Tang.

“However once it comps China earnings, we expect TWE to deliver strong earnings growth from the 2H22 [quarter] onwards.”

Organic growth could be accompanied by acquisitions, according to Morgans.

“We view TWE’s recent acquisition of Napa Valley luxury wine business, Frank Family Vineyards (FFV) as strategically important,” said Tang.

“This high margin business should see TWE achieve its US margin target two years earlier than planned.”

Treasury Wine shares are trading at $11.86 on Monday morning. They’ve gained 24.14% since the start of the year.

“The stock is currently trading at a material discount to its long term PE range,” Tang said.

“We see recent share price weakness as a great buying opportunity in this high quality company.”

The post Drinking and gambling: 3 ASX shares to buy now appeared first on The Motley Fool Australia.

More reading

• Can Treasury Wine (ASX:TWE) ever fill the hole left by Chinese exports?
• Top brokers name 3 ASX shares to sell next week
• Could this be a fly in the ointment for Woolworths’ (ASX:WOW) push into healthcare?
• Brokers name 3 ASX shares to buy today
• Can Wesfarmers (ASX:WES) win the battle to take over API?

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 recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2ZVgXEK

The past year has been a rewarding one for Lynas Rare Earths Ltd (ASX: LYC) shareholders. With a return of 130% since this time last year, the rare-earths mining company has been one of the highest returning investments in the S&P/ASX 200 Index (ASX: XJO) of the last year.

While the times have been good in recent history, the company’s managing director, Amanda Lacaze, is optimistic of an even brighter future. This sentiment was shared during Lynas’s annual general meeting (AGM) last week.

Electrification trend sparks rare-earth boom

The underlying strength behind the Lynas share price has been the rising price of rare-earth commodities. This includes neodymium-praseodymium (NdPr), a high purity magnetic alloy that is used in a growing number of technology applications. A significant contributor to the growth in demand for NdPr is the accelerating demand for electric vehicles.

In last week’s AGM, the company revised its forecast for NdPr demand growth. Previously, ASX-listed Lynas had pencilled out an annual growth rate of 7.5%. However, with global electric vehicle sales rising by 140% in the first quarter of 2021, the company now expects an annual growth rate of 10%. For context, NdPr is used in the permanent magnets used in electric motors.

The projected base scenario for electric vehicle (EV) share of the light-vehicle market in 2030 is 37% for China. Similarly, Europe and the United States are expected to reach a 33% and 17% EV share respectively. A much larger amount of rare-earths will likely be needed to cater to the significant number of EVs forecast to be on the road by 2030.

By 2030, regulations and incentives in China and Europe will likely propel EV market share to at least 1/3rd of all light-vehicle sales. In the US, that much market share would require an aggressive pickup in sales @McKinsey @FinancingRenew #Renewable https://t.co/wDoh4ZvBNg pic.twitter.com/mPL0KvOKHA

— Financing Renewables (@FinancingRenew) December 2, 2020

https://platform.twitter.com/widgets.js

Already, there are concerns of rare earths evolving into the next microchip crisis. Much like other elements used in EVs, such as lithium, a supply-demand imbalance is expected for the magnetic material.

For this reason, Lynas’s management team is expecting a continuation in favourable market conditions.

ASX-listed Lynas benefits from supply diversification

In addition to the strong demand for rare earths, Lynas is benefitting from countries diversifying their source. Historically, China has been the dominant force in rare-earth production, producing an estimated 91% of all rare earth metals.

This heavy reliance on China’s supply has fed into a push for local rare-earths supply in other regions. As such, ASX-listed Lynas has found itself in prime focus of investors, being one of few large-scale rare-earth producers outside of China.

The post Here’s how EV mania is supercharging growth for Lynas (ASX:LYC) appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares last week
• 5 best ASX 200 resource shares to hold in November
• Lynas (ASX:LYC) share price tipped for 18% upside
• These were the 5 best performing ASX 200 shares in November
• The Lynas (ASX:LYC) share price has hit 10 9-year highs so far this month. Here’s why

Motley Fool contributor Mitchell Lawler owns shares of Lynas Corporation Limited. 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3dkSTOM

The Strike Energy Ltd (ASX: STX) share price is going gangbusters today, currently up 14.6% at 17 cents apiece after rocketing out of the opening gates with an early 18% surge.

Below, we take a look at the ASX oil and gas explorer’s field update that looks to be spurring investor interest.

What gas field update was announced?

The Strike Energy share price is off to the races after the company reported “high-quality, low CO2, conventional gas accumulation” at its suspended Walyering gas field, located in the Perth Basin.

Strike said its Walyering-5 (W5) well results delivered a higher quality reservoir than it had expected, along with revealing additional gas pay in deeper sands. It has confirmed 4 gas charged reservoirs with a total gross thickness of 116 metres and total net pay of 51 metres. Peak porosities were reported at 21.5% with an average porosity of 15.4%.

Commenting on the results, Strike Energy’s CEO, Stuart Nicholls said:

The results of the Walyering-5 well have exceeded Strike’s pre-drill expectations with thicker and better-quality gas charged sands being encountered across several reservoirs. These results are another example of the excellent geoscience outcomes that the Strike team continue to deliver, and this result bodes well for ongoing success throughout the basin.

The co-location of the Walyering gas field with transmission infrastructure, better than pipeline quality gas and position on free-hold land, combines to make the potential for a very fast to market domestic gas development.

Strike Energy is the operator and the holder of a 55% joint venture (JV) interest in the project. Talon Energy (ASX: TPD) holds the other 45%. The Talon Energy share price is flat at time of writing.

Looking ahead, Nicholls said Strike and Talon would now come up with a plan for a fast, low-cost development. They also intend to have the resource independently certified.

Strike Energy share price snapshot

Despite today’s big leap, the Strike Energy share price remains down more than 40% in 2021. By comparison, the All Ordinaries Index (ASX: XAO) is up 8% year-to-date.

Over the past month, Strike Energy shares have gained 6%.

The post Here’s why the Strike Energy (ASX:STX) share price surged 18% today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Strike Energy (ASX:STX) share price isn’t cooking with gas today
• Why is the Strike Energy (ASX:STX) share price climbing today?

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3xYuwQv

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.

On the surface, the stock market appears to be doing relatively well. The Nasdaq, S&P 500, and Dow Jones Industrial Average indices are all down around 5% from their recent highs and are still up big for the year. Look closer, however, and it’s clear that the prices of many smaller growth stocks, and even some top-tier companies, are hovering around 52-week lows.

Investors that follow the electric vehicle (EV) industry are probably wondering if the tech sell-off affects growth companies like Lucid Group (NASDAQ: LCID) and Nio (NYSE: NIO). Here’s a look at how each company could be impacted.

Lucid is no stranger to skepticism

Daniel Foelber (Lucid): It seems like a distant memory now, but it was only in August and September when share prices of Lucid were struggling to stay above $20 a share as early investors cashed out. The electric vehicle maker spent much of the summer fine-tuning its luxury sedan, the Lucid Air, but failed to mention the date everyone really cared about — which was deliveries. This period was followed by the company’s late September announcement that it had begun mass production, which was followed by its late October announcement that it had begun customer deliveries. These were major milestones that Lucid said it would hit in the second half of 2021. And once it hit them, investors breathed a sigh of relief and gained confidence that Lucid is the real deal, even though its battery technology already showed it was.

In hindsight, the stock price volatility looks rather silly. But uncertainty is a tricky beast that can get the best of both imagination and fear.

What Lucid management did well this year, especially during its Q3 conference call, was set expectations. The company knows that its financial figures will appear paltry for a few years, so it’s creating its own yardstick for the market to measure it on. For Lucid, that means setting goals for its cash position, reservations, number of showrooms and service centers, production, deliveries, and manufacturing capacity. Meeting and exceeding expectations in these performance indicators should be enough to keep Lucid’s investment thesis alive. But if Lucid incurs delays or falls shot due to unforeseen headwinds, investors may not be so patient. In this vein, Lucid is playing its own game.

No one knows how a stock will move in the short term. But if Lucid continues to deliver on its promises in 2022, then the long-term investment thesis will look even better than it does today.

Heading into a transition year

Howard Smith (Nio): Equity investors can be jittery when news headlines are flying, leading to reactions that are based on bigger-picture assumptions resulting in sector-wide stock moves. Investors need to balance that against what might be due to company-specific information.

Share prices of Chinese EV maker Nio have dropped more than 15% over the past several weeks, and a deeper look seems to indicate the drop was due to a combination of both a sector shift and some short-term news from the company. 

Fears of uncertainty surrounding the economic recovery from the pandemic and the potential spread of the new omicron variant impacted stocks in general in recent weeks. Fast-growing businesses in the tech sector typically get hit hardest when market jitters surface. Nio is one such business, and it has yet to report a profitable quarter. It makes sense that a general sell-off in highly valued stocks is going to include Nio. 

But some company-specific fears were put to rest this week, giving investors a potential opportunity as Nio moves into what should be a transitional year for its business. Last month, Nio disappointed investors when it announced only 3,667 vehicle deliveries in October. That was a decrease of 27.5% year over year. Those results were in sharp contrast to the first nine months of 2021, which showed an increase of more than 150% in deliveries compared to the prior-year period.

But the company returned to that prior growth in November when it delivered a monthly record of 10,878 electric vehicles. The dip in October was mainly due to disruption caused by work to upgrade its manufacturing lines in preparation for both higher volumes and new products. Nio expects to deliver three new products in 2022, including the highly anticipated ET7 luxury sedan. It is also expanding its sales into Europe beginning in Norway, with plans to move into Germany next year. With that backdrop of upcoming growth for the company, investors focused on the long-term can use the recent sell-off to get Nio shares at a discount.

Patience and perseverance are paramount 

Just like other growth stocks, Lucid and Nio are not impervious to volatility. Investors shouldn’t expect either stock to go to the moon before each company establishes itself as a long-term market participant.

However, Lucid and Nio both have a lot going for them that should help investors weather the current market storm in case things go south over the short term. If Lucid accomplishes its 2022 goals, it would signal strong demand for its vehicles and mark a major milestone that a new U.S. automaker other than Tesla can compete in the ultra-competitive luxury sedan market. Similarly, Nio continues to prove its mettle against a stout Chinese cohort of competitors and is expanding nicely internationally. For most investors, taking a basket approach by diversifying into multiple EV stocks offers one of the best ways to combat volatility. 

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

The post Does the tech sell-off affect EV stocks like Nio? appeared first on The Motley Fool Australia.

More reading

• Why Nio stock is trading lower today
• Could Rivian, Lucid, or Nio become the next Tesla?

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

from The Motley Fool Australia https://ift.tt/3Gg8cEN

The Douugh Ltd (ASX: DOU) share price is having a day to forget after coming out of a trading halt. This comes after the financial wellness app provider announced an update on its recent share placement.

During mid-morning trade, Douugh shares are down 10.84% to 7.4 cents. This means that the tech company’s shares have fallen more than 20% in the past week alone.

What’s dragging Douugh shares lower?

Investors are scrambling to sell Douugh shares as the company prepares to dilute existing shareholder value.

According to its release, Douugh advised it has received firm commitments to raise $5.5 million through a share placement.

The company presented the offer to institutional and sophisticated investors at an issue price of 7.2 cents per share. This equates to roughly 76.4 million new ordinary shares being added to the company’s registry.

In addition, Douugh launched a share purchase plan (SPP) for retail investors under the same terms as the placement.

Seeking to raise a further $2.5 million, the SPP will be available to apply for starting tomorrow (7 December).

Together, Douugh expects the capital raising efforts to generate $8 million to accelerate user and revenue growth. This includes investment in research and development as well as marketing initiatives.

Douugh founder and CEO Andy Taylor commented:

We are delighted to have received this support from investors to be able to kick-off the AU integration with Railsbank and continue to build on the strong momentum we are showing in the US. In October, we increased our US customer base by 42% and revenue by 53% month-on-month, with November proving to be just as solid.

With the launch of our new Douugh Rewards offering this week in time for Christmas spending, the Crypto investing feature under development as well as a couple of major enhancements to the core product, we are well positioned in the coming months to further improve our activation rate to increase our revenue profile.

About the Douugh share price

Over the past 12 months, the Douugh share price has plummeted by more than 70%. The company’s shares reached a 52-week low of 5.9 cents in October, before moving in circles since.

On valuation grounds, Douugh commands a market capitalisation of around $33.57 million, with roughly 453.7 million shares on issue.

The post Why the Douugh (ASX:DOU) share price is sinking 10% today? appeared first on The Motley Fool Australia.

More reading

• Dough (ASX:DOU) share price surges another 43% on Wednesday. Here’s why
• Douugh (ASX:DOU) share price rises 16% on soaring number of US users

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3lDQ67N

The CSL Limited (ASX: CSL) share price is slipping amid reports a major broker has questioned why the company would go ahead with a potential $10 billion acquisition, citing “limited obvious product alignment”.

It follows last week’s rumours that CSL is looking to acquire Swiss company, Vifor Pharma.

At the time of writing, the CSL share price is $291.19, 2.18% lower than its previous close.

For context, the broader market is mixed this morning. The S&P/ASX 200 Index (ASX: XJO) is currently up 0.01% while the All Ordinaries Index (ASX: XAO) has slipped 0.03%.

Let’s take a closer look at today’s reports on the biotech giant.

CSL share price struggles amid acquisition confusion

The CSL share price might be being weighed down by Macquarie Group Ltd (ASX: MQG) analysts’ confusion over a potential major acquisition.

According to reporting by The Australian, a broker’s note sent to Macquarie clients – written by analysts David Bailey and Rachel Harwood – stated the rumoured purchase could be “financial accretive” for the company, but the strategic reasoning behind it is unclear.

Vifor Pharma is aiming to be a global leader in iron deficiency, nephrology, and cardio-renal therapies. It works to discover, develop, and manufacture pharmaceutical products.

The publication claims the analysts think, if the acquisition goes ahead, it could mean an earnings boost of around 5 cents per CSL share before synergies.

The company responded to the rumours last week, saying it regularly looked for strategic opportunities to improve its business. However, it noted there was no certainty it would be undergoing any kind of merger or acquisition activity.

The CSL share price dipped 2.5% on Friday when it fronted the acquisition talk.

Additionally, Vifor Pharma responded to “market speculations” on Friday, saying it “systematically reviews options that can strengthen its market position and/or accelerate the growth of the company”. Such options include both partnerships and acquisitions, which it doesn’t comment on.

The Australian has also reported CSL has tapped the Bank of America to undertake a capital raise. It’s said to be set to bolster its coffers by between $4 billion and $5 billion.

The company hasn’t responded to that claim.

The post Rationale behind CSL (ASX:CSL) acquisition play not ‘immediately apparent’: Macquarie appeared first on The Motley Fool Australia.

More reading

• CSL (ASX:CSL) share price holds the line in November
• What’s going on with the CSL (ASX:CSL) share price on Friday?
• ASX 200 (ASX:XJO) midday update: BHP higher on unification plans, TPG tumbles
• You want an ASX share to hold for 4 years? Here are 2!
• 5 things to watch on the ASX 200 on Friday

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. owns shares of and has recommended CSL Ltd. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2ZVdO7U

The Kogan.com Ltd (ASX: KGN) share price has continued its poor run and is tumbling lower again on Monday.

In morning trade, the ecommerce company’s shares are down a further 4% to a new 52-week low of $7.40.

This means the Kogan share price is now down 66% from the 52-week high of $21.89 it reached in January.

Why is the Kogan share price falling?

Investors have been selling down the Kogan share price this year after its strong form during the pandemic ended abruptly.

This was driven by a sharp slowdown in sales after bricks and mortar stores reopened and management’s failure to anticipate this. The latter led to Kogan building up its inventory materially and then being unable to shift it. As well as having to discount products, warehouse costs increased and Kogan incurred demurrage fees for inventory stuck at the port with nowhere to go.

Unfortunately, the pullback in the Kogan share price has knocked somewhere in the region of $1.6 billion off its market capitalisation since January, which has led to its latest bit of bad news.

What has happened?

After the market close on Friday, S&P Dow Jones Indices announced changes to the S&P/ASX Indices following a quarterly review. These are effective prior to the open of trading on 20 December.

One of those changes is the removal of Kogan from the benchmark S&P/ASX 200 Index (ASX: XJO). This is due to its market capitalisation no longer being at a level that makes it one of the 200 largest companies on the Australian share market.

This could be bad news for the Kogan share price for a couple of reasons. One is that index funds that mirror the ASX 200 will now sell its shares and buy the new additions to the index instead.

The other reason is that some fund managers have strict mandates that mean they can only invest in shares on certain indices. This means that even if a fund manager is positive on Kogan turning around its disappointing performance, it will have to sell its shares when the changes are made if it can only own ASX 200 or higher shares.

This could add to the selling pressure on the Kogan share price, much to the delight of short sellers which continue to target it. This morning I revealed that Kogan remains the second-most shorted share on the ASX with 12% of its shares held by short sellers.

The post Here’s why the Kogan (ASX:KGN) share price just hit another 52-week low appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why these 3 ASX tech shares could plunge this week
• 5 things to watch on the ASX 200 on Monday
• Is there hope for the Kogan (ASX:KGN) share price in the lead up to Christmas?
• 2 top ASX shares for December

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. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3Gdt4ws

At the latest Hearts and Minds Investments Ltd (ASX: HM1) investment conference, legendary investor Charlie Munger has said that the current share market valuations are crazy.

Hearts and Minds Investments is a listed investment company (LIC) which brings together the top picks of leading fund managers. At the conference, the managers pitch their best ideas and it also has famous guest speakers like Charlie Munger.

Charlie Munger is the business partner of Warren Buffett at Berkshire Hathaway, the investment business that they have been running for decades together. Mr Munger is widely seen as one of the wisest investors in the world and helped hone Mr Buffett’s investing to be more effective by focusing on the long-term with great businesses.

Hearts and Minds fund managers provide their investment picks for free, so that the LIC can donate 1.5% of its net tangible assets (NTA) per year to a range of medical research beneficiaries.

Charlie Munger calls the share market valuations “crazy”

Mr Munger was quoted by various news sources, including the Australian Financial Review, who said:

The dotcom boom was crazier on the valuations even than we have now but overall, I consider this era even crazier than the dotcom era.

You have to pay a great deal for good companies and that reduces your future returns.

Berkshire Hathaway, under Mr Buffett’s stewardship, has generally avoided technology businesses over the decades. Mr Buffett has been wise in the past to stick to investing in what he calls his “circle of competence” – only investing in what he understands.

However, a few years ago, Berkshire Hathaway bought a position in Apple and that’s now the largest stock position in the Berkshire Hathaway portfolio.

Charlie Munger went on to say that whilst he has become more focused on great companies, the high valuations make investing mistakes more costly. He said about investing in those companies:

That is particularly hard for me because the great companies come at a high price.

You want companies that have high earnings on capital and have a durable competitive advantage, and if you can add to that they’ve got a good management instead of a bad one, that’s a big plus too.

But what you’ll find is that the great companies of the world have been discovered. They’re very expensive to buy.

But stocks wasn’t the only thing that Mr Munger commented on.

Not a fan of cryptocurrencies

The Sydney Morning Herald reported that Mr Munger said he wouldn’t take part in the “insane” boom of cryptocurrency and didn’t approve of promoters of cryptocurrency assets. He said:

I’m never going to buy a cryptocurrency. I wish they’d never been invented.

I think the Chinese made the correct decision, which is to simply ban them. My country – English-speaking civilisation – has made the wrong decision

I just can’t stand participating in these insane booms, one way or the other. It seems to be working; everybody wants to pile in, and I have a different attitude. I want to make my money by selling people things that are good for them, not things that are bad for them,” he said.

Believe me, the people who are creating cryptocurrencies are not thinking about the customer, they are thinking about themselves.

Inflation

Finally, on inflation, Charlie Munger reportedly said that over 100 years he doesn’t trust any currency issued in the world. He said it’s natural to reduce the purchasing power of currency. The best a government can hope for is slow inflation.

The post ”Crazier than the dot.com era”: Charlie Munger on current share market valuations appeared first on The Motley Fool Australia.

More reading

• Is a $1 million retirement nest egg enough?
• Could interest-paying crypto accounts be coming to a CBA (ASX:CBA) branch near you?
• Orocobre (ASX:ORE) share price pushes higher amid ASX 100 inclusion
• 5 Ways Inflation Can Hurt Stocks
• Vulcan Steel (ASX:VSL) share price surges 8% higher on guidance upgrade

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3DpEZWk

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.

Saving $1 million may sound like a good retirement goal. And you may assume a seven-figure nest egg would give you plenty of income to enjoy your later years.

The reality, however, is that $1 million in your retirement portfolio may not provide nearly as much money as you think. Here’s the reality of just how much you can do with it.

Why a $1 million nest egg doesn’t go as far as you might think

While a nest egg valued at $1 million may sound like a lot, you need to keep a few things in mind:

• If you withdraw too much from your investment accounts, you could end up with an account balance that’s too small to earn many returns, and that puts you at risk of running out of money. 
• Taxes could reduce the actual amount you have to spend after you’ve taken withdrawals from your retirement accounts.
• Inflation will reduce your buying power as prices go up over time. 

To avoid withdrawing too much from your accounts, you should decide on a safe withdrawal rate. That’s the amount of money you can safely take out without risking your savings running dry while you’re still alive. Traditionally, experts recommended a 4% withdrawal rate in your first year, which could be adjusted up by inflation each year. Because of longer life spans and lower future projected returns, this may be a bit too aggressive if you want to be sure you won’t fall short. You may want to opt for 3.5% instead. 

That means a $1 million nest egg would leave you with around $35,000 or $40,000 in annual income at most. When combined with Social Security, that may seem like enough. But don’t forget to factor in state and federal taxes. You won’t get to keep all your money because of your obligations to the government, and the exact amount you’ll end up bringing home depends on a huge number of factors including your filing status, the deductions you’re eligible to claim, and where you live. But you’ll likely lose thousands to the IRS and your state. 

You should also think about what inflation will do to your buying power. If you’re planning to save $1 million for a retirement that’s 20 years away, a $35,000 income from your investments in the future isn’t going to buy you what a $35,000 income would pay for today. The price of goods and services will be much higher by that time, so your $35,000 might have only around $23,000 in buying power, assuming 2% annual inflation over time. 

All of this means your $1 million, which sounds like plenty, may not be enough. To make sure you don’t find yourself falling short, don’t assume a big number like $1 million will be sufficient to support you. Instead, set a personalized savings goal by taking into account your future spending needs, as well as the impact of taxes and inflation, to ensure you have enough to live on in your later years. 

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

The post Is a $1 million retirement nest egg enough? appeared first on The Motley Fool Australia.

More reading

• Could interest-paying crypto accounts be coming to a CBA (ASX:CBA) branch near you?
• Orocobre (ASX:ORE) share price pushes higher amid ASX 100 inclusion
• 5 Ways Inflation Can Hurt Stocks
• Vulcan Steel (ASX:VSL) share price surges 8% higher on guidance upgrade
• Metcash (ASX:MTS) share price jumps 7% on strong half year results

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 Bruce Jackson.

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

from The Motley Fool Australia https://ift.tt/3rBp4Sv

Commonwealth Bank of Australia (ASX: CBA) made headline news on 3 November when it announced it would become the first Australian bank to offer crypto services to its customers.

Using CBA’s app, customers will be able to buy, sell or hold up to 10 selected cryptos including Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).

At the time CBA CEO Matt Comyn said, “We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform.”

CommBank is partnering with crypto exchange Gemini and blockchain analysis firm Chainalysis to roll out the new offering.

What CBA’s new crypto service doesn’t offer, yet, is the ability to earn interest on your crypto holdings.

But that may be changing.

Gemini Earn aims to come Down Under with CBA

Gemini Earn is currently only available in the United States, Singapore and Hong Kong.

So what is Gemini Earn?

According to the Gemini website, “Gemini Earn is a lending program through which you may choose to lend your crypto to certain institutional borrowers and earn interest on your crypto.”

Gemini also says, “You can receive up to 8.05% APY [annual percentage yield] on your cryptocurrency.”

In a world of ultra-low interest rates, that’s sure to generate some, erm, interest. Though it’s unclear what type of deposit protections, if any, would be in place if the product rolls out in Australia.

Most crypto holdings will pay a fair bit less than 8.05%. And the rates can change throughout the day. At the time of writing Bitcoin is paying 1.5% while Ether is paying 1.8%.

Commenting on the company’s plans to launch the service in Australia, Andy Meehan, chief compliance officer for Gemini Asia Pacific said (quoted by The Australian):

In Australia our view would be to offer the product to the retail investors. We think CBA broke the mould in your market, which is an attractive market. In fact, is it a highly developed investment market that has a long tradition of people being very quick to take up new finance technology when it arrives on the scene…

CBA has forced the regulators to move much faster than they might have naturally desired, but you’ll see every one of your banks offer crypto services very soon.

How soon?

Meehan didn’t give any specific timeframe for when Aussies can expect to earn interest from their CBA crypto accounts. He first needs to engage with Australian regulators.

CommBank share price snapshot

Despite taking a tumble from its 5 November all-time high, the CBA share price remains up 17% year to date. By comparison the S&P/ASX 200 Index (ASX: XJO) is up 10% for the calendar year.

Over the past month CommBank shares are down 12%.

The post Could interest-paying crypto accounts be coming to a CBA (ASX:CBA) branch near you? appeared first on The Motley Fool Australia.

More reading

• Here’s how these 4 top traded cryptos performed in November
• Here’s why Charlie Munger says crypto should have ‘never been invented’
• Why Bitcoin, Ethereum, and Dogecoin are slumping today
• What happened to the CBA (ASX:CBA) share price in November
• Is Australia on the precipice of mass crypto adoption?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/31BueCM