On Tuesday the S&P/ASX 200 Index (ASX: XJO) was on form again and charged higher. The benchmark index rose 0.6% to 7,066 points.

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

ASX 200 expected to fall

It looks set to be another disappointing day of trade for the Australian share market on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day 74 points or 1.05% lower this morning. This follows a poor night of trade on Wall Street which saw the Dow Jones fall 0.8%, the S&P 500 drop 0.85% and the Nasdaq fall 0.55%.

Webjet full year results

The Webjet Limited (ASX: WEB) share price will be one to watch closely on Wednesday when it hands in its full year results. The online travel agent is releasing its results today after shifting its financial year to end on 31 March. The market is expecting another large loss due to COVID-19 headwinds.

Oil prices soften

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could fall on Wednesday after oil prices softened. According to Bloomberg, the WTI crude oil price is down 1.2% to US$65.49 a barrel and the Brent crude oil price has fallen 1.05% to US$68.74 a barrel. Oil prices touched on two-month highs before giving back their gains.

EML Payments shares to return

The EML Payments Ltd (ASX: EML) share price will be one to watch this morning when it returns from its trading halt. The payments company requested a trading halt on Monday while it prepared an announcement in relation to “significant regulatory concerns” notified by the Central Bank of Ireland. These concerns relate to its Prepaid Financial Services business. Given that EML Payments has taken two full days to prepare the announcement, things don’t look good.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) will be on watch after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.1% to US$1,869.40 an ounce. The precious metal is now closing in on a four-month high. 

More reading

• ASX 200 rises, Nuix jumps, James Hardie drops
• 2 ASX 200 shares to buy for growth
• 2 ASX shares rated as strong buys by brokers
• Here’s why Centuria Capital (ASX:CNI) shares are falling 6% today
• ASX 200 up 0.6%: James Hardie Q4 update, St Barbara sinks, Nuix jumps

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 recommends EML Payments. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you want to build a balanced portfolio, you might want to form the foundations with some blue chip ASX 200 shares.

But with so many to choose from, it can be hard to decide which ones to buy. To narrow things down for you, I have picked out two ASX blue chip shares that have been given buy ratings:

Sonic Healthcare Limited (ASX: SHL)

The first blue chip ASX 200 share to look at is Sonic Healthcare. It is a leading medical diagnostics company with operations across the world.

Sonic has been a very strong performer so far in FY 2021. During the first half, the company delivered a 33% increase in revenue to $4.4 billion and a 166% jump in first half net profit to $678 million.

While a key driver of this growth has been COVID-19 testing services, the rest of the business is performing positively as well. The latter also appears well-placed to benefit from a backlog in healthcare work. And with COVID-19 testing likely to continue for a little while to come, Sonic looks set to continue its growth in FY 2022.

In addition to this, due to its strong balance sheet, the company has the opportunity to boost its growth through earnings accretive acquisitions.

One broker that is particularly positive on the company is Credit Suisse. It currently has an outperform rating and $40.00 price target on the company’s shares.

Telstra Corporation Ltd (ASX: TLS)

A second blue chip ASX 200 share to look at is Telstra. It could be a good option due to its improving outlook, attractive valuation, and generous dividends.

In respect to its outlook, things are looking significantly better for Telstra thanks to its T22 strategy. This is cutting costs and making it a much leaner operation. In addition to this, the company’s leadership position in 5G internet looks set to boost its key mobile business in the coming years.

Another positive is the company’s plan to unlock value by monetising assets and splitting into three separate entities.

Ord Minnett is a fan of the company. It currently has a buy rating and $4.05 price target on its shares. The broker also believes Telstra can pay fully franked 16 cents per share dividends for the foreseeable future. Based on the current Telstra share price, this will mean 4.6% dividend yields.

More reading

• Forget Dogecoin! Here are 2 ASX dividend shares to buy for income today
• Why is the Telstra (ASX:TLS) share price falling today?
• Why I’m loving this ASX bank share at the moment: fundie
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 2 quality ASX dividend shares for income investors

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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One of the best ways to set yourself up for a comfortable retirement is by having a passive income stream that is both reliable and has the potential to grow over time. Investing in companies that share their profits through dividend payments is arguably the most efficient way of achieving this, particularly in the current low interest rate environment.

But which ASX shares could you buy for a retirement portfolio? Two highly rated ASX shares to consider are listed below:

Coles Group Ltd (ASX: COL)

The first option to consider for a retirement portfolio is this supermarket giant.

It has been a particularly strong performer over the last 12 months thanks to favourable tailwinds brought about by the COVID-19 pandemic.

And while its growth will inevitably moderate now as trading conditions return to relatively normal, the company remains well-positioned over the long term. This is due to its strong market position, focus on automation, and cost reductions.

Combined with its track record of delivering like for like sales growth, this should underpin solid earnings and dividend growth over the 2020s.

Goldman Sachs is positive on Coles and has a buy rating and $20.50 price target on its shares. The broker is also forecasting a fully franked dividend of 62 cents per share in FY 2021. Based on the current Coles share price of $16.40, this will mean a yield of 3.8%.

Goodman Group (ASX: GMG)

Another option to consider for a retirement portfolio is Goodman Group. It is an integrated commercial and industrial property group that owns, develops, and manages industrial real estate in 17 countries.

Goodman has been growing at a solid rate over the last decade thanks to the diversity of its operations and its exposure to quick growing markets such as ecommerce.

Pleasingly, the latter market has resulted in strong demand from blue chip customers such as Amazon, Coles, and Walmart. This appears to have positioned Goodman for sustainable growth over the 2020s.

One broker that is very positive on Goodman is Citi. It currently has a buy rating and $22.10 price target on its shares. It is also forecasting a distribution of 30 cents per share in FY 2021. Based on the current Goodman share price of $18.55, this represents a 1.6% yield. 

More reading

• Woolworths and Coles sign ANZPAC plastic pact
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 2 growing ASX dividend shares to buy
• Leading brokers name 3 ASX shares to sell today
• 2 excellent ASX 200 shares rated as buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If small caps are too high on the risk scale for your tastes, then you might be better off looking at the mid cap space.

These companies are lower down the risk scale but still have the potential to generate outsized returns for investors in the future.

Two mid caps that tick a lot of boxes are listed below. Here’s what you need to know about them:

Hipages Group Holdings Ltd (ASX: HPG)

The first mid cap ASX share to look at is Hipages. It is a leading Australian-based online platform and software as a service (SaaS) provider that connects tradies with residential and commercial consumers.

Its increasingly popular platform helps tradies grow their businesses by providing job leads from homeowners and organisations looking for qualified professionals.

At the last count, over three million Australians had used Hipages, providing more work to over 34,000 trade businesses subscribed to the platform.

Goldman Sachs is very positive on the company and sees it as a great long term option. It notes that the company currently captures around 5% of total industry advertising spend. However, it sees scope for this to increase to 40% to 60% in the future as the company builds out its ecosystem. 

Goldman Sachs recently reiterated its buy rating and $3.35 price target on its shares. This compares to the current Hipages share price of $2.42.

Jumbo Interactive (ASX: JIN)

Another mid cap ASX share to look at is Jumbo Interactive. It is an online lottery ticket seller which is best-known as the operator of the Oz Lotteries website.

While the company generates the majority of its revenue from the Oz Lotteries website, there’s a lot more to it than that. Jumbo also has its own SaaS business – Powered by Jumbo.

This part of the business allows lottery operators to take their lotteries online without having to invest in a development team and build a website. Management estimates that the global lottery market is worth US$303 billion per year in transaction value. Positively, with only ~7% of this market online at the moment, Powered by Jumbo has an enormous opportunity to capture.

Morgan Stanley is bullish on the company. It currently has an overweight rating and $15.20 price target on its shares. This compares to the current Jumbo share price of $13.04.

More reading

• Leading broker names 5 emerging ASX shares to buy today
• Leading brokers name 3 ASX shares to buy today
• 2 buy-rated mid cap ASX shares

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Life360, Inc. and Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) rose by 0.6% to 7,066 points.

Here are some of the highlights from the ASX today:

Nuix Limited (ASX: NXL)

The Nuix share price climbed more than 12% today after giving a presentation.

The Australian Financial Review quoted Nuix CEO Rod Vawdrey who said:

I take full responsibility for the performance of the business. For those investors big and small who have been impacted in the last few months, I’m incredibly sorry.

Within the actual presentation, Nuix said that it’s well positioned for future revenue and earnings growth.

It claims to have a strong and growing pipeline, with both new business and upselling. New business is at record levels.

Nuix also pointed to its strong customer retention and low churn for the market to back the ASX 200 company. Historically, its net dollar retention has been more than 100%, meaning that its existing customers are spending more money. The revenue churn was 3.5% in FY19 and 4.7% in FY20.

The business also said that it’s shifting its pricing to be tied to consumption. Management believe it’s going to increasingly benefit from the organic data growth of its customers, with expected revenue from the transition to consumption models not fully factored into its FY21 forecast.

Nuix continues to invest in research and development to drive future growth and new products, as well as going into new markets.

The business reminded investors it has high gross margins and a relatively fixed cost base, leading to operating leverage and cost efficiency.

St Barbara Ltd (ASX: SBM)

The St Barbara share price dropped by over 8% today after the gold miner gave an update.

The miner said that the transition to Macmahon Holdings Limited (ASX: MAH) is taking longer than expected at its Leonora operations. St Barbara said that the restructuring of the mining contract and the strategy delivers a compelling business case for the future of Gwalia.

The recruitment of critical roles and experienced operators by Macmahon has been well below expectations, with the shortfall in personnel a factor for a reduction of guidance. WA-based workforce availability has impacted the planned mine schedule and led to the deferral of mined ore tonnages from FY21 into FY22. The guidance for FY21 is now forecast to be between 150,000 to 160,000 (down from 175,000) and the all-in sustaining costs is now between $1,815 and $1,950 per ounce (up from $1,590 to $1,630 per ounce).

St Barbara also decreased its guidance at its Simberi operations as a result of low mining rates not achieving planned face positions which is affecting gold recovery. The COVID-19 situation continues to put pressure on the operation and workforce in PNG.

Overall guidance for FY21 is now forecast to between 330,000 ounces to 360,000 ounces (down from 370,000 ounces to 380,000 ounces). FY21 AISC is now expected to be in a range of $1,547 to $1,695 per ounce.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price fell by 4.5% today after reporting its fourth quarter and FY21 result.

Fourth quarter global net sales grew by 20% to US$807 million, global adjusted earnings before interest and tax (EBIT) rose 43% to US$173.1 million and adjusted net income grew by 44% to US$124.9 million for the quarter. James Hardie boasted that every operating region delivered double digit net sales and double digit EBIT growth in the quarter.

Looking at the overall FY21 result, the ASX 200 share’s global net sales rose 12% to US$2.9 billion and adjusted net income went up 30% to US$458 million. Operating cashflow grew 74% to U$786.9 million.

FY22 adjusted net income is expected to be in a range of US$520 million to US$570 million.

More reading

• 2 ASX 200 shares to buy for growth
• Here’s why Centuria Capital (ASX:CNI) shares are falling 6% today
• Why Aristocrat Leisure, Creso Pharma, Nuix, & Resolute are charging higher
• Nuix (ASX:NXL) share price gains 12% on signals of accountability
• ASX 200 up 0.6%: James Hardie Q4 update, St Barbara sinks, Nuix jumps

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking for some growth shares to add to your portfolio, then you may want to take a look at the ones named below.

Here’s why they have been tipped as buys:

Breville Group Ltd (ASX: BRG)

The first growth share to look at is Breville. It is one of the world’s leading appliance manufacturers responsible for the Sage, Kambrook, Baratza, and eponymous Breville brands.

Thanks to the popularity of its brands in the ANZ market and internationally, Breville has been growing at a solid rate for many years.

Pleasingly, its growth has not only continued in FY 2021, it has accelerated. This has been driven by favourable tailwinds brought about by the working from home trend and its international expansion.

For the six months ended 31 December, Breville reported a 28.8% increase in revenue to $711 million. And on the bottom line, the company delivered a 29.2% increase in net profit after tax to $64.2 million.

The good news is that UBS appears confident this strong form can continue. Its analysts are bullish on its long term growth outlook thanks to product launches and its expansion into new markets. The broker currently has a buy rating and $35.70 price target on its shares.

PointsBet Holdings Ltd (ASX: PBH)

Another growth share to look at is PointsBet. It is a rapidly growing sports betting company with operations in the ANZ and US markets.

Sports betting is becoming increasingly popular thanks to the innovation of new product offerings such as same game multis and the ease of mobile betting. Combined with PointsBet’s highly successful expansion into the US market, this has underpinned stellar sales growth since its IPO. 

For example, during the third quarter of FY 2021, PointsBet reported a 236% increase in turnover to $905.2 million. This was driven by a 137% jump in Australian turnover to $423.2 million and a 431% increase in US turnover to $482 million.

Goldman Sachs is confident of more of the same in the fourth quarter and beyond. This is thanks largely to its enormous opportunity in the United States market. Its analysts currently have a buy rating and $17.20 price target on its shares.

More reading

• US market bounces back, ASX 200 tech shares on watch
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• These were the worst performing ASX 200 shares last week
• Why Zip (ASX:Z1P) and these ASX growth shares are rated as buys
• Leading broker names 5 emerging ASX shares to buy today

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 recommends Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Ainsworth Game Technology Limited (ASX: AGI) share price backtracked today after the company provided a business update.

At market close, the gaming technology company’s shares finished the day at 88 cents, down 2.78%.

What was announced?

Investors sold off their positions in Ainsworth today despite the company’s strong forecasted preliminary results and new partnership agreement.

According to its release, Ainsworth advised it expects to report a profit before tax of $1 million for H2 FY21. Continued improvements in market conditions following the impact of COVID-19 led the group to achieve better revenue and profitability.

Group underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for FY21 is projected to come in at $19 million. Most of the earnings were attributed to the robust second-half performance which recorded $13.2 million. This represents an increase of 128% on the $5.8 million achieved in the first-half.

Ainsworth noted, however, that both forecasted metrics excludes any currency movements and one-off items such as the $3.3 million sale of land at its Nevada facility.

In addition to the update, the company announced an exclusive agreement with internet-based interactive gaming services, GAN Limited (NASDAQ: GAN).

The 5-year partnership will see Ainsworth provide GAN with exclusive use of online real money games within the United States. Rights of up to 79 unique slot titles including QuickSpin brand of wheel games are included in the deal.

Furthermore, Ainsworth will supply a variety of new game content on a regular basis to keep customers enthused.

Online operations will run in New Jersey and are being planned for Michigan and Pennsylvania.

The contract will generate a minimum guaranteed amount of US$30 million and will come into effect 1 July 2021. The funds will be received with US$10 million in cash in H1 FY22, and the remaining US$20 million paid over the life of the contract.

About the Ainsworth share price

Year-to-date, Ainsworth shares have gained traction to almost double in value, up over 80%, reflecting positive investor sentiment. The company’s share price reached a 52-week high of $1.175 before profit taking swooped in.

On valuation grounds, Ainsworth commands a market capitalisation of around $294 million, with approximately 336 million shares outstanding.

More reading

• Here are the shares that Warren Buffett has been buying (and selling) lately
• Here are the US shares ASX investors were buying last week
• Learning to love share price falls
• 2 ASX 200 shares to buy for growth
• The Aristocrat Leisure (ASX:ALL) share price is up 4% and could keep climbing

Motley Fool contributor Aaron Teboneras 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.

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Unfortunately, Warren Buffett – chair and CEO of Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) – doesn’t often talk about which shares Berkshire is buying and selling, at least until a few months after he has done so. But fortunately, Berkshire is required to tell us what shares Buffett has been buying and selling. Well, every 3 months, that is. In the United States, companies have to report what’s known as a 10F filing every quarter. This filing contains all of the stocks and assets a company holds. That means we can use them to see what changes Buffett has been making to Berkshire’s sprawling portfolio.

And that brings us to today. Yesterday, Berkshire filed its 10F report for the quarter ending 31 March 2021. Although that’s a while ago now (and an eternity in the investing world), it’s still a great opportunity to get a look inside Buffett’s head and see what he’s been up to.

So let’s dig in.

Buffett’s buys

So according to reporting in the Australian Financial Review (AFR), Berkshire did make some substantial moves over the March quarter. These were mostly selling though. His largest sells were in bank shares, particularly Wells Fargo & Co (NYSE: WFC), which the AFR notes Buffett has held for more than three decades now. At the height of Berkshire’s Wells Fargo investment, the company owned more than 10% of the US$198 billion bank. But as of 31 march, Berkshire only owned ~675,000 shares, worth roughly US$32.34 million on the most recent pricing.

Berkshire also offloaded shares of another US bank in U.S. Bancorp (NYSE: USB), as well as a smaller, but total, stake in Synchrony Financial (NYSE: SYF).

Another sector that Berkshire and Buffett seem less enamoured with than in the past is oil. In the quarter ending 31 December 2020, Berkshire has a US$4.1 billion position in the oil giant Chevron Corporation (NYSE: CVX). But Berkshire has been selling off this position as well. As of 31 March, Berkshire had just US$2.5 billion worth of Chevron stock left. Perhaps the recent bull run in oil prices has served its purpose for Buffett.

Other shares that Buffett and Berkshire trimmed over the quarter include AbbVie Inc (NYSE: ABBV), Bristol-Myers Squibb Co (NYSE: BMY), Merck & Co., Inc. (NYSE: MRK) and General Motors Company (NYSE: GM).

In their place, Berkshire has added to its stake in supermarket chain Kroger Co (NYSE: KR), almost doubling its investment over the quarter to 51 million shares (worth US$1.91 billion on today’s prices). It has also topped up on communications giant Verizon Communications Inc. (NYSE: VZ), and services company Marsh & McLennan Companies, Inc. (NYSE: MMC). It also initiated a position in insurance broker Aon PLC (NYSE: AON).

Berkshire’s stakes in its largest holdings in Apple Inc (NASDAQ: AAPL) and Bank of America Corp (NYSE: BAC) remain unchanged for the quarter.

More reading

• Here are the US shares ASX investors were buying last week
• Has COVID-19 killed the ASX WAAAX shares?
• Here are the US shares ASX investors were buying last week
• Nasdaq slump: will ASX tech shares face selling pressure today?
• ASX tech shares are in a world of pain. There might be more to come…

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Bristol Myers Squibb. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Verizon Communications and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short March 2023 $130 calls on Apple, short June 2021 $240 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, and long January 2023 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Most weeks, Commonwealth Bank of Australia (ASX: CBA)’s CommSec share trading platform tells us the US shares that its Aussie customers were buying the previous week.

Since CommSec is one of the most popular brokers in Australia, this data is a useful insight into the US shares that ASX investors are finding tempting at the moment.

My Fool colleague James Mickleboro has already covered some of the ASX’s most popular shares today. So here are the top 10 US shares that CommSec customers were buying and selling last week. This week’s data covers 10-13 May.

GameStop (and Tesla) still an ASX heart stealer

1. Tesla Inc (NASDAQ: TSLA) – representing 7.3% of total trades with a 78%/22% buy-to-sell ratio.
2. GameStop Corp. (NYSE: GME) – representing 3% of total trades with a 94%/6% buy-to-sell ratio.
3. Apple Inc (NASDAQ: AAPL) – representing 2.5% of total trades with a 69%/31% buy-to-sell ratio.
4. Palantir Technologies Inc (NYSE: PLTR) – representing 2.1% of total trades with an 82%/18% buy-to-sell ratio.
5. Nio Inc – ADR (NYSE: NIO) – representing 1.8% of total trades with a 58%/42% buy-to-sell ratio.
6. AMC Entertainment Holdings Inc (NYSE: AMC)
7. Microsoft Corporation (NASDAQ: MSFT)
8. Amazon.com Inc. (NASDAQ: AMZN)
9. Alibaba Group Holding Ltd (NYSE: BABA)
10. Alphabet Inc Class C (NASDAQ: GOOG)

What can we learn from these trades?

Well, this week’s list looks remarkably similar to last weeks’ list. The same top 5 shares, with the exception of Nio. Similar buy/sell ratios for the top 5. And some similar themes.

One thing that stands out this week is the ongoing obsession ASX investors seem to have with GameStop Corp. GameStop was infamously the hottest stock in the world back in January. That was when a Reddit-fuelled stock squeeze was orchestrated by retail investors, forcing GameStop shares up 1,770% between 1 January and 27 January. Today, GameStop shares are down almost 50% from those highs. Saying that, this stock has continued to provide the odd ‘pop’ since then. Case in point, the stock is currently up 26% since last Monday. The 94%-6% buy-to-sell ratio is startlingly bullish too. Clearly, there are many ASX investors who are still looking to get lucky with this one.

Tesla remains at the top of the pile too, with more than double the total trades of the second-place GameStop last week. That’s despite the Elon Musk-headed electric vehicle and better manufacturer losing almost 20% of its value over the past month.

Nio’s return to the top 5 is also interesting. Nio, a Chinese electric vehicle maker and rival to Tesla, is now down around 37% year to date. But given this company went from US$3 a share in March last year to a high of US$67 by January, there are clearly a few investors looking for some more magic out of this one. 

Meanwhile, Aussie demand for the blue chip US tech stocks continues to be solid. Apple still holds its bronze medal in this list. And Amazon, Microsoft and Google-parent Alphabet are still bobbing along in the top 10.

More reading

• Here are the shares that Warren Buffett has been buying (and selling) lately
• Learning to love share price falls
• If Bitcoin investing isn’t risky enough for you, try this
• Australians are opening their wallets, says CBA report
• Exec jailed for ASX share market manipulation

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. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alibaba Group Holding Ltd., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, NIO Inc., and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Palantir Technologies Inc and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week, I wrote about the volatility that has hit the ASX over the past few months (and the past few days). On the surface, that sounds strange, given the ASX hit an all-time closing high just last Tuesday.

But, like the proverbial duck sitting serenely on the surface of the water, but paddling madly underneath, the headlines and totals hide quite a lot of activity.

Banks and miners have been on the rise, while ‘growth’ companies have taken a hit. Some are down a little. Others are down a lot.

And it’s important to remember such moves, while unwelcome, are far more common than most people realise.

Doesn’t necessarily make them any more fun, though. Judging by the feedback I received in response to what I wrote, it sounds like my article struck a chord.

“I needed to read that” was typical of the responses.

It’s easy to feel confident when things are going well. Less so when share prices are falling.

Doubt creeps in.

Uncertainty.

Fear.

The pain of loss.

Life wasn’t meant to be easy, apparently. And neither is investing, unfortunately.

I feel your pain.

But today I wanted to try to take you one step further.

See, if you’re going to be buying shares – directly, indirectly via a dividend reinvestment plan perhaps, or automatically via Super, it might just pay to cast this volatility in a different light.

And I’m going to go to the Oracle, himself, Warren Buffett, to help me make the case.

Tell ’em what you said, Warren:

“The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise.”

“You benefit when stocks swoon.”

“Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance.”

“These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.”

Now, Buffett isn’t criticising us (too much) for enjoying the ‘green’ days, when our portfolios rise.

But, as he says, it’s important to remember that petrol price analogy. The petrol in your tank might be worth more today if the price rises 10c a litre, but we know that’s a false economy.

You should think of shares the same way.

I’ll use a personal example.

I’m a bit partial to Coke Zero. 

I’ve been known to run out of cans and have to pay full price in the past. But when I’m appropriately organised and aware – and when it’s on special – I grab a couple of boxes at a time.

Am I unhappy because the ones I already have in the fridge have gone down in price?

Not a chance.

I might wish I’d bought those other ones more cheaply… but I’m not looking a gift horse in the mouth!

There are more than enough share price examples I could give you. Amazon going from $100 to $9 per share is the archetype.

Would shareholders have been sad? Yep.

Angry? Maybe.

Yelling at their adviser? Probably.

Upset at losing money? Sure.

But if they’d focused on the business, instead?

If they’d seen growing sales, more customers, more categories, more countries? If they could have ignored the pain, and realised they were being offered shares “on special”, rather than a business that was permanently impaired?

Let’s just say they wouldn’t have too many financial worries with the Amazon share price now at $3,200.

(I own shares for the record. And no, I didn’t buy at $9, unfortunately!)

See, that’s the power of knowledge. And context. And a business focus. And long-term thinking.

No, not every company that loses 90% will subsequently go up 350 times in value.

In fact, very, very few will.

But plenty of companies do go higher after having fallen. Sometimes meaningfully so.

And that’s the important part.

If a company’s shares go from $10 to $20 over the next 5 years, it’d be nice if that happened slowly and steadily, like riding a travelator.

They (almost) never do, of course.

Maybe it goes to $12, then to $8.

Then to $15, then to $5.

Then, eventually to $20.

The journey is no fun, for holders. But if you’re a buyer, it can provide plenty of opportunities to buy more. Which is the key.

I don’t expect you to love volatility, necessarily.

I don’t expect you to love your portfolio losing value.

I don’t expect you to love the market telling you – implicitly or explicitly – that you’re wrong.

But I do want you to realise it’s going to happen. Maybe a lot.

I do want you to accept it.

I do want you to make your peace with it. And yes, I do want you to learn to see those times as buying opportunities.

Now, I’m not saying ‘Buy everything that goes down’. That’d be silly.

Enron went down. Myer went down. Dick Smith went down. So did Kodak.

And I’m not saying ‘Don’t buy when prices are up’. Amazon went up. And up. And up. Waiting for a cheaper price can also be expensive.

I’m just saying ‘Don’t let the market tell you what to think’. And, more importantly, I’m saying that if you like a company at $20 per share, and the shares fall to $10 unless something material has changed, you should like it a whole lot more!

The best investors let volatility be their friend.  They use it as an opportunity, even though the falls can still be painful.

I don’t expect you to be good at that, straight away. Or even to like it. 

But if you can develop the ability to at least accept it – and hopefully act on it, especially when it comes to quality companies – your portfolio might just be meaningfully better, as a result.

More reading

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• 3 explosive shares that defy PE ratios
• Has COVID-19 killed the ASX WAAAX shares?
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• Nasdaq slump: will ASX tech shares face selling pressure today?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Scott Phillips owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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