Australian copper miner OZ Minerals Limited‘s (ASX: OZL) share price rocketed 24.3% in July. Over that same time, the S&P/ASX 200 Index (ASX: XJO) gained a meagre 0.5%.

OZ Minerals wasn’t spared from the COVID-19-driven market rout that savaged most ASX shares. From 21 February through 23 March, the OZ Minerals share price plunged a gut-wrenching 40%.

Since then, it’s been uphill all the way for the copper miner. By the end of the trading day on 31 July, the share price had gained a whopping 128% from it 23 March low.

Year-to-date, OZ Minerals share price is up 35.3%. The current price of $14.34 per share gives the company a market cap of $4.6 billion.

What does OZ Minerals do?

Based in South Australia, OZ Minerals is mining company primarily focused on copper. It owns and operates the high-quality Prominent Hill copper-gold mine and the Carrapateena advanced exploration copper-gold project. Both sites are located in South Australia.

The company had $15 million in net cash (unaudited) at 30 June and had a $480 million revolving credit facility.

What fuelled the OZ Minerals share price rise in July?

OZ Minerals has clearly benefited from the rising price of copper, its primary focus. During July, the price of copper went from US$6,015 per dry metric tonne to US$6,413, an increase of 6.6%. It’s also worth noting that the price of copper gained 39% from its 24 March low through 31 July.

Topping off the big gains in copper for OZ Minerals mines, July kicked off nicely for the company when JP Morgan upgraded the company from “neutral” to “overweight”. That came after the big name broker re-evaluated its initial value ascribed to OZ Minerals’ Carrapateena block cave project, with both ore grades and the mine life upgraded.

JP Morgan put its 12-month target for the OZ Minerals share price at $12.80 a share. In late afternoon trading today, the miner was trading at $14.34 per share.

A second top broker, Macquarie Group Ltd (ASX: MQG) named OZ Minerals as one of its “counter consensus calls“, believing the miner’s financial year 2020 earnings per share estimates will come in higher than consensus forecasts.

This was borne out by OZ Minerals’ quarterly report, released on 22 July. The company raised its financial year 2020 production guidance from 83,000-100,000 tonnes of copper to 88,000-105,000 tonnes. If that holds true, the OZ Minerals share price could have further to run.

More reading

• These record breaking ASX stocks just got downgraded by top brokers
• Has the ASX 200 finally taken off?
• ASX 200 up 1%: Challenger disappoints, Sydney Airport to raise $2bn, a2 Milk names new CEO
• ASX iron ore miners jump on broker upgrades
• 3 tips for beginners investing in ASX shares

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 market continues to power ahead on a better than expected start to the reporting season, but valuations for some ASX stocks are getting hard to justify.

The S&P/ASX 200 Index (Index:^AXJO) jumped 0.5% in after lunch trade with most sectors making gains.

But brokers warn that some stocks are starting to look overbought and have downgraded their recommendations on the following ASX stocks.

Tasting a tat too rich

One stock that got cut today is the Breville Group Ltd (ASX: BRG) share price, which is trading at a record high of $28.50 at the time of writing.

A big profit upgrade by JS Global is fuelling enthusiasm for Breville as the Chinese kitchen appliance maker is enjoying strong demand for its products.

That bodes well for Breville although Credit Suisse is struggling to keep the stock on its “buy” list after the BRG share price surged by more than 160% since March.

Big premium drives downgrade

“BRG is trading on an unusually high 224% premium to the ASXI [ASX Industrials Index] and the COVID-19 environment remains highly uncertain,” said the broker.

“We therefore think this is a good opportunity to take stock.”

Credit Suisse downgraded the stock to “neutral” from “outperform” two days before the company hands in its profit results.

However, the broker lifted its 12-month price target to $26.81 from $20.27 a share to reflect the positive sales momentum for its products.

When an upgrade leads to a downgrade

Another stock to be hit with a downgrade despite positive trading conditions is the Mineral Resources Limited (ASX: MIN) share price.

Shares in the mining services group also hit a record high of $28.32 this afternoon, thanks in no small part to brokers upgrading their forecast iron ore price for the next few years.

Mineral Resources benefits from the more positive outlook for the steel making commodity. Not only does it offer mining services (like crushing) to some of the world’s largest iron ore miners, it also owns iron ore and mineral sands projects.

Better value elsewhere

JP Morgan is one of the brokers that lifted its price estimates for the commodity. It expects iron ore to average US$100 a tonne in 2021 (up 19%) and that prompted it to lift its price target on Mineral Resources to $21.40 a share from $18.80.

However, the MIN share price is trading too far above the upgraded valuation, which forced JP Morgan to downgraded its rating on Mineral Resources to “underweight” from “neutral”.

More reading

• Here’s why the OZ Minerals share price rocketed 24% in July
• Has the ASX 200 finally taken off?
• ASX 200 up 1%: Challenger disappoints, Sydney Airport to raise $2bn, a2 Milk names new CEO
• ASX iron ore miners jump on broker upgrades
• 3 tips for beginners investing in ASX shares

Motley Fool contributor Brendon Lau owns shares of Breville Group Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Is the Vanguard US Total Market Shares Index ETF (ASX:VTS) a good long-term investment? I’m going to explain why it is. 

Exchange-traded funds (ETFs) are a great way for people to invest in the share market. Most ETFs give the investor an easy way to invest in a large number of shares with a single investment. Some ETFs may invest in 100 to 300 shares and others are invested in thousands.

Many ETFs also come with low operating costs, much lower than active fund managers. The lower the cost the higher the net returns – which is obviously the most important thing for investors.

Vanguard US Total Market Shares Index ETF

This ETF is invested in most of the US share market. At the end of June 2020 it had 3,531 positions. That’s extremely diversified in my opinion. Diversification reduces the risk of any particular business or industry hurting the overall portfolio’s return too much.

Looking at the particular industry allocations with more than a 5% weighting: 25.2% of the ETF is invested in technology, 16.6% is invested in financials, 14.6% is invested in health care, 14% is allocated to consumer services, 12% is invested in industrials and 7.9% is invested in consumer goods.

I like the spread of the businesses across different industries in the US Total Market Shares Index ETF. There is a fair bit allocated to technology, but this is the sector that’s seeing the most growth. If I could pick which industry to have the most exposure to, it would be technology.

Holdings

This ETF holds all of the US’ best businesses in its holdings. Its top ten holdings are among the best and most well-known businesses in the world.

At 30 June 2020 its leading holdings were: Microsoft, Apple, Amazon.com, Alphabet, Facebook, Johnson & Johnson, Berkshire Hathaway, Visa, Proctor & Gamble and UnitedHealth.

Its holdings further down the list are names like Home Depot, Mastercard, JPMorgan Chase, Intel, Verizon, Nvidia, AT&T, Adobe, PayPal, Walt Disney, Netflix, Merck & Co, Exxon Mobil, Bank of America, PepsiCo, Pfizer, Comcast and Cisco.

Many of the above businesses have strong profit margins and long-term growth potential.

Plenty of the stocks within US Total Market Shares Index ETF are global giants within their sectors. Global earnings provides much more growth potential and also means it can be more resilient as well – it’s unlikely they every region would be suffering at the same time. Apart from something like this COVID-19 pandemic.

Look at the big technology companies. They are involved in changing how the world runs with their cloud computing offerings. Virtual reality and AI is going to be dominated by the these businesses. Automated cars could become a huge division for Alphabet’s Waymo.

Fees

As I’ve mentioned, the lower the fees the better.

Vanguard US Total Market Shares Index ETF has annual management fees of just 0.03% per annum. That’s one of the lowest available for ASX investors. It’s so low that you’d hardly see any difference between the gross return and the net return.

Returns

The net returns of an investment are the most important thing. Over the past year the ETF has delivered a net return of 16.2%. Over the past decade it has delivered an average return per annum of 15.3%.

Past performance is not a guarantee of future performance. However, I think it shows the types of returns that this ETF’s holdings can generate over the long-term. However, most of the return will be in the form of capital growth because it has a fairly low dividend yield.

Foolish takeaway

I think Vanguard US Total Market Shares Index ETF is one of the best options to invest into US shares. It has extremely low operating costs, very good diversification and its largest weightings is to high-growth technology shares.

It’s a pretty good time to buy shares because the Australian dollar has strengthened. However, I think that the upcoming US election could create more volatility for the US share market – that could be a good time to invest.

More reading

• Here’s why the OZ Minerals share price rocketed 24% in July
• These record breaking ASX stocks just got downgraded by top brokers
• 3 ASX shares fighting COVID-19 and rewarding shareholders
• Flight Centre and Zip Co were among the most traded shares on the ASX last week
• Has the ASX 200 finally taken off?

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Australia’s fight against coronavirus continues with Victoria in lockdown as the government battles to suppress the virus. Managing the pandemic involves a host of government and private sector resources, with many ASX shares involved in the fight. ASX companies are involved in everything from manufacturing PPE, to testing for the virus, to supplying equipment and treatments to assist COVID-19 patients.

Here we take a look at 3 ASX shares that are actively involved in the fight against coronavirus.  

Atomo Diagnostics Ltd (ASX: AT1) 

Atomo Diagnostics operates in the medical device space, emerging as a leader in the development of point of care devices for rapid diagnostic testing (RDT). The company’s AtomoRapid RDT platforms are customisable to suit a variety of applications, including screening for chronic conditions and detection of infectious diseases. This week the Therapeutic Goods Administration (TGA) approved Atomo’s COVID-19 rapid antibody test.

The TGA approval means Atomo can now sell the COVID-19 tests to medical professionals. The test is jointly manufactured with a French company, NG Biotech, which manufactures the test strip. Atomo manufactures the testing device. The test has already been approved and sold in France by NG Biotech. Atomos is in commercial discussions to assess distribution channels for the test in Australia. 

“We see strong potential use of our test across a number of channels in Australia and we believe TGA approval will accelerate these negotiations,” Managing Director John Kelly explained.

“The proven ease of use of the Atomo device in the field makes our test well suited for deployment in a large country like Australia, with a variety of point of care settings,” he added. 

The Atomos share price gained 17% at its peak following announcement of the TGA approval. The share price has since settled somewhat and is currently trading 11.7% up from its pre-announcement price. The company only debuted on the ASX in April, becoming the first company to do so since the pandemic took hold. Atomos raised $30 million from its IPO at an offer price of 20 cents per share. With shares now trading at 34 cents, IPO investors are already sitting on a substantial profit. 

Resmed Inc (ASX: RMD) 

Resmed is a medical equipment company that provides devices for the treatment of sleep apnea and chronic obstructive pulmonary disease (COPD). The company makes continuous positive airway pressure masks and machines and life support ventilators. Production of the latter was ramped up in response to the COVID-19 pandemic with the machines used to help patients breathe while their immune system fights coronavirus. Resmed pivoted its business in response to the pandemic, increasing manufacture of ventilators and mask systems for hospitals treating pandemic patients. 

Resmed’s long term strategy revolves around supporting customers with digital health technologies and out-of hospital management software. This enables better care for those suffering from sleep apnea, COPD, and asthma. Over the longer term, Resmed believes its strong foundation will accelerate adoption of digital health solutions in the respiratory medicine field. In the meantime, the company is actively involved in the delivering solutions used in the treatment of coronavirus patients. 

The increased demand for Resmed products has been reflected in its results. Revenue increased 9% in the fourth quarter to $770.3 million, and 13% over the full year to $3 billion.

Mick Farrell, Resmed’s CEO, commented: “Throughout our fiscal fourth quarter we continued to support the COVID-19 pandemic response through increased manufacturing of our ventilators while also supporting our customers with digital health solutions and other innovative tools to enable remote care for patients.” 

In FY20, Resmed’s net operating profit increased 40%, giving NON-GAAP diluted earnings per share of $4.76, up from $3.64 in FY19. But this wasn’t enough for investors, who sent the Resmed share price tumbling last week when results were announced. The share price has fallen 11.7% since results were released with shares currently trading at $24.79 (at the time of writing). But the Resmed share price is still up more than 27% over the past year, so investors are looking at solid returns. 

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) 

Fisher & Paykel Healthcare manufactures products and systems used in respiratory care, acute care, and in the treatment of obstructive sleep apnea. The healthcare company upgraded its earnings guidance early in the pandemic as demand for its respiratory humidifiers and consumables increased. Both are used directly in treating coronavirus patients.

Fisher & Paykel also benefitted from stronger sales in its homecare product range and a weakening of the NZ dollar, leading it to update revenue and profit guidance to $1.24 billion and $275 million–$280 million, respectively.  

Fisher & Paykel’s financial year ended 31 March 2020 with the company exceeding its forecasts. Operating revenue was $1.26 billion, up 18% on the previous year. Net profit after tax was $287.3 million. The increase in revenue was largely driven by demand for products to treat COVID19 patients, as well as strong hospital hardware sales and demand for Fisher & Paykel’s Optiflow nasal high flow therapy. 

“The 2020 financial year was already on track to deliver strong growth before coronavirus impacted sales,” said Managing Director and CEO Lewis Gradon. “Beginning in January, the demand for our respiratory humidifiers accelerated in a way that has been unprecedented.”

By adopting new processes and procedures, the company was able to double, and in some instances, triple, output for some hospital hardware products over just a few months. 

The hospital product group, which includes products in respiratory and acute care, saw operating revenue increase 25%. The homecare product group, which includes products used in the treatment of obstructive sleep apnea and home respiratory support, saw revenue rise 9%.

Fisher & Paykel’s priority is to invest in the business to support long term sustainable growth. Dividends are expected to increase as earnings grow, taking into consideration the company’s target gearing ratio. Investors have been impressed by Fisher & Paykel Healthcare’s growth, sending the share price up 110% over the past year. 

Foolish takeaway 

These ASX shares are directly involved in the fight against coronavirus. From diagnosing the disease to treating its patients, these ASX shares are combatting the pandemic while delivering strong returns to shareholders. 

More reading

• Has the CSL share price lost its ASX 200 market darling status?
• These ASX healthcare shares could be fantastic long term options
• Why CIMIC, oOh!Media, ResMed, & Resolute shares are dropping lower
• These were the worst performing ASX shares last week
• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Investment platform provider CommSec has just released data on the five most traded ASX shares on its platform from last week.

Once again, the list includes two of the most popular buy now pay later providers on the ASX. They were joined by two of the big four banks and a beaten down travel company.

Here’s the data:

National Australia Bank Ltd (ASX: NAB)

National Australia Bank shares were popular with investors last week and were the most traded on the CommSec platform. The NAB share price tumbled 4% over the period, possibly due to a broker notes out of Macquarie. Although the broker downgraded NAB to an underperform rating with a $17.50 price target, there were still more buyers than sellers. NAB shares accounted for 2.1% of total trades on the platform, with buyers accounting for 75% of these trades.

Zip Co Ltd (ASX: Z1P)

This buy now pay later provider continues to be popular with CommSec investors. It was responsible for 2% of all trades on the platform during the week. And although the buying and selling was evenly split, the Zip Co share price pushed 4% higher during the week.

Afterpay Ltd (ASX: APT)

Another buy now pay later provider that remains popular with investors is Afterpay. It accounted for 1.7% of total trades on the CommSec platform last week. However, there were more sellers than buyers, with 59% of trades coming from sellers. Despite this, the Afterpay share price rose 3.15% over the period. This stretched its year to date gain to almost 150%.

Westpac Banking Corp (ASX: WBC) 

Westpac was among the most traded shares for a second week in a row. The banking giant’s shares accounted for 1.6% of trades on the CommSec platform, with 71% of these trades from buyers. Despite this buying pressure, it wasn’t enough to stop the Westpac share price from losing 2% over the period. However, these buyers have been rewarded this week, with the big four banks charging higher on Monday and Tuesday.

Flight Centre Travel Group Ltd (ASX: FLT)

This travel agent’s shares have entered the top five, contributing 1.5% of total trades on the CommSec platform. With 65% of these trades coming from buyers, it appears as though investors may believe recent share price weakness has been a buying opportunity. This has certainly proven to be the case this week. The Flight Centre share price is up 9% week to date at the time of writing.

More reading

• Why this reporting season is different, and now’s a great time for ‘buy to hold’ investors in ASX shares
• Why I would buy and hold Afterpay and Xero shares
• ASX stock of the day: Moneyme share price surges 36% as lender enters buy now, pay later space
• Why Afterpay, Challenger, IVE Group, & Mesoblast shares are dropping lower
• 3 tips for beginners investing in ASX shares

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is having a top day today. On the surface, the 0.88% gain the ASX 200 has so far added today (at the time of writing) doesn’t seem that special. But consider this: with this rise, the ASX 200 is sitting at 6,164.10 points, its highest level since early March. Between 23 March and 9 June, the index rose around 35% off of its low. But since then (over a period of 2 months), the ASX 200 has essentially been stuck in a rut around the 6,000 point mark.

Just take a look at the chart below for some context:

See what I mean?

And yet today, the rut has seemingly been broken. So is the ASX 200 about to take off once again? Remember, although investors have enjoyed some solid gains since March, the ASX 200 is still down around 14% from the highs we saw back in February.

Why are ASX 200 shares surging?

I think there are 2 reasons why ASX shares are moving higher this week (so far anyway).

Firstly, commodity prices have been pushing higher in recent weeks. We have seen iron ore holding around US$117 a tonne, as well as gold making new record highs above US$2,000 an ounce. Some of the ASX 200’s largest holdings are iron ore miners like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).  The ASX’s largest gold miner Newcrest Mining Limited (ASX: NCM) is no minnow either at a near-$30 billion market capitalisation. These companies are all at or near multi-year highs today, which has helped push the index higher.

Secondly, investors now have increased confidence over the government backstop over the economy. The federal government has confirmed subsidies like JobKeeper and the coronavirus supplement are sticking around until at least the end of the year (March 2021 in JobKeeper’s case). Right now, I think it’s fair to say that these programs are holding the economy up, and their previously-scheduled September end date was a concern for many investors. Knowing this safety net will remain in place for at least the rest of the year is helping to boost investors’ confidence, in my view.

Where to from here?

Perhaps the ASX 200 pushes even higher from here, reclaiming the 7,000 point threshold we saw at the start of the year. Perhaps the market retreats tomorrow back into its 6,000 point rut. Frankly, I, nor anyone else, has no idea of what will happen next. Here’s what we do know though. The coronavirus crisis, unfortunately, isn’t going away anytime soon. In fact, it may well get worse before it gets better  (fingers crossed for the negative).

I see a lot of downside risk right now, and not much to make me confident in a huge climb higher. I’m not selling shares of my favourite companies, mind you. But I am trying to maximise my cash position all the same.

More reading

• ASX 200 up 1%: Challenger disappoints, Sydney Airport to raise $2bn, a2 Milk names new CEO
• ASX iron ore miners jump on broker upgrades
• Are ASX lithium shares the next big thing?
• 3 tips for beginners investing in ASX shares
• ASX reporting season reveals some upside surprises

Motley Fool contributor Sebastian Bowen owns shares of Newcrest Mining Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Goodman Group (ASX: GMG) share price gained 14.0% in July. That came during a difficult month for many real estate-focused shares, and a month that saw the S&P/ASX 200 Index (ASX: XJO) gain only 0.5%

Like the vast majority of Australian companies, the Goodman Group share price took a heavy hit from the COVID-19 sharemarket selloff in February and March. Goodman shares tumbled more than 42% from 19 February to 19 March.

Then things turned around for the company. The Goodman Group share price rallied strongly from its 19 March low, gaining 75% by the closing bell on 31 July, trading for $16.93 per share.

Year-to-date, the group’s share price is up an impressive 33%. At the current share price of $17.98 per share, Goodman has a market cap of 32.9 billion.

What does Goodman Group do?

Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil.

The group was formed following the merger of Macquarie Goodman Industrial Trust and Macquarie Goodman Management in 2005. Goodman operates 4 divisions: property investment, fund management, property services and property development.

Today, Goodman Group is the largest real estate investment trust (REIT) in Australia, which makes Goodman shares a favourite of listed property enthusiasts. Goodman shares first listed on the ASX on 2 February 2005. The group now takes its place as one of the largest companies on the Australian sharemarket, with total assets under management of $55 billion across 395 properties globally as of March 2020.

Why did the Goodman Group share price leap 14% in July?

While many REITs have struggled with the pandemic shutdowns, the Goodman Group share price had more than recouped all of its February and March losses, and then some, by the end of July.

Much of Goodman’s share price success is due to the company’s large exposure to industrial properties like warehouses and logistics facilities. The surge in online shopping and delivery services during the pandemic has seen a sharp increase in demand for these facilities. The group counts Amazon.com (NASDAQ: AMZN) as its largest client.

And Goodman Group’s future growth outlook is strong, with $4.8 billion of development work underway.

The Goodman Group share price also received a lift in early in July after analysts at Macquarie Group Ltd (ASX: MQG) named it as one of their best buy ideas for the reporting season currently underway.

More reading

• Why I would buy Goodman Group and these blue chip ASX shares
• 3 core holdings for a $100,000 ASX portfolio
• Buy these outstanding ASX 50 shares for strong potential returns
• 5 things to watch on the ASX 200 on Monday
• 3 coronavirus ASX shares to buy as consumer preferences change

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bernd Struben 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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ASX reporting season is upon us. A handful of companies have already released their full year or quarterly results. But the bulk are yet to come. ASX bank shares will be among those dominating the financial news headlines, particularly when the big four banks release their reports. 

Tomorrow, Commonwealth Bank of Australia (ASX: CBA) releases its full year report. It’s the first of the big four banks to do so.

National Australia Bank Ltd. (ASX: NAB) is up next, releasing its third quarter results on Friday.

Next week, Westpac Banking Corp (ASX: WBC) releases its third quarter report on Tuesday 18 August. Australia and New Zealand Banking Group Limited (ASX: ANZ) follows with its third quarter results next Wednesday.

Avert your eyes!

Why this reporting season really is different

That may seem like odd investment advice. And ordinarily it would be. But these are no ordinary times.

We’re not talking about the trade ructions between the United States and China here, disputes that inevitably envelop Australia. Or the diplomatic wrangling between the United Kingdom and the European Union over who gets to fish where post-Brexit. Or even the nuclear sabre rattling by despots like North Korea’s Kim Jong-un.

Unfortunately, all these events — and a laundry list of others — are very much part of our ordinary times. But the COVID-19 pandemic — and the lockdown measures put in place around the globe to contain it — are not.

Which is why I believe you should take the results from the current reporting season with a very large grain of salt. But don’t just take my word for it.

ST Wong is the Chief Investment Officer of Prime Value Asset Management, which manages more than $1.5 billion in assets. Here’s what he wrote in last Wednesday’s Australian Financial Review:

“Compared to previous years, financial guidance from companies will be less forthcoming, leading to large dispersions in analysts’ estimates for the 2021 financial year. Companies’ cash flows will be distorted by provisions for bad debts, inventory and working capital build-ups. Against this backdrop, companies that demonstrate visibility in earnings growth, strong cash flow conversion, robust balance sheets and management adaptability to change will be bid up”.

And it’s not just companies struggling to forecast their financial outlooks. States and governments are also mired in uncertainty.

In her speech last Friday, the Reserve Bank of Australia’s Assistant Governor, Luci Ellis, outlined the economic ambiguities thrown up by the coronavirus, saying:

“The course of the virus is very uncertain, and so will be people’s responses to it. Given this uncertainty, we have again presented the outlook in the form of three scenarios. The difficult situation in Victoria is an example of how quickly this can change”.

Treasurer Josh Frydenberg concurred, stating, “We’re living in unprecedented times, with a once in a century pandemic, and it’s a very fluid situation”.

‘Invest to hold’

With uncertainty claiming the day — and the coming months — day trading shares has never been riskier.

Traders with cast iron stomachs will tell you that along with that higher risk comes the potential for higher rewards. And that’s true. But that’s not unlike your potential rewards going up when you bet on the long-shot horse winning the Melbourne Cup.

The odds of consistently correctly guessing the next phase of Australia’s battle against the virus —and which shares stand to gain or lose short term — are long indeed.

That’s why The Motley Fool’s own Scott Phillips recommends the ‘buy to hold’ investing style. That’s to discern it from ‘buy and hold’, which traders are quick to criticise as they see that as holding onto every share you buy and never checking in on its performance or outlook again.

But as Scott writes: “In whatever form, using whatever words, the idea of buying great businesses and holding them for as long as it makes sense is a tried and tested approach to investing well. It’s our preferred approach, and one we’re using in our continued quest for market-beating returns”.

With ASX bank shares facing a potential hit during the coming reporting week, some traders will be betting against them by shorting their shares. That may, or may not work out in the short run.

But longer term, you should keep in mind that ASX bank share prices are still well down from their February highs: CommBank’s share price is down nearly 17%; ANZ’s share price is down just under 32%; NAB’s share price is down over 34%; and the Westpac share price is down nearly 31%.

If you have a long-term investing horizon (at least 3 to 5 years), you may want to see how the market reacts to the banks’ upcoming reports, then consider buying shares of what have historically been some of the best dividend paying shares on the ASX.

More reading

• ASX reporting season reveals some upside surprises
• Forget term deposits and buy these ASX dividend shares
• Should you buy CBA shares before the dividend announcement?
• Bank savings rates fall as Buffett racks up record cash pile and analysts tip Qantas share price rebound
• ASX 200 jumps 1.2%: Big four banks rise, Qantas update, Mesoblast surges

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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