Jun.15 — Dawn Soo, head of wellness at Cigna International Markets, discusses the company’s Covid-19 global impact study which studies the impact of the virus on people’s well-being. She speaks on “Bloomberg Markets: Asia.”
from Yahoo Finance https://ift.tt/37tPCZP
Standard and Poor’s announced a big reshuffle to the key ASX indices that could see a number of ASX stocks outperform and underperform in the near-term.
The June quarterly rebalance includes a bigger than normal shake-up of the S&P benchmarks as the March rebalance was held over due to the COVID-19 crisis.
History shows us that index inclusions and exclusions tend to have an impact on the share prices of ASX stocks swept up in the changes.
This seems to be unique to Australian shares and is called the “index effect”. This market anomaly could form a basis for some short-term trades for nimble investors.
The analysts at Macquarie Group Ltd (ASX: MQG) found that the stocks to be included in the S&P/ASX 100 (Index:^ATOI) (ASX:XTO) tend to underperform in the weeks before they are added to the index.
However, these stocks after two-weeks from their inclusion and the broker speculates this is due to selling from small cap fund managers.
Many of these funds have mandates that prevent them from owning stocks in the top 100 benchmark and are forced to sell.
This means the Nextdc Ltd (ASX: NXT) share price and Saracen Mineral Holdings Limited (ASX: SAR) share price could be heading higher soon as they are the latest to be added to the index.
They replace international shopping centre owner UNIBALWEST/IDR UNRESTR (ASX: URW) and miner Whitehaven Coal Ltd (ASX: WHC).
Interestingly, large caps that are dropped from the ASX 100 don’t generally come under much selling pressure, added the broker.
However, the same can’t be said for the S&P/ASX 200 Index (Index:^AXJO).
“S&P/ASX 200 index additions have typically outperformed strongly in the weeks prior to the announcement of the changes,” said Macquarie.
“Stock performance has often peaked prior to implementation date. ASX 200 deletions have traditionally underperformed as they are removed.”
What this means is that it might be too late to buy ASX shares that are about to become part of the ASX 200 club as the index change comes into effect this Friday.
On the other hand, those getting the boot could underperform from next week.
On that note, the six ASX 200 rejects are the ones to watch. These include aged care company Estia Health Ltd (ASX: EHE), investment platform Hub24 Ltd (ASX: HUB), online lottery group Jumbo Interactive Ltd (ASX: JIN), drug maker Mayne Pharma Group Ltd (ASX: MYX), miner Pilbara Minerals Ltd (ASX: PLS) and wealth manager Pinnacle Investment Management Group Ltd (ASX: PNI).
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Macquarie Group Limited. The Motley Fool Australia has recommended Hub24 Ltd. 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.
The post The ASX winners and losers from the latest S&P index shake-up appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2MUYMoC
from Yahoo Finance https://ift.tt/30HkPY1
Stating that every Aussie portfolio should hold ASX blue chip shares is a big call. But that’s how confident I am that the 2 blue chip ASX shares below will continue to be good investments well into the future.
There are no certainties in investing (apart from taxes, of course), but here’s why I think Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and CSL Limited (ASX: CSL) would be the best shares for any ASX investor to buy and hold for the long-term.
Soul Patts is one of the oldest (and bluest) companies on the ASX – it was founded back in 1872 and listed on the stock exchange in 1903. Since then, the company has built an impeccable reputation for quality returns. It invests in a concentrated basket of quality ASX shares, which it aims to hold over the long-term. Right now, these include TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC). It has used this portfolio to pay a dividend every year since its inception, which includes the duration of the Great Depression and both World Wars. Soul Patts is also the only company that has delivered 20 years of uninterrupted dividend increases to its shareholders.
This ASX blue chip share won’t make you rich overnight, but I think it’s an essential share to own for any investor that desires a strong and robust long-term portfolio.
CSL shouldn’t be a stranger to any ASX investor these days. This asx blue chip share has managed to blow past all 4 of the ASX banks over the past 5 years to claim the crown of the ASX’s largest company. Today, CSL is a global blue chip healthcare giant, with two cutting edge divisions (Behring and Seqirus) that dominate the blood plasma and vaccine spaces respectively. Part of CSL’s success story is the focus the company has on Research and Development (R&D), which it invests heavily in every year. This long-term focus has been (and I think will continue to be) the secret to CSL’s remarkable success.
CSL resides in an evergreen industry, is still growing at a healthy rate, and has started paying a rapidly rising dividend. As such, I think CSL will continue to be a fantastic investment to hold for the long-term, and (I think) has a place in every ASX investors’ portfolio.
For some more shares you might want to consider today, don’t miss the free report below!
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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.
The post 2 ASX blue chip shares I think every portfolio should hold appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/37voBVH
from Yahoo Finance https://ift.tt/2UI3FWm
Between mid-February and late March, shares in SEEK Limited (ASX: SEK) fell by around 50% to $11.95. However, since then, SEEK has managed to regain most of this share price decline. The SEEK share price is currently trading at $19.29.
During the initial period of the coronavirus pandemic, investors became spooked due to the sharp fall-off in listing volumes. Billings were down by up to 60% during the week ending 29 March, across all regions.
However, lockdown restrictions are gradually easing across Australia and New Zealand. This is leading to increased investor confidence and rising ad volumes. Investors are becoming increasingly optimistic that the worst of the pandemic is now behind us.
Is the SEEK share price a buy right now?
New job ads on SEEK are still down significantly on what they were during February and early March, before the full impact of the pandemic hit. However, there are early signs of job ad volume recovery. In SEEK’s latest employment monthly snapshot it revealed that new job ads posted on the Aussie employment platform during the fortnight ended 7 June, were up by a very sharp 60.6%. This represented a further increase on the previous three fortnights of 26.8%, 39.7% and 49.2% respectively.
The Australian market is bouncing back from the pandemic much faster than anticipated in late March. Australia and New Zealand have been two of the most successful countries globally in containing the coronavirus outbreak.
Sectors which are seeing strong growth over the past month in Australia include trades and services, healthcare and medical and hospitality and tourism. In addition, manufacturing, transport and logistics and education and training are all starting to see stronger demand.
July also looks promising. Job ad volumes have historically tended to ease off towards the end of the financial year (i.e. the end of June). July and August tend to then see an initial boost as hirers reaffirm their budgets.
Lockdown restrictions appear set to be further eased across Australia over the coming months. There also continues to be strong encouragement by the Australian Government for people to return to work. I think that it’s looking increasingly likely that employment ad volumes will continue to improve significantly over the next few months for SEEK. That is assuming there isn’t a second wave of the pandemic.
SEEK’s second biggest market, New Zealand, also looks set to follow a similar path towards recovery.
From a long-term perspective, I believe SEEK appears to be well positioned for continued growth in revenue and profitability. It has an entrenched and dominant position in its local Australian market and is also continuing to grow its international presence.
While SEEK’s share price has bounced back since late March, it is still well below the 12-month peak it saw in late January.
I therefore believe that the SEEK share price offers investors a reasonable buying opportunity right now.
In light of this, two other online classifieds ASX shares you might want to look are: Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA).
For more shares we Fools think represent solid buys in the current market, check out the following report.
One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.
Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
Motley Fool contributor Phil Harpur owns shares of carsales.com Limited, REA Group Limited, and SEEK Limited. The Motley Fool Australia has recommended carsales.com Limited, REA Group Limited, and SEEK 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.
The post Is the SEEK share price a buy right now? appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2UI00b4
If you’re on the lookout for dividend shares for your retirement portfolio, then I think the three listed below could be worth considering.
All three have qualities that I think are attractive for retirees in search of both growth and income. Here’s why I would buy them:
The first ASX dividend share that I think retirees ought to consider buying is BWP. It is a real estate investment trust with a focus on commercial properties. The majority of the company’s assets are large format retailing properties which are leased to Wesfarmers Ltd (ASX: WES) operated Bunnings Warehouse. I think this is a great tenant to have and the risk of rental defaults and store closures is low in comparison to other areas of the retail sector. In light of this, I believe BWP is well-positioned to continue growing its income and distribution at a solid and predictable rate for a long time to come. I estimate that BWP will pay investors an 18.5 cents per share distribution in FY 2021. This means that its shares currently offer a forward 4.9% distribution yield. I believe this is very attractive for income-focused investors in this low interest rate environment.
Another dividend share to consider buying is Goodman Group. It shares may not offer the biggest yield, but I believe the integrated commercial and industrial property group could still be a top option for retirees. I estimate that Goodman will pay a distribution of approximately 32 cents per share in FY 2021. This represents a modest forward yield of approximately 2.2% based on its current share price. However, given its exposure to the structural tailwinds of the ecommerce market, I believe this distribution could grow strongly over the next decade and drive solid total returns for investors.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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.
The post 2 of the best ASX dividend shares for retirees to buy today appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/37sEcWc
The Ardent Leisure Group Ltd (ASX: ALG) share price is bouncing around today following news that the entertainment company has sold a stake in its Main Event business in the US.
Investors initially reacted positively to the news, sending Ardent shares flying 20.41% in early morning trade. However, it appears sentiment has turned, with the Ardent Leisure share price now trading 4.08% lower at the time of writing.
As its name suggests, Ardent is in the business of leisure and entertainment. It is the owner and operator of Gold Coast theme parks Dreamworld and WhiteWater World. And over in the US, Ardent owns a portfolio of family entertainment assets under the Main Event brand. Main Event offers activities like bowling, laser tag, and arcade games across 44 locations throughout North America.
This morning, Ardent revealed that US-based private investment firm, RedBird Capital Partners, will invest US$80 million to acquire a 24.2% interest in Main Event Entertainment.
The transaction values Main Event at an implied enterprise value (EV) of US$424 million and an EV/EBITDA multiple of 8x based on CY19 adjusted EBITDA.
As part of the transaction, RedBird has also been granted an option to acquire an additional 26.8% interest in Main Event at a future date. The option is exercisable between July 2022 and July 2024. Valuation will be based on normalised pro forma EBITDA at the time of exercising the option, subject to a minimum equity floor price.
According to Ardent, RedBird’s invested capital will be used exclusively to support Main Event. The funds provide Main Event with the financial support and flexibility to adapt to the current challenging macro environment. What’s more, the transaction provides Ardent with potential capital in the future in the event that the option is exercised.
The company noted there are no conditions to the transaction, nor shareholder approval. Therefore, the initial investment is expected to settle on 15 June 2020.
Along with the transaction news, Ardent revealed that Main Event has secured support from its lenders, including near-term covenant relief. It also stated that 28 of 44 Main Event centres have reopened following COVID-19 restrictions.
Commenting on the deal, Ardent chair Dr Gary Weiss said:
“We are excited by this new partnership with RedBird which not only reinforces Main Event’s financial strength and liquidity, but also provides a value-added strategic partner who can help drive the Company’s growth and expansion plans in the United States.”
Meanwhile, Gerry Cardinale, managing partner of RedBird, said, “we have witnessed firsthand Main Event’s growth as a leading brand in a resilient and fast growing family entertainment market. RedBird’s focus on building high-growth companies in sports and entertainment and expertise in delivering premier content to consumers will be highly complementary to the Main Event platform as it looks to expand throughout the country.”
One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.
Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
Motley Fool contributor Cathryn Goh 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.
The post Why the Ardent Leisure share price is on the move today appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2Y1i2ad
I’m a big believer in taking small actions to help frame your mindset for larger ones. Whether it’s making your bed in the morning or starting your week off reading quotes from Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) Warren Buffett, I find small successes can feed into large ones.
Of the above examples, I’m more of a fan of the latter (although I find no issue with a made bed). Buffett is not only one of the greatest investors of all time, but he’s also one of the best investing educators. I think all ASX investors can learn something from a man with such an interesting and successful life.
So drawing from the comprehensive list of Buffett quotes that our Fool colleagues over in the US have knocked up, here are 3 Warren Buffett quotes to help you start your week off right!
This is a quote I love, especially its opening line, “I never attempt to make money on the stock market”. Buffett sees making money only as a consequence of successful investing – you get the horse right and the cart follows.
Viewing ASX shares through this mindset is a great way to think about investing in my view. Too often, hopeful investors get distracted by the day-to-day ructions of the share market and forget that real investing, Buffett-style, is about acquiring ownership of quality companies – not trading ticker symbols.
If you truly want to adopt this mindset, try imagining holding your ASX shares for the next 5 years and assess how comfortable it makes you!
Too often, people are put off from investing in shares because they think it’s something only ‘smart people’ do. But Buffett disproved this notion with just one line here, highlighting that successful investors are more likely to be emotionally detached than smart.
As Warren Buffett rightly points out, most aspiring investors slip up by acting with emotion – either selling their shares in a market crash out of fear, or buying overvalued shares out of greed. Mastering these emotions is the best way to invest successfully, not by getting 5 PhDs from university.
Here Buffett is talking about the importance of buying companies that invest their cash prudently and aim to never be caught short. The only thing that can really bankrupt a company is debt, at the end of the day. And no one really cares about debt until there’s a crisis. A company’s cash levels and debt burden should be the first things you look at when assessing a potential investment.
I also think this quote can be translated into your own cash position. Right now, the S&P/ASX 200 Index (ASX: XJO) is motoring along just fine. But if there happens to be another market crash in 2020, you’ll regret not putting aside some cash for any ASX shares that might go on sale.
For some more shares you should take a look at for this week, don’t miss the report below!
One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.
Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
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 Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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.
The post 3 Warren Buffett quotes to start your week off right appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2XZQaU8
I keep getting the same question, and hearing the same comments, from amateurs and professionals alike.
“How can shares be up, when the economy is still struggling?”
It is, on the surface, a reasonable, even sensible question.
But it misunderstands both the economy and the sharemarket on two fundamental levels.
First:
Humans tend to think market falls are almost always justified, but rises are to be viewed with scepticism.
To wit:
Few people say “The S&P/ASX 200 Index (ASX: XJO) shouldn’t be at 5,812 points!”
They say “How can the market be up 28%???”
Again, a reasonable question on the surface. But it misses one fundamental point:
Up 28% from where?
See, the starting point matters.
If you’re going to ask “Should the market be up 28% from March 23?”, logic dictates that you have to also ask “Should the market have fallen 38% in the first place?”
Let’s simplify it:
Should someone increase their bodyweight by 5%?
You’re already instinctively saying “It depends where you started”.
Fair to say I’m not as svelte as I should be. Today, putting on 5% of my bodyweight would be a bad idea.
But in November 2018, after spending a couple of weeks with severe pneumonia, I left hospital at 68kg. Putting on 5% of my bodyweight at that point was a very good idea.
See, the starting point matters.
Should the ASX be up 28%? No-one can say for sure.
But at the same time, you can also ask: “Should the ASX be down 13% for the year?”.
Because both are true: We’re down 13% since December 31 AND we’re up 28% since March 23.
Let’s take another lens:
What if, instead of falling 38% between Feb 20 and March 23, the market had fallen 50% or 70%? Or if it was actually UP 10%.
A subsequent 28% gain from any of those points would have us in a very different position today.
So ‘up 28%’ is all-but useless as a basis for assessment.
Actually, scrap that. It’s not ‘all-but’ useless. It’s completely bloody useless.
If you hear anyone talk about it, without putting it into context with either prior falls and/or some sort of P/E ratio (or similar), you should probably ignore them.
They’re falling into a simple but dangerous trap: assuming some arbitrary past point was an accurate basis for comparison.
It’s understandable (but wrong) for amateurs. It’s all but unforgivable for the pros.
… yet it’s still only half of the ways in which people misunderstand the situation we’re in.
The second is conflating the economy and the stock market.
Or, more specifically, conflating current share prices and current/recent past economic data.
Let’s start by looking at shares.
If you buy shares in, say, Woolworths Group Ltd (ASX: WOW) today, I assume you’re doing it for a couple of reasons:
First, I assume you think it’ll continue to make money in future (buying shares in a company you expect to go bankrupt would be a strange way to try to make a quid).
Second, I assume you want to get a share of those future profits by way of dividends, and a rising share price.
Notice both of those sentences have the word ‘future’ in them?
See, here’s the thing: If you bought Woolies on the day the ASX hit its 2020 highs, you’d have paid around $43 per share.
But this year’s earnings will probably be somewhere around $1.30 per share, and they’ll pay out around $1 in dividends.
I don’t know about you, but I’m not paying $43 to get $1 back.
If my investment in Woolies is to work out, they have to keep earning profits well into the future, ideally increasing over time.
How far into the future? Well the algebra is painful unless you’re a nerd, but essentially into eternity, but we (rightly) care more about today’s earnings than profits in the year 2084, so we ‘discount’ those to allow for the fact we have to wait so long.
Let’s say you want a 10% annual return, and Woolies will earn $1.30 each year.
Right now, in the first year of our investment, $1.30 is worth, well, $1.30.
In year 2, we discount that $1.30 by our 10% requirement and say “$1.30 in a year’s time is worth $1.17 to me today ($1.30 minus 10% ($0.13) = $1.17.).
In year 3, the $1.30 we’ll get is worth $1.05, and so on.
We add it all up and — in a perfectly efficient market — we’d get to the $36 share price.
But here’s where we need to compare the present and the future.
Yes, the economy is in recession. Unemployment may well peak at over 10%. Things — right now — are grim.
And let’s say Woolies’ profit gets completely wiped out by COVID-19. It won’t, of course, but let’s pretend.
And let’s say that it goes back to normal in 2021.
How much less should we pay for Woolies shares?
Using the maths above, we know Woolies was selling for $43 in February.
And if we’re not earning anything this year, we’ll miss out on our $1.30.
But next year’s earnings will still come in, as will every year after that.
If the full future earnings added up to $43, then taking out this year’s earnings (only) means we should only want to pay $41.70 ($43 – $1.30).
The shares should have fallen by 3%.
Okay, let’s say we’re really, really pessimistic. Let’s say it doesn’t make money in 2020 OR 2021.
Now the shares should sell for $43 – $1.30 – $1.17 (the discounted value of the second year’s profits).
So now we’ll pay only $40.50.
And, hey presto, today Woolies shares are selling for…
No, not $40.50.
Around $36.
Huh?
Exactly.
Now, as I said before, there’s no reason why the February 20 price was ‘right’, and the current price is ‘wrong’.
As I wrote last week, the market doesn’t know what it’s doing, either.
But a fall of 38% in share prices from Feb 20 to March 23 would have meant somewhere around 5 years of profits being wiped out.
A pandemic is bad, but 5 years? I don’t think so.
Which brings me back nicely to my point:
Yes, the economy is in a funk. It might take months — maybe even a year or two — to get back to normal.
And yes, that’s awful for the people and businesses involved.
But the share market isn’t (completely) stupid.
If you think Woolies was worth $43 in February, even in a worst case scenario where two years worth of profits go down the drain, it’d only be worth 10-15% less, because share prices — by their very nature — are the sum total of not just 2020 and 2021’s profits, but of every year from here on!
Get it?
Even if the market expects the next couple of years to be terrible, there was almost no logical reason — short of huge numbers of ASX companies going broke — for a fall approaching 40%.
Yep, markets overreact. It’s what they do, and what makes investing so emotionally taxing.
But if they’re going to overreact, it’s almost perfectly logical that we see decent-sized gains when it wakes up to itself.
That doesn’t always happen quickly, of course — no-one predicted the speed of this recovery.
But it’s why I was saying — during and after the worst of the falls — that I expected long-term investors to do well, buying quality companies (or an index-based ETF) at those levels.
More falls ahead? Maybe. No idea. (No-one else knows either).
After all, if the market can emotionally overreact by that much, why would you pretend you knew what it was going to do next.
Instead, looking out long term, Australia’s listed companies will do just fine. Economic activity will, I’m almost certain, return to pre-pandemic levels. I expect company profits to do the same.
(I’m not allowed to express things as certainties under ASIC rules, and that’s fair enough. But my entire wealth outside our home and cars is in the stock market, so I’m walking the talk.)
Should the market be up 28% from its lows? Because it’s an arbitrary number with no justification of the ‘then’ or ‘now’ valuations, the only answer is a casual shrug of the shoulders.
But what should be clear, by now, is that there’s no reason shares should be thrown out with the bathwater, just because the economy is currently in a rough patch.
Let’s put it another way, to finish off:
If I owned a cafe that was making $1,000 a week in profit in January, should I sell that cafe today for 40% less, just because last week’s profits were $600?
Of course not, because the customers will return, and I’ll be back making maybe $900 or $950 a week in a few months’ time.
Yet that’s what the stock market did with shares in March, and why, when it comes to its senses, we see share prices recover, even though the economy is still struggling.
Fool on!
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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.
The post Shares up? Haven’t you seen the economy? appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2B6Ip5J