Stock Pick

  • Zoom Says China Asked It to Censor Pro-Democracy Activists

    Zoom Says China Asked It to Censor Pro-Democracy Activists(Bloomberg) — Zoom Video Communications Inc. said it deactivated accounts of pro-democracy Chinese activists based in the U.S. at the request of China, intensifying concerns that Beijing is extending its censorship clout globally.Chinese officials reached out to Zoom in May and early June about four videoconference calls that were publicized on social media to commemorate Tiananmen Square protests, the San Jose, California-based company said Thursday in a blog post. Zoom said that China “demanded” the company terminate the meetings and host accounts because of the activity, which it deemed illegal.Zoom said that at least three of the four meetings contained participants from mainland China, and it made the decision to end three of the meetings and terminate the associated accounts, two in the U.S. and one belonging to an activist in Hong Kong. “Going forward Zoom will not allow requests from the Chinese government to impact anyone outside of mainland China,” the company said.Zoom announced Wednesday it had reinstated the closed U.S. accounts, and said it was working on technology that could prevent participants from specific countries from joining calls that were deemed illegal in those areas. The company will also outline a new policy to address these types on requests on June 30.Beijing employs some of the strictest internet controls in the world, rooting out content and blocking websites it deems a threat to stability. It has scaled up the level of censorship in the years since President Xi Jinping came to power, expanding controls on social media, requiring real-name registration of accounts, criminalizing the spread of rumors and punishing influential commentators with millions of followers.While China’s Great Firewall blocks access to internet sites such as Google, Facebook and Twitter, more of its 1.4 billion citizens are turning to home-grown alternatives such as WeChat and Weibo to express their discontent. Controls have become even more stringent this year, after the coronavirus outbreak unleashed a rare outpouring of criticism of China’s government. Internet controls also typically intensify ahead of major political events or other dates deemed sensitive such as the June 4 anniversary of the deadly student protests in 1989.‘Consider the Consequences’Now the fear is that China is increasingly bringing its desire to control internet activities beyond its borders to control its citizens and corporations. For companies that want to conduct business in China, the message is clear: Actions that harm China’s interests have implications. Wang Sixin, a professor at the Communication University of China, said tech companies that have operations in China and rely on its market will “need to respect China’s laws, ethics, political correctness and local people’s feeling.” For Zoom, that also applies, regardless of where the virtual meeting takes place, he said.“China, after all, has a huge market, and we now have measures to counter such actions that are harmful to China,” Wang said. “This is not to say we’re using the market size to bully them. But the companies need to consider the consequences of their actions.”“Google, Facebook and Twitter all have hurt Chinese people deeply in the past, and they are still doing that during the pandemic, limiting accounts of Chinese diplomats, and China has kept a record of them,” he added. “They can do what they like, but there would be consequences when they or their related businesses want to expand in China.”In another move that came to light Thursday, Apple Inc. removed two podcast applications from its App Store at the request of the Chinese government. Google pulled its search engine from mainland China in 2010, citing security and censorship concerns. A Google project to create a censored search service for the country, called Dragonfly, was killed last year after protests from employees and U.S. politicians.‘Pick a Side’Zoom, which maintains a significant research-and-development workforce in China, is now in the middle of the clash between free speech and government censorship that has confronted other U.S.-based technology companies doing business, or trying to conduct business, in China. Chief Executive Officer Eric Yuan was born in China, but is a U.S. citizen.The company’s actions stoked worries that the tech company, which has risen to prominence while millions have been stuck at home during the pandemic, was too close to Chinese authorities who have sought to censor images and content about the 1989 protests and resulting massacre in Beijing. The event is a seminal moment for advocates of democracy in China.U.S. Senator Josh Hawley, a Republican from Missouri, wrote Yuan Thursday, stating that Zoom was not the first U.S. company to censor users in order to do business in China, but in the end, the Chinese Communist Party would benefit more than the appmaker.“It is time for you to pick a side: American principles and free speech, or short-term global profits and censorship,” he wrote.Universities, big corporations and other users of Zoom during the pandemic will need to consider how much information the company is collecting and whether there is “any bad faith activity with that information after its been captured and collected,” said Michael Norris, Shanghai-based analyst with AgencyChina. “All of this reinforces the extraterritoriality of China’s censorship apparatus.” (Updates with context on China censorship in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • 3 ASX shares I’d buy if the market hits 23 March levels again

    calendar with 23 March highlighted

    23 March 2020.

    That’s the day the S&P/ASX 200 Index (ASX: XJO) found its bottom for the year so far. On that fateful day, the ASX 200 descended below 4,500 points before finishing the day at 4,546. That’s a long way from the levels we see today (even after the savage sell-off). But this dip was so quick if you blinked, you probably would have missed it. The next trading day, shares were back up and the rest is, as they say, history.

    But sometimes history repeats itself – or at least rhymes.

    So if we do see an ASX 200 back at the levels we saw on 23 March, I will be buying shares, no question. But which ones? Well, these 3 are on my wishlist for the prices they were offering 2½ months ago.

    Afterpay Ltd (ASX: APT)

    Afterpay hit the unbelievable share price of $8.90 on 23 March – a lightyear away from its current share price of over $50. Yep, that’s right, anyone who won the lottery by buying Afterpay on this date would be sitting on an almost 500% gain today. That’s not bad for a couple of months’ work. I think this company is one of the most exciting and disruptive companies on the ASX (and maybe even in the world). If the Afterpay share price got back to single digits, I wouldn’t hesitate to back up the truck.

    WAM Research Limited (ASX: WAX)

    I love locking in a solid dividend yield, and WAM Research is known for exactly that. On current prices, this company is offering a hefty 7% dividend yield, complete with full franking credits. However, WAM Research dipped to around 94 cents per share on 23 March – which would have enabled a lucky investor to lock in the far more preferable yield of 10.4%. That’s a yield I couldn’t say no to, and so WAM Research shares will be at the top of my watchlist if the ASX dips once again.

    Newcrest Mining Limited (ASX: NCM)

    Newcrest is the ASX’s largest gold miner and a great way to get some indirect exposure to gold through ASX shares in my view. I think there is a strong bull case for the yellow metal over the coming years. With central banks around the world lowering rates to zero and printing massive amounts of money to counter the economic effects of the coronavirus, I think there will be a high demand for tangible (and unprintable) assets like gold in the years to come.

    On 23 March, Newcrest shares dipped down to $21.06. Given that they’re over $30 today, I think it would have been a great move to pick up some Newcrest shares then. It’s a mistake I won’t make again if the ASX gets back to 23 March levels.

    For some more ASX shares you might want to check out if the market falls, take a look at the report below!

    3 “Double Down” stocks to ride the bull market higher

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has identified three stocks he thinks can ride the bull market even higher, potentially supercharging your wealth in 2020 and beyond.

    Doc Mahanti likes them so much he has issued “double down” buy alerts on all three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    See the Double Down Stocks

    *Extreme Opportunities returns as of June 5th 2020

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    Sebastian Bowen owns shares of Newcrest Mining Limited and WAM Research Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. 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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  • Why the Lovisa share price is at risk of falling further over the coming weeks

    Lovisa shares

    The Lovisa Holdings Ltd (ASX: LOV) share price tumbled on Friday along with its peers, but the costume jewellery retailer may continue to lag ahead of its profit results in August.

    This is the prediction from Morgan Stanley who’s warning that there is a 70% to 80% chance the Lovisa share price will fall over the next 60 days.

    The bearish prediction stands in contrast to the recent re-rating of ASX retail stocks as Australia emerges from the COVID-19 shutdown.

    Retail re-rating

    Some retailers like JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) have benefitted from increased demand for IT equipment and electronics from stuck-at-home consumers.

    Meanwhile, other retailers like Baby Bunting Group Ltd (ASX: BBN) and Kathmandu Holdings Ltd (ASX: KMD) have experienced a spike in online sales.

    The sector also got a boost on news that the economic fallout from the coronavirus pandemic isn’t half as bad as what experts were predicting.

    Left behind

    But Lovisa may be among the worst placed retailers to benefit from these tailwinds. Morgan Stanley sees near-term risk to its share price as its store rollout in the US, UK and France may take six to 12 months to ramp up again.

    This is significant as new store openings in those key markets are a major earnings driver for the group.

    But these countries are having more trouble than Australia in flattening the coronavirus curve. The US may be particularly hard hit on fears of a second wave of infections as the number of Americans catching the virus surpassed two million.

    All glammed up and nowhere to go

    This may not be the only thing to weigh on Lovisa’s share price. Morgan Stanley doesn’t think the small cap retailer will benefit so much from the rebound in consumer spending in Australia.

    The reason is social events like weddings are a big driver for jewellery demand and there are still strict limits on the number of people who can attend such gatherings.

    Disconnected from online sales

    Finally, Lovisa may not benefit significantly from the big shift to online shopping because the company doesn’t have a strong presence in this channel, explained Morgan Stanley.

    If the broker is right, the company’s full year result announcement in August may be a sombre affair!

    Morgan Stanley’s recommendation on Lovisa is “equal weight” (equivalent to a “hold”) and its price target on the stock is $6.50 a share.

    If you are looking for ASX shares to buy during the market volatility, you might want to read this free report from the experts at the Motley Fool.

    They’ve picks some of their best buy now stock ideas. Click on the free link below to find out what they are.

    5 ASX stocks under $5

    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!

    Learn More

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Brendon Lau 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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  • 3 defensive ASX shares to buy if the sell-off continues

    group of business people in a panic, asx shares

    The S&P/ASX 200 Index (ASX: XJO) seems to have had a rather dramatic mood swing. After some great gains early in the week, both Thursday and Friday have seen massive sell-offs, pushing the ASX 200 decisively back below 6,000 points.

    With the global economy and the coronavirus pandemic still in very fluid situations, next week might well see the sell-off of ASX shares continue.

    So with this in mind, here are 3 ASX shares that I think have defensive qualities and should be an asset to any portfolio if the sell-off continues next week.

    Transurban Group (ASX: TCL)

    Transurban is a gigantic owner and operator of tolled roads and motorways across Australia and North America. Transurban’s monopolistic grip on the roadways of our major capital cities is inescapable – both as a motorist and as an investor. Yes, Transurban did see a massive collapse in road usage during the height of the lockdown period over March and April. But I think with restrictions easing, this company will continue to bounce back and remain a great investment for the long-term.

    BHP Group Ltd (ASX: BHP)

    Miners are not normally my ‘go-to’ for a defensive holding. But I think the unique circumstances 2020 has brought us has changed the game somewhat. Commodity prices have held up remarkably well over the coronavirus pandemic. Chief amongst those has been iron ore, which has topped US$100 per tonne in recent weeks. Thus, I think a diversified commodity play like BHP is a prudent investment going forward. It’s one of the largest miners in the world, is diversified across coal, iron, copper and oil, and has some of the lowest extraction costs in the business. Therefore, I don’t think you can go wrong with Broken Hill Proprietary if the markets sell-off once more.

    Metcash Limited (ASX: MTS)

    Metcash is often overlooked for its larger rivals Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW). But I think this perpetual underdog is a great defensive investment if there is another ASX sell-off. Not only does it own the IGA network of grocers, but it also has in its stable hardware chains Mitre 10 and Home Timber & Hardware.

    Both grocers and hardware stores have seen increased consumer spending during the coronavirus lockdowns, and I see these trends continuing well into the future. As such, I think Metcash is another great defensive share to look at if the ASX does indeed continue to shed value next week.

    For some more shares you should take a look at for next week, don’t miss the report below!

    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.

    See the Double Down Stocks

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and 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.

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  • Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy

    investing, fund manager

    Despite the falls we have seen today, the S&P/ASX 200 Index (ASX: XJO) has still had a remarkable month and is up 7.8% over the past 4 weeks.

    This is in no small part due to the ongoing easing of restrictions related to the coronavirus pandemic. Australia’s success so far in containing the disease is enabling the economy to slowly return to ‘normal’, which is obviously great news for ASX companies.

    So with the coronavirus still looking to be the major market mover in 2020, it makes sense to position your portfolio accordingly. That’s what the fund managers at Spheria Asset Management are looking at anyway. Spheria runs a micro-cap fund that returned more than 15% in April – so I reckon we should at least have a look at what they’re doing.

    Spheria’s top 4 ASX picks

    In its April update, Spheria named 4 ASX picks for a COVID-19 recovery.

    First off, we have G8 Education Ltd (ASX: GEM). Spheria notes that childcare providers like G8 have benefitted enormously from the government offering free childcare over the last few months. Although this support is scheduled to end soon, it’s still likely to have residual benefits for G8. The fundies also note that due to the successful capital raising G8 recently undertook, the company has fortified its balance sheet for the rest of the year.

    Next, we have Ardent Leisure Group Ltd (ASX: ALG). Ardent runs a portfolio of theme parks including Dream World and WhiteWater World. Obviously, this company struggled immensely with the coronavirus outbreak with its parks forced to shut down. But Spheria thinks there is a lucrative potential recovery to be harnessed here, once restrictions are lifted and business can start to return to normal.

    Village Roadshow Ltd (ASX: VRL) is next cab off the rank here. This company is another theme park operator, which owns Movie World, Sea World and Wet’n’Wild. Clearly, Spheria is making another bet on the easing restrictions, with Village Roadshow likely to benefit from the same potential tailwinds as Ardent Leisure. The fund notes that any increase in domestic tourism as a result of bans on international travel will likely benefit these 2 theme park operators as well.

    Finally, we have Vista Group International Ltd (ASX: VGL). Vista provides exhibition software to cinemas – another industry that has been hit hard by the coronavirus restrictions. As people start returning to movie theatres around the country, Vista Group is an obvious beneficiary. Spheria is going for a value play on this one, noting it is priced well below its software-based peers when compared to its revenues (even if they don’t return to pre-COVID levels).

    Foolish takeaway

    Although we should never take fund managers’ picks as investment advice, it’s always interesting and illuminative to check out what ‘the professionals’ are buying!

    On that note, you should check out the report below before you go!

    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.

    See the Double Down Stocks

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Vista Group Intl. 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 200 falls 1.9%, big 4 ASX banks retreat

    ASX 200

    The S&P/ASX 200 (ASX: XJO) fell by 1.9% today. Overnight the Dow Jones Industrial Average (DJI) fell by 6.9% on fears of a second wave of COVID-19.

    This week the Federal Reserve boss Jerome Powell said: “This is going to take a whole lot of time. There are just a lot of people that are unemployed and it seems quite likely there will be a significant group, even after a lot of strong jobs growth, that will still be struggling to find jobs.” 

    But there was some good news for Australians today. The federal government has announced it’s working on rules with the states to allow stadiums with 40,000 seats to hold crowds of up to 10,000 people. Bigger stadiums could be allowed to fill a quarter of the seats. These changes could come in July.

    Major ASX banks retreat

    The share prices of each of the big four ASX banks went backwards today.

    The Commonwealth Bank of Australia (ASX: CBA) share price dropped 1.2%, the Westpac Banking Corp (ASX: WBC) share price fell 3.1%, the Australia and New Zealand Banking Group (ASX: ANZ) share price declined 2.8% and the National Australia Bank Ltd (ASX: NAB) share price dropped 2.2%.

    However, they remain higher than where they were a month ago. 

    Big falls in the ASX 200

    Thankfully the ASX 200 actually recovered some lost ground – it was down over 3% this morning. However, whilst some shares like Afterpay Ltd (ASX: APT) managed to reverse the decline, others ended the day down heavily.

    The Platinum Asset Management Ltd (ASX: PTM) share price went down 12%.

    The oOh!Media Ltd (ASX: OML) share price dropped 9.8%.

    Southern Cross Media Group Ltd (ASX: SXL) saw its share price decline 9.1%.

    ASX 200 engineering business Monadelphous Group Limited (ASX: MND) suffered a share price decline of 8.9%.

    The Unibail-Rodamco-Westfield (ASX: URW) share price went down 8.8%.

    Zip Co Ltd (ASX: Z1P) announces May 2020 trading update

    The buy now, pay later (BNPL) ASX 200 business said that it grew its monthly revenue to $15.6 million, an increase of 78% year on year. Zip’s monthly transaction volume increased by 63% to $189.3 million.

    Zip said its receivables figure was up 85% compared to a year ago to $1.2 billion.

    Customer and merchant numbers were also up by a significant amount. Customers increased by 63% to 2.1 million. It added 65,000 new customers over the course of the month. Merchant numbers increased by 46% year on year to 23,600.

    In terms of net bad debts and monthly arrears, the ASX 200 said it was doing very well. Net bad debts of 2.16% were in-line with management expectations, Zip said this significantly outperformed the market. Monthly arrears reduced from 1.57% in April to 1.47% in May. Monthly arrears are seen as a forward indicator of future losses.

    The ASX 200 business said that customer repayment success rates are higher or on par with pre COVID-19 rates. Monthly repayments as a percentage of opening receivables increased to 16%, up from 15% in April.

    Pleasingly, there has been no material change to the number of requests for hardship assistance, which peaked at the end of March 2020 at less than 0.08% of receivables.

    Zip reminded investors of the acquisition of QuadPay. Management are looking to accelerate Zip’s global expansion strategy. Zip also re-iterated to investors it has reached an agreement to raise up to $200 million from US-based Susquehanna International Group to further drive growth.

    The Zip managing director and CEO Larry Diamond said that the BNPL business remains on track to hit its FY20 target of $2.2 billion in annualised transaction volume set at the beginning of the year.

    5 ASX stocks under $5

    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!

    Learn More

    *Extreme Opportunities returns as of June 5th 2020

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    Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended oOh!Media 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.

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  • 2 ASX ETFs I would buy for diversification and strong long term returns

    silhouette of person holding world above head

    If you’re looking to add a bit of international exposure to your portfolio, then it is remarkably easier than you might think.

    This is thanks to the emergence of exchange traded funds (ETFs). Through just a single investment, ETFs can provide investors with exposure to a wide range of international indices and themes.

    Two ETFs that I think would be great additions to a balance portfolio are listed below:

    BetaShares NASDAQ 100 ETF (ASX: NDQ)

    If you’re a fan of tech shares then you might want to look at the BetaShares NASDAQ 100 ETF. This ETF gives investors exposure to the 100 largest non-financial shares on the famous NASDAQ index. Among its biggest holdings you’ll find tech giants Apple, Microsoft, Amazon, Facebook, and Google. Whereas some of its smaller holdings include online conferencing company Zoom, Chinese search engine giant Baidu, and eBay. On the whole, I believe the majority of companies on the NASDAQ 100 are well-placed to grow at a quicker than average rate. This could drive strong returns for investors in this ETF.

    Vanguard US Total Market Shares Index ETF (ASX: VTS)

    Another option to consider buying is the Vanguard US Total Market Shares Index ETF. If you want a more balanced ETF with less of a focus on tech shares, then this ETF could be the one for you. It provides investors access to approximately 3,500 shares listed on the U.S. stock market. While this means it gives investors exposure to many of the tech giants listed above, it also gives investors access to blue chips such as Berkshire Hathaway, Johnson & Johnson, Proctor & Gamble, and Visa and Mastercard. And as many of these companies pay dividends, it also provides investors with a source of income. At present the ETF offers a trailing 2% dividend yield.

    And here are more exciting shares which could be stars of the future…

    5 ASX stocks under $5

    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!

    Learn More

    *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 and has recommended BETANASDAQ ETF UNITS. 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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  • Down 20% in 7 trading hours… Worse to come?

    jumping

    “If we as a society stopped and thought about it for a minute, we’d blow the whole finance industry up.”

    That was me, talking to a good mate this morning.

    (And because we live in reactionary, call-out times, let me be clear I’m talking metaphorically and holistically — I’m clearly not suggesting actual explosions or harm!)

    With that out of the way, back to my point.

    My mate called me to laugh about the recent bout of market volatility, with the US market down some 6% overnight.

    Laugh, not because we were both making losses, but because the whole thing is just silly.

    Here, some travel stocks have lost 20% in little more than 7 trading hours over the past two days.

    Twenty per cent.

    Because?

    Well, you can make up your own mind. 

    In theory, it seems to be because of a more sober outlook from the US Fed and an uptick in coronavirus cases in the US.

    Okay, fine.

    But let me put that another way.

    If you think Flight Centre Travel Group Ltd (ASX: FLT)’s total future earnings — from here to eternity — are  worth 20% less because of those two inputs, I don’t think you have any business investing.

    Here’s why:

    First, eternity is a long time. Coronavirus is either transitory or endemic, but in either case, discounting the entire future earnings of Flight Centre by 20% on the basis of two transitory data points is, as they say in Yes, Minister, ‘courageous’.

    Second, if that’s your view, you implicitly thought Flight Centre was worth 20% more on Wednesday just because you expected the Fed to be more bullish, and COVID cases to fall in a 24hr period.

    Which means you were betting 20% of the value of that position on what a Fed Chief might say, and the ultra-short-term trajectory of an inherently unknowable and volatile data series: COVID case counts.

    And when I say ‘you’, I don’t just mean you, dear reader.

    I mean the sum total of all investors buying and selling (and, implicitly, choosing to neither buy nor sell) over the past couple of days.

    In short, the finance industry.

    These are people who extract billions of dollars in fees from people like you and me every year.

    Because, apparently, they’re the experts.

    They know what’s going on.

    They’re not silly enough to take part in a market that drops 38% in a matter of weeks, then climbs the best part of 20%, before falling 6% in a couple of days.

    I mean, that’d be crazy, right?

    Who’d seriously invest that way.

    And who, in their right minds, would pay fees to people who invested that way?

    Oh.

    I see.

    Us?

    Yep. Us.

    Billions and billions of dollars every year, across the globe.

    Can you imagine if your accountant worked that way?

    Your mechanic?

    Your doctor?

    Now, I have to say, I shouldn’t hate on it too much.

    After all, as long as we can separate ourselves from the seemingly manic activity, it can be an opportunity.

    I’ve been telling you that I think it’s been a good idea to keep buying, if you want to make money.

    (If you don’t like money, I have a PayPal account you can donate to!) 

    Not because I knew what the skittish market would do next, but because my (and I hope your!) time horizon is different.

    From a wealth-building perspective, I genuinely don’t care what the market does next.

    Because I’m not cashing out tomorrow. Or next week. Or next month. Or next year.

    Nor are you.

    Even if you’re retired or about to retire, you almost certainly don’t need to ‘go to cash’ this week.

    Maybe you can live on dividends. Maybe you need to slowly liquidate your portfolio over many years.

    Either way, today’s movements are noise.

    All of this volatility reminds me of an old joke:

    A bloke is worried about whether his blinkers are working, and asks his mate to stand behind the car and check.

    His mate calls out ‘They’re working… they’re not working… they’re working… they’re not working… they’re working…’.

    It’s not a bad metaphor for investing.

    Investing doesn’t stop working just because some knuckleheads get temporarily overexcited or temporarily disappointed.

    Investing wasn’t a great idea on Wednesday, but a terrible idea yesterday.

    (Sounds kinda obvious when you put it that way, doesn’t it?)

    Was the market seriously ever worth 38% less in March, compared to February, because of a pandemic?

    Nope.

    Just as it wasn’t worth less because of wars, recessions or anything else in the past.

    Because the value of each company’s shares are the full sum total of profits over the long term — not just this week or this month, or even this year.

    To be blunt, Flight Centre cannot have been worth $16.85 per share on Wednesday at 4pm and $13.32 at 11am today. The company’s future just hasn’t swung that wildly in 7 trading hours.

    Maybe — maybe — one of them was right.

    But probably not.

    Still, if we’re generous, and say one of them was right, then the market has been right half the time.

    Half.

    (And both are still probably wrong.)

    Now you know that, are you still going to put value in the daily recitations of the value of the S&P/ASX 200 Index (ASX: XJO)?

    Do you still reckon the billions doled out in fees to financial types are value for money?

    Are you really going to let the daily movements of share prices tell you how to think and how to feel?

    I hope not.

    Short term movements are noise.

    Distraction. Misdirection. Rubbish.

    —-

    A small aside: As I write this on Friday morning, an alert just popped up on my phone. Apparently US futures are up 100 points.

    Up. Down. Up.

    It’s laughable.

    —–

    Fair dinkum. If you’re still letting the market dictate your moods, or your actions, I hope this piece helps you sleep a little better.

    I hope it helps you realise that the charade of ‘control’ that lets the finance industry rake in exorbitant fees is, well, just that — a charade.

    I hope it makes you ask that eternal question, first voiced by someone when a stockbroker showed him his brand new boat: “… But where are all the customers’ yachts?”.

    Yes, there are some good eggs. They’re trying their best. You’ll know them, because they’re the ones who are happy to say ‘I don’t know’, and to prick the pompous bubble of the industry.

    The others? Well, decide for yourself.

    Just take their prognostications with a huge dose of salt. And their fees the same.

    In the meantime?

    I’m never particularly happy when my portfolio is worth less than it was yesterday. I’m only human, too.

    But it’s the response that counts far more.

    Mine? 

    I’m not selling. I’m not panicking. And I’m sure as hell not asking the market what I should think.

    I’ll probably buy shares next week, I think. (I have a decent Achilles’ heel: our internal trading rules mean I’m not allowed to buy or sell shares within 2 full business days of mentioning them in public or to our members. So my ‘restricted’ list is usually longish and ever-changing!).

    And my prediction? I’m sticking with the words of John Pierpont Morgan who famously said, when asked to give a prediction on what would happen to the index: “It will fluctuate”.

    Everything else is vanity, pretence or willing obfuscation.

    Over the long term, though? History has delivered meaningful long-term compound gains for the patient.

    Invest accordingly. Please.

    Fool on!

    5 stocks under $5

    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!

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    Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. 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.

    The post Down 20% in 7 trading hours… Worse to come? appeared first on Motley Fool Australia.

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  • Mineral Commodities share price tumbles 15% on COVID-19 trading update

    red chart with downward arrow

    The Mineral Commodities Limited (ASX: MRC) share price ended the week on a sour note, closing 15.38% lower on Friday at 22 cents.

    While the ASX was a sea of red as investors responded to a potential second COVID-19 wave in the US, Mineral Commodities also released a trading update today which likely weighed on its shares.

    Mineral Commodities is a global mining and development company. Its primary focus is on the development of high-grade deposits within the mineral sands and battery minerals sectors.

    The company’s major projects include the Tormin mineral sands operation in South Africa and the Skaland graphite operation in Norway.

    Operations update

    In the release today, Mineral Commodities shed some light on trading conditions and recent developments at its major operations.

    At Skaland, the company’s mining operations and downstream program haven’t experienced any major interruptions from COVID-19.

    Meanwhile, at Tormin, Mineral Commodities revealed that the pandemic has caused delays for its section 102 expanded mining rights application. Nonetheless, the application has progressed to the Department of Mines Resources and Energy for granting.

    Mining and processing operations at Tormin were impacted by South Africa’s nationwide lockdown in March and April. However, operations resumed on 13 April and have since returned to normal. Accordingly, the company reported that mining and processing tonnes in May were the highest recorded performance for the year.

    Sales

    Mineral Commodities revealed it has seen “unabated” demand and continues to sell all the production of its non-magnetic zircon rutile concentrates to China.

    However, as flagged back in March, there has been reduced demand for bulk ilmenite concentrate. As a result, no sales for ilmenite concentrate had been secured up until mid-June. However, the company noted it has now secured firm sales for the second half of FY20.

    With this, Mineral Commodities stated it has observed improving market conditions as most Chinese tertiary mineral sands processing facilities have returned to production. It expects to start shipping ilmenite concentrates by as early as July 2020.

    Mineral Commodities also flagged a technical dispute that has arisen regarding its Life of Mine Garnet Offtake Agreement with GMA Group. The dispute relates to stockpiled inventory quantities and both parties have reverted to a formal dispute resolution process.

    On a more positive note, graphite sales at Skaland have continued without interruption. The company achieved record sales in the first quarter as product inventory accumulated in 2019 was sold down.

    Financial position

    Turning to the balance sheet, Mineral Commodities has US$18.6 million in current account receivables. This includes US$11.7 million owing from GMA Group, with US$8.6 million past due for payment.

    Mineral Commodities noted that budgeted revenue and operating cash inflows have been adversely affected by the disruption to normal ilmenite and garnet sales.

    “The Company’s business remains sound and on track to deliver the growth profile at Tormin and Skaland, however unforeseen circumstances have ensued, compounded by the COVID-19 pandemic, which require Management and the Board to undertake contingency planning to ensure that the business successfully navigates these challenges,” said executive chair Mark Caruso.

    5 ASX stocks under $5

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    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.

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  • Top fundie names small-cap ASX shares to buy

    finger pressing red button on keyboard labelled Buy

    Investing is one of those rare games where cheating isn’t against the rules. Well, not all cheating. Insider trading is still a crime.

    But by ‘cheating’, here I mean looking over other investors’ shoulders and seeing what they’re buying. Of course, not all investors are worth a look. You never want to copy the test of the worst student in the class.

    But the fund managers at Bennelong Australian Equity Partners are amongst those investors that are well worth a peek, in my view. Bennelong’s managed funds are often at the top of the pile in terms of performance history. The Bennelong Emerging Companies Fund, for example, has managed a return of 22.47% per annum since its inception in 2017.

    And it’s this fund we’re going to have a peek at today.

    Bennelong has just released its monthly update for May, and it merits some interesting reading if you’re looking for some small-cap ASX shares to buy.

    Bennelong’s top ASX share picks

    In its letter to investors, Bennelong remained coy about its exact portfolio holdings (and fair enough). But it did give us some tidbits.

    The fund manager named Viva Leisure Ltd (ASX: VVA), Mader Group Ltd (ASX: MAD) and BWX Ltd (ASX: BWX) as amongst its top holdings for the month.

    Viva Leisure owns a chain of gyms, including Club Lime and HIIT Republic. Here, Bennelong obviously bet on the lifting of coronavirus restrictions surrounding gyms benefitting this company going forward. Fair enough too – this stock is already up more than 260% from the lows we saw in March.

    Mader (which an enviable ticker symbol, I must say) is a manufacturer of mining equipment and machinery. According to the company it works with ‘all the major names Australian and international mining’, which presumably includes BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG). Again, Mader has done well in recent months, up more than 30% from the March lows. Even so, this company remains significantly underwater from its highs in February, and so might still offer some growth opportunities.

    BWX is a boutique beauty products manufacturer which includes brands such as Sukin, Andalau, USPA and Nourished Life. Its shares have also been doing well lately, up more than 36% from its March lows. Like Mader though, BWX is still underwater in 2020 so far, and so perhaps Bennelong is playing a long game with this one.

    Foolish takeaway

    Just because one ASX investor is buying a share doesn’t mean we should all rush out and blindly copy their moves without doing our own research first. But we can still ‘cheat’ by getting some of our next ideas to research from well-performing fund managers. So take these shares with a grain of salt, but take note nonetheless!

    For some more shares you might want to check out today, keep reading!

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    Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX 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 Top fundie names small-cap ASX shares to buy appeared first on Motley Fool Australia.

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