Stock Pick

  • Silver -How to Participate in this Run?

    Silver -How to Participate in this Run?XAGUSD (Silver CFD) has gone vertical, seemingly trying to play catch up to Gold. Although this may seem logical, it is NOT a good idea to be consumed by such a limiting belief. What you are witnessing here is the herd mentality at an extreme, and it is very important to understand what this behavior means in terms of RISK.

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  • Oil Approaches $45 in London on Rising Equities, Weaker Dollar

    Oil Approaches $45 in London on Rising Equities, Weaker Dollar(Bloomberg) — Oil rose toward $45 a barrel in London, with a weaker dollar and stronger equity markets countering an expansion in U.S. crude stockpiles.Brent futures traded near their highest level since March as European stocks and U.S. equity futures advanced. Yet bearish signs persist in the physical market. China’s thawing oil demand has seen the value of Iraqi crude drop, and there’s renewed weakness in the key swaps that help value North Sea grades. In America, crude stockpiles rose by 5 million barrels last week.Oil jumped earlier this week after European Union leaders agreed on a stimulus package, but prices have struggled to break out of a tight range this month. While the race for a coronavirus vaccine is gathering pace, rising infections across major economies and the imminent easing of OPEC+ output cuts is keeping a lid on further price gains amid a patchy recovery in consumption.“Uncertainty comes from demand,” said Tamas Varga, an analyst at PVM Oil Associates. “It is imperative to follow the dollar exchange rate, as a layer of oil-demand support will disappear should the greenback start strengthening again.”The dollar slipped for a fifth session, falling 0.2%, making commodities priced in the U.S. currency more attractive.However, the recovery in U.S. gasoline demand has faltered, with Americans staying at home as the virus flares through the nation’s most populous states.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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  • Silver’s Overlooked Rally May Put Gold in the Shade

    Silver's Overlooked Rally May Put Gold in the Shade(Bloomberg Opinion) — It’s not only gold that glitters. Since touching its weakest level in more than a decade in March, silver has doubled to a seven-year high of almost $23 an ounce. Partly, it’s a rally fueled by the same low-yield, weak-dollar haven dynamic that has pushed bullion to within spitting distance of a record. Investor demand is booming and silver — which is the best conductor of electricity — has industrial uses, too. Short-term supply, meanwhile, has been dented by pandemic-related closures. The metal can keep shining.Silver tends to loosely track gold. Like the yellow metal, it is benefiting from investors’ jangled nerves, with the global economic recovery looking slow and further coronavirus outbreaks almost certain. Rock-bottom borrowing rates have also reduced the opportunity cost of holding a non-interest-bearing asset, and there’s no sign of a change. Investor demand is responsible for much of this accelerated rally. This year alone, exchange-traded funds have increased their gold holdings by more than a quarter to surpass 106 million ounces, according to data compiled by Bloomberg, taking the total value to almost $200 billion. Silver holdings have climbed 40%, to more than 850 million ounces.  In the futures market, net managed money long positions are climbing back toward levels seen at the end of 2019. The Silver Institute, meanwhile, estimates retail bullion coin sales jumped by an estimated 60% in the first half from a year earlier. Speculative interest in China, which helped drive silver to all-time highs in 2011, is also showing signs of life.Demand from other quarters is less dramatic, though still encouraging. It helps that silver has a range of applications, unlike gold, which is generally too expensive for industrial uses. Not all are growing: Appetite from photography has ebbed since the advent of the digital camera, while the consumer electronics and automotive sectors have suffered from the squeeze the pandemic has put on households. Yet silver jewelry is expected to drop less than gold, given its relative affordability. Solar panels, meanwhile, should benefit from green-tinged recovery efforts — photovoltaic cells account for about a fifth of silver’s industrial demand. China is the world’s biggest solar power market, and will increase installations this year, despite the slow start to 2020. The country’s silver imports have been running above average. Longer term, the advent of next-generation telecoms technology will help, too.All the while, supply has been severely disrupted by coronavirus closures and other containment measures, particularly in Peru and Mexico. The Silver Institute earlier this month put the expected drop in mine production at 7% for 2020, even after recent restarts. The issues go beyond the pandemic. Output has been trending lower in recent years, with large primary-silver mines aging and new ones holding less of what is one of the world’s rarest metals. Silver is usually a byproduct, meaning most production comes from mines that primarily dig out zinc, lead, copper or gold. That’s good news for miners like Mexico’s Fresnillo Plc, with large primary silver operations. Despite marginal increases expected from 2021, rivals can’t simply crank up production in response to higher prices. At a time of tight exploration budgets, a little shiny silver can’t make up for plenty of lackluster zinc.Comparing silver with gold suggests the rally has further to run. The silver-gold price ratio, currently around 1.2%, is edging closer to its long-term average of around 1.5%, according to analyst Vivek Dhar at Commonwealth Bank of Australia. He points out previous sharp run-ups in silver have seen the ratio climb to 2.2% or 2.4 before retreating%. That leaves room for silver to keep shining. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Beyond Meat Releases New High-Protein, Low-Fat Burger

    Beyond Meat Releases New High-Protein, Low-Fat BurgerBeyond Meat Inc. (BYND) has announced a new veggie burger which will be produced locally in Canada. Made with simple, plant-based ingredients without GMOs, the Beyond Burger is designed to meet, if not exceed, the nutritional profile of its animal protein equivalent- and boasts 35% less saturated fat.The California-based vegan brand says that its newest burger offers 20g of protein derived from “simple, plant-based ingredients like peas, mung beans, and rice, and features marbling made from cocoa butter that is designed to melt and tenderize like beef.”In a July 22 press release, Beyond Meat CEO Ethan Brown said, “We look forward to providing the Canadian consumer with our latest burger iteration and to furthering our commitment to this important market by investing in local production.” He added, “Our process of rapid and relentless innovation in service of the consumer, and making investments in the markets we serve, are key pillars in our company’s strategy to provide delicious and nutritious plant-based protein with a lower environmental footprint.”Meanwhile, Beyond Meat has expanded its geographical footprint into China this past April, with its menu items being available at 4,200 Starbucks locations. Earlier this month, the company launched its food products- Beyond Beef, Beyond Burger, and Beyond Sausage in Brazil at 19 Sao Paulo locations through the retail chain, St. Marche.“Our Brazil market entry marks an important step in furthering our mission of increasing accessibility to plant-based meat globally. As the third-largest market in the world in terms of animal meat consumption, Brazil offers significant opportunity for plant-based meat adoption,” said Brown, in a July 15 company news release.Bernstein analyst Alexia Howard says that according to her estimates, BYND will record a sales increase of 52% for Q2 for about $102 million, which is well below the 141% year-over-year gain Beyond Meat reported in Q1. She noted, “This significant slowdown in sales growth could shock some retail investors, who tend to move the stock.Howard added, “Beyond Meat’s strong sales velocities may provide a high barrier to entry for other brands into the refrigerated section of the store which could limit competition.” The analyst reiterated a Hold rating on the stock and raised her price target from $118 to $133, which implies 3% upside potential.Also, Citigroup analyst Wendy Nicholson anticipates “near-term pressure as a result of its exposure to the foodservice segment,” in addition to “longer-term pressure as the [alternative meat] category becomes more competitive.” She assigned a Sell rating on the shares and set her price target at $123 (5% downside potential).Beyond Meat’s stock is up 72% year-to-date. The Moderate Sell analyst consensus breaks down into 2 Buy ratings versus 5 Hold ratings and 6 Sell ratings. The $112.38 average price target suggests 13% downside potential for the shares in the coming 12 months. (See Beyond Meat’s stock analysis on TipRanks).Related News: KFC Wants To Bring Lab-Grown Meat To Its Fast Food Chain Beyond Meat Shares Rise On Sale Of Plant-Based Meat In Brazil Costco June Sales Beat Estimates As Shoppers Go Online; Top Analyst Raises PT More recent articles from Smarter Analyst: * Microsoft Plans To Become Carbon Neutral By 2030 * Delta Air Lines: Under the Surface Improvements * Facebook Forms Teams To Search For AI-Programmed Racial Biases * Spotify Climbs 5% In Pre-Market On Multi-Year License Agreement With Universal Music

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  • Early super release scheme set to be extended

    hand holding hammer smashing open empty piggy bank

    One of the federal government’s more controversial moves in tackling the coronavirus pandemic and the damage it is wreaking on our economy has been to allow early access to superannuation.

    For those who qualify, the government allowed withdrawal of up to $10,000 from superannuation accounts in the 2020 financial year. Up to another $10,000 is available in FY21. As FY20 ended on 30 June, eligibility for the first tranche of the scheme has now ended.

    Eligibility for withdrawals under the second tranche was due to expire on 31 October 2020. But according to reporting in the Australian Financial Review (AFR), today the government has announced that this deadline will be extended by 3 months to 31 December 2020.

    The $10,000 cap will remain, which means that if anyone has already withdrawn up to $10,000 in FY21, no further withdrawals are permitted.

    The AFR quotes a spokesperson from the Treasury, who stated:

    The government is extending the application period for the measure… to increase the scope for individuals who may still be financially impacted by coronavirus to access early release in the coming months. While superannuation helps people save for retirement, the government recognises that for those significantly financially affected by the coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.

    Should you withdraw your superannuation early?

    I’ve been on the record before on this issue, and my views have not changed. I do accept that withdrawing funds from superannuation might be necessary for those who may have been severely affected financially from this crisis. Unemployment is at record highs. This might be the only viable pathway left for some individuals or families to avoid acute hardship, despite the other avenues of assistance the government is providing in response.

    However, I maintain that withdrawing cash from a superannuation fund should be the absolute last resort for anyone. Super is designed to provide all Australians with a safety net in retirement. Under the super system, your regular contributions are typically invested in growth assets like ASX shares.

    Harnessing the miracle of compound interest, this should result in a sizeable nest egg for most workers over a working lifetime. This system is not perfect, but it does work reasonably well in my view. Especially if you consider the generous tax implications of using super.

    However, compound interest works best when you simply leave it to ‘do its thing’. By withdrawing a sizeable chunk of cash from your super fund, you are kneecapping this process. This could result in losing multiples of the withdrawn amount had you left it alone.

    The AFR quotes modelling that warns, “a 30-year-old worker would be $97,214 worse off in retirement if they took out the full $20,000 permitted across the two financial years.”

    I have heard many unsubstantiated reports of people withdrawing super for what could be deemed frivolous means, such as buying a new car, new furniture or even gambling it. Is another $100,000 for your retirement really worth doing something like that?

    Foolish takeaway

    I pass no judgement on anyone who takes advantage of the early super scheme to save themselves or their family from financial hardship. However, this announcement from the government does concern me. I do think there are significant cases where individuals are withdrawing their super money unnecessarily.

    So if you’re considering taking the government up on its offer – think twice. Leaving your super alone might just be the best investment decision you ever make.

    Where to invest $1,000 right now

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    Motley Fool contributor Sebastian Bowen 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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  • Tesla’s $200 Billion Question Remains Unanswered

    Tesla's $200 Billion Question Remains Unanswered(Bloomberg Opinion) — You know Tesla Inc. is maturing as a carmaker when it manages to be slightly dull. Wednesday evening’s earnings update was even more eagerly anticipated than usual after the recent surge in its share price. Elon Musk’s company has added an astonishing $200 billion to its already ample market capitalization since the end of March.Confirmation that Tesla will add a second U.S. factory in Austin, Texas is certainly something to celebrate — especially for the workers it will employ there to build its Cybertruck and other products. So too is the fourth consecutive quarter of net profit, which may prompt the company’s inclusion in the S&P500.And yet the earnings call — where Musk has in the past ranted about “fascist” virus lockdowns and attacked analysts for asking “boring, bonehead” questions — was a bit of a snooze. It even featured a long discussion about insurance and Musk’s appreciation for the actuarial profession.In the current economic environment, such steadiness is an achievement. Most car companies will probably suffer huge losses because of the recent closures of factories and showrooms, even if things won’t be quite as bad as feared initially. By contrast, Tesla reported $104 million of net income in the April to June period, bringing its total profit over the past four quarters to $368 million.To be sure, these are modest amounts for a company with a $295 billion market capitalization and which is valued at an inexplicable 800 times trailing earnings. The profits are also more than accounted for by $1 billion of regulatory credits that Tesla sold to other carmakers during the 12 months to June, including $428 million in the latest quarter. It’s only able to earn this income because rivals haven’t gotten their act together yet on building enough electric vehicles and have to buy credits from Musk’s company to satisfy emissions regulators. Tesla acknowledges this good fortune won’t last forever.At a time when Musk is building three new factories on three continents, money from any source is welcome. Tesla says its $8.6 billion pile of cash and equivalents is sufficient to fund its expansion. But raising capital would barely dilute shareholders given how inflated the stock is. Investors might even welcome it.The second-quarter earnings won’t, however, settle the debate about whether demand for Tesla cars is starting to tail off in important markets. While Musk says this isn’t a problem, the company has been cutting prices in North America and China. His explanation is that the cheaper the cars are, the more people will buy them. So long as the company remains “slightly profitable” and avoids going “bankrupt” — in his words — then he sounds happy to sacrifice a bit of profit margin to drive growth.  Tesla isn’t growing all that much right now, which is hard to square with the massive jump in its share price. Revenue declined 5% year on year in the latest quarter. The pandemic will have taken a toll, but Tesla will only really start to merit its “Big Tech” valuation once its top line starts firing again.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Sorrento Therapeutics gets FDA approval for COVID-19 drug trial

    Sorrento Therapeutics gets FDA approval for COVID-19 drug trialYahoo Finance’s Alexis Christoforous, Brian Sozzi, and Anjalee Khemlani speak with Sorrento Therapeutics CEO & Founder Dr. Henry Ji about the company’s FDA clearance for a COVID-19 drug trial, to be used on patients with milder symptoms.

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  • Where I’d invest $9,000 in ASX shares

    australian flag superimposed over share market chart

    ASX share prices change every day. Share prices can move a lot over a week or a month. 

    We have to decide if the price being presented is good value or not. We can decide to buy shares at the price the market is offering. Perhaps we may take the price the market is willing to buy our shares for. Or we can just do nothing.

    I don’t think there are many shares that are trading at great value at the moment due to uncertainty caused by COVID-19 (and the related impacts) as well as the strength of the share market’s recovery since March 2020.

    But there are still some ASX shares I’d be happy to buy for my portfolio today:

    Bubs Australia Ltd (ASX: BUB) – $3,500

    Bubs is a business which is still fairly early on in its growth journey. It’s an infant formula business with a specialisation in goat milk products.

    With a smaller business I think it’s important to think about the long-term. Don’t think about how much an ASX share may grow in six months. Think about where the business will be in three years or five years from now.

    Bubs is doing an excellent job of growing its international revenue. In the quarter ending 31 March 2020 it more than doubled its Chinese revenue. Its ‘other markets’ revenue increased by about 20 times in that same quarter. I think the company has great global growth potential. There is a huge addressable market in Asia alone.

    The Bubs share price looks good value to me. Due to the essential nature of the business’ products, I think Bubs has defensive revenue with a great growth trajectory.

    WCM Global Growth Ltd (ASX: WQG) – $2,500

    This is a listed investment company (LIC) that targets global businesses. It looks for international businesses that have an expanding economic moat. One of the main factors that WCM looks for is a rising return on invested capital. It also looks for businesses with a corporate culture that supports that goal of an improving economic moat.

    Some of the ASX share’s current largest positions include Shopify, Tencent, Visa and MercadoLibre. These businesses are leaders in their respective markets.

    The LIC’s returns have been strong over the past three years, yet the WCM Global Growth share price is still trading at a double digit discount to the pre-tax to the latest net tangible asset (NTA) disclosed in the weekly update.

    City Chic Collective Ltd (ASX: CCX) – $1,000

    City Chic is one of the most promising ASX retail shares in my opinion. The ASX share is a fashion leader in Australia for plus-size clothing for women.

    City Chic was growing nicely before COVID-19 came along. Whilst store closures were tough, the company saw online sales growth of 57% during the shut store period. That’s impressive considering the company said two thirds of global sales are online.

    I’m excited by City Chic’s aim of becoming a world leader in plus size women’s clothing. It’s making smart acquisitions to try to make this happen.

    At 21x FY22’s estimated earnings I think the City Chic share price looks like a good long-term buy.

    Vitalharvest Freehold Trust (ASX: VTH) – $2,000

    There is a lot of uncertainty in the share market and economy at the moment. A cheap agricultural real estate investment trust (REIT) could be a good way to play this situation.

    Farming returns can be quite different to the overall share market. Vitalharvest owns some of the largest berry and citrus farms in Australia. Those farms are leased to Costa Group Holdings Ltd (ASX: CGC). Hopefully the next 12 months will be better for Costa’s earnings because Vitalharvest has a profit share agreement with the horticultural giant.

    I’m excited that Vitalharvest has a new manager which will be looking across the whole farming supply chain for investment opportunities. Things like food storage and food processing properties will be among the considerations for the ASX share’s portfolio.

    At the current Vitalharvest share price it’s trading at an approximate 20% discount to the net asset value (NAV) at 31 December 2019. I think that’s a big discount that can close up with better earnings and distributions from the REIT.

    Foolish takeaway

    I think each of these ASX shares could beat the market over the next three to five years. Vitalharvest looks great value and I believe Bubs has a very good growth journey ahead of it, assuming China doesn’t cause any problems with exports.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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    *Returns as of June 30th

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    Motley Fool contributor Tristan Harrison owns shares of WCM Global Growth Limited. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and COSTA GRP FPO. 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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  • Which ASX 200 shares are the safest?

    Safe Shares

    Which ASX shares are the safest on the S&P/ASX 200 Index (ASX: XJO)?

    Well, it’s a fraught question. What do we really mean by ‘safe’? For most investors, a ‘safe’ share is one that won’t lose its value under any market conditions. And on this front, it’s almost impossible to call any ASX share ‘safe’. See, the share market is a volatile place. In theory, it should always be pricing every asset according to its true and intrinsic market value. But the problem is that markets don’t put much store in theory. In reality, emotional investing (either fear or greed) is the predominant force in moving shares on a day to day basis. Legendary investor Benjamin Graham once said that the stock market is a ‘voting machine in the short-term, and a weighing machine in the long-term’, or words to that effect.

    So it’s almost impossible to find a share that never loses its value at any point in time. A cash-based exchange-traded fund like the iShares Core Cash ETF (ASX: BILL) is probably your best bet. But that’s not too different to just having your money in a bank account anyway.

    So what’s your next best option? A seasoned investor might point you to ASX blue chip shares like Woolworths Group Ltd (ASX: WOW) or Wesfarmers Ltd (ASX: WES). Or even the ASX banks, because they’re ‘safe as banks’ right? Well, try telling that to anyone who was a shareholder in Westpac Banking Corp (ASX: WBC), which saw its value crater by more than 50% between September 2019 and March 2020.

    ASX blue chips are no safer than any other ASX 200 share in a market crash. What really matters is the durability of a business’ cash flow. If a company has a robust and resilient revenue base, it’s more likely (but not certain) to hold its market value over time.

    What about inflation-safe ASX shares?

    But perhaps market volatility is not the only thing that troubles some investors. The more pessimistic market participants amongst us have another fear: inflation. With governments around the world spending an unprecedented amount of cash to combat the coronavirus crisis, there are sections of the investing community that believe this will eventually lead to massive inflation – the loss of a currency’s purchasing power through increased supply.

    Figuring out which ASX shares are best placed to survive a world of high inflation depends on a few factors. Firstly, does the company have sufficient pricing power to be able to increase its revenues at least in line with the rate of inflation? Those companies that dominate their markets usually have the most power in this regard and are more equipped to deal with a high-inflation world. Think Apple with its iPhones, or the A2 Milk Company Ltd (ASX: A2M) with its premium dairy products.

    Secondly, does the company have real, tangible assets it can use to support its cash flow? Transurban Group (ASX: TCL) for example, owns and operates a series of toll roads. No matter what is happening with inflation, Transurban is always going to have a portfolio of assets that consumers want (or even need) to use. This gives Transurban a massive advantage in a world of high inflation. It’s a similar story with Sydney Airport Holdings Pty Ltd (ASX: SYD) or AGL Energy Limited (ASX: AGL). If you’re worried about future inflation, these kinds of companies are a good place to start looking for a ‘safer’ investment, in my view.

    Foolish takeaway

    There’s really no such thing as a ‘safe’ share or investment on the share market. If you have specific worries around inflation or any other kind of economic calamity, there are steps you can take to position your ASX portfolio accordingly. But investing in shares is never going to be a game of gains with no risk of losses. If you really can’t deal with the fact your portfolio’s value will fluctuate, then I would recommend periodically investing in exchange-traded funds (ETFs) without ever looking at your portfolio’s value. The only other option is leaving your cash in the bank, I’m afraid.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    See The 5 Stocks

    *Returns as of June 30th

    More reading

    Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk, Transurban Group, Wesfarmers Limited, 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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  • Why this fund manager is preparing for a massive market crash

    Bear and bull colliding over man holding an umbrella, asx 200 bull market

    Is another massive market crash coming?

    The S&P/ASX 200 Index (ASX: XJO) had another positive day, closing the day up 0.32% to 6,094 points. Since bottoming out on 23 March at 4,546 points, the ASX 200 is now up by 34%. It’s an incredible bull run, considering March brought us one of the sharpest and most severe bear markets in living memory. Despite its recent performance, the ASX 200 is still 9% below the level it was at the start of the year.

    But one fund manager is betting that what he has labelled the markets’ “free pass” when it comes to the impact of the coronavirus pandemic won’t last forever.

    An ultra-bearish fund manager

    According to reporting in the Australian Financial Review (AFR), Rob Almeida, portfolio manager and strategist at MFS Investment Management, is calling time on the recent bull run in global markets. In fact, he sees another market crash on the horizon.

    MFS is based in the US state of Massachusetts and has been around for around 90 years. Mr Almeida has one cardinal rule for his fund: “All that matters to investing is that you’re paying for future cash flows”.

    And right now, he doesn’t see a positive outlook for cash flows at all. He’s also “having none” of the recent rally in global markets. In fact, according to the AFR, he has positioned his long/short strategy as “bearishly as possible”. The fund is sitting “in maximum cash and just 10 per cent exposure to equity (shares)”. The AFR quotes Almeida as stating the following:

    One in three companies in Russell 10000 was unprofitable before the crisis. I can’t imagine that’s improved…I’ve got to believe we reach a point – I don’t know when – when investors stop giving companies and the economy a free pass on horrendous data… the quality of balance sheets, particularly in America, is the worst it’s been in over 100 years. There’s just no getting around that.

    Almeida acknowledges the reckoning he’s been expecting for some months may not be entirely imminent. But with the level of conviction Almeida is placing within his fund on a dramatic reversal of market fortunes, I’m sure his investors are hoping he’s right.

    Should ASX investors sell everything today?

    I’m not prepared to follow Mr Almeida’s lead and liquidate 90% of my portfolio. However, I do think this gentleman has some good points, particularly surrounding cash flow. I like to invest in companies that are either producing healthy levels of recession-resistant cash flow today, or look to be able to in the foreseeable future.

    The next year or 2 will be critical for many companies on the ASX. Some will be fine, but others will struggle and could even go under. And I do think it’s entirely possible we’ll see another market crash. We are by no means out of the woods yet with regards to the coronavirus. And there will be a point where the government can no longer afford to prop up the economy with record deficit spending.

    So I’m not selling the farm just yet. But I am looking at my portfolio and seeing which businesses will be best placed to generate cash flow into the future, regardless of what happens within the economy.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    See The 5 Stocks

    *Returns as of June 30th

    More reading

    Motley Fool contributor Sebastian Bowen 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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