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Volatility has crept into the ASX share market in 2022, and there’s been plenty of calamity from the fallout.

The standard deviation – a measure of volatility both up and down – of the S&P/ASX 200 Index (ASX: XJO) is at an annualised 16% this year to date, well above historical levels.

As a result, several sectors are pushing lower, while others are well up, with pockets of green and red littered throughout each corner of the market.

Worried about the uncertainty? Think long-term

One important consideration is the current economic and investing cycle, Shane Oliver of AMP Capital says.

The economist says while there are plenty of setbacks in the ASX share market, over the long-term, growth assets like stocks continue to provide outsized returns.

“It’s invariably the case that the share market leads the economic cycle (bottoming out before economic recovery is clear and topping out before an economic downturn has really hit and vice versa at the top) and that different assets perform relatively best at different phases in the cycle,” he said to Livewire.

Such a mantra is important, Oliver says, because investment returns have proven to be smooth and consistent for the patient investor. That’s despite an extensive list of “worries” that have kept more than a few on the sidelines.

“Australian economies have had plenty of worries over the last century, but it got over them with Australian shares returning 11.8% per annum since 1900, with a broad rising trend in the All Ords price index,” he remarked.

Expanding on this school of thought, Oliver also mentioned:

Worries are normal around the economy and investment markets but most of them turn out to be no more than short-term noise.

Short-term share returns can sometimes see violent swings, but the longer the time horizon the greater the chance your investments will meet their goals. It’s also extremely hard to time these short-term swings. So in investing, time is on your side and its best to invest for the long-term.

ASX shares have certainly shrugged off the wave of pressures in the past few years, even powering through geopolitical and global market tensions since trading resumed in 2022.

The benchmark recently powered back towards its all-time highs, with the All Ordinaries Index (ASX: XAO) and Australian small caps following suit.

The post Worried about current ASX share market uncertainty? Read this appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• What’s the outlook for the Cochlear share price in April?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• ASX 200 midday update: Magellan jumps, tech shares tumble
• 2 ASX tech shares that are cheap enough to buy now

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Medibank Private Ltd (ASX: MPL) finished trading yesterday at $3.06 apiece.

The gain comes amid a period of heavy losses for the company whose share price has collapsed from a high of $3.60 on January 2.

What’s up with the Medibank share price?

Shares have been gliding down these past few weeks with authority. This is despite nothing sensitive from the company.

Noteworthy are the natural flooding disasters spread along the East Coast of Australia that are no doubt causing headaches for Australian insurers and insurees alike.

Fellow insurers Suncorp Group Ltd (ASX: SUN) and Insurance Australia Group Ltd (ASX: IAG) also felt pain from the fallout.

As such, it appears the market has priced in lower growth expectations for Medibank over the coming periods, according to Matt Ingram, analyst at Bloomberg.

“[Medibank’s] cyclically adjusted P/E ratio lags behind peers despite being 20% above the past decade’s average and could be due to the market’s lower growth expectations for Medibank,” he wrote in a recent note.

“Its 4.3% dividend yield is comparable to peers, but may not be boosted by more buybacks like Suncorp and Australia’s big four banks due to lower surplus capital,” he added.

The market prices securities on a balance of earnings performance and in particular, future earnings expectations, Peter Lynch says in One Up on Wall Street.

So if the market feels Medibank’s growth is set to wind back, so will its share price on this logic.

In the last 12 months, the Medibank share price has climbed 21% but has erased around 8% of gains since trading resumed this year.

The post Why did the Medibank share price go backwards in March? appeared first on The Motley Fool Australia.

More reading

• Why has the Medibank (ASX:MPL) share price lost 11% since early January?
• Own Medibank (ASX:MPL) shares? Now you own a piece of this tech start-up

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking to boost your income with some dividend shares, then you might want to consider the ones listed below.

Both dividend shares are expected to provide investors with attractive yields in the near term. Here’s what you need to know about them:

Rural Funds Group (ASX: RFF)

The first ASX dividend share for income investors to look at is Rural Funds.

It is a lessor of agricultural property with revenue derived from leasing almond orchards, macadamia orchards, poultry property and infrastructure, vineyards, cattle properties, cropping properties, agricultural plant and equipment, cattle and water rights.

Rural Funds currently has property portfolio comprising 61 properties across New South Wales, Victoria and South Australia with a lengthy weighted average lease expiry of 10.9 years.

Combined with built in periodic rental increases, this provides Rural Funds with great visibility on its long term earnings. It also allows management to target a 4% dividend increase each year.

This means that in FY 2022, the company is aiming to lift its dividend to 11.73 cents per share. Based on the current Rural Funds share price of $3.00, this represents a yield of 3.9%.

Westpac Banking Corp (ASX: WBC)

Another dividend share that could be a buy is Westpac. It is of course one of Australia’s big four banks, operating through a number of brands. These include the eponymous Westpac brand, Bank of Melbourne, Bank SA, St Georges, and Rams.

Although Australia’s oldest bank has seen its shares rebound strongly from recent lows, they are still expected to provide investors with generous dividend yields in the coming years.

For example, on a trailing 12-month basis, Westpac’s shares currently offer a fully franked 4.9% dividend yield. Whereas if you look ahead to FY 2023, when the team at Morgans is forecasting a $1.60 per share dividend from the bank, the yield increases to a very attractive 6.6% for investors.

The post 2 ASX dividend shares with attractive yields appeared first on The Motley Fool Australia.

More reading

• ASX 200 banks bounce bank in March. Here are the April forecasts from analysts
• Is the Westpac share price the best value of the big four banks?
• How big will the CBA dividend be in 2022?
• How did the Westpac share price perform in March?
• How did ASX 200 bank shares perform today?

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Experts have named some ASX shares as buys, and April 2022 could be the time to jump on these opportunities.

When a business generates a lot of revenue growth, it could lead to elevated compound growth over time.

Here are two ASX shares that are liked:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is an e-commerce business that sells an extensive range of different homewares and furniture products. It sells more than 200,000 products from hundreds of suppliers.

The business runs a drop-shipping model where products are sent directly to customers by suppliers, which enables faster delivery times and reduces the need to hold inventory, allowing for a more extensive product range.

The ASX share also has a private label range, which is sourced from overseas suppliers.

Temple & Webster is generating growth in numerous ways. In the FY22 first half, revenue increased 46% year-on-year to $235.4 million. Active customers grew 34% to 906,000, and revenue per active customer rose 10%.

According to management, the second half of FY22 started “strongly”, with year-on-year growth of 26% for the period of 1 January 2022 to 6 February 2022.

Management said it remains confident that the strategy is resonating with the next generation of shopper and it’s well placed to continue to take share in the markets it’s operating in.

It is continuing to reinvest its operating leverage where it makes sense to do so, building strategic moats around the core business while investing in new growth horizons.

It’s currently rated as a buy by Credit Suisse, with a price target of $13.54. The Temple & Webster share price closed on Thursday at $6.26, suggesting a potential upside of 116%.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara Health Technologies is an ASX healthcare share that offers software for screening clinics providing feedback on breast density, compression, dose, and quality, while its enterprise-wide practice-management software helps with productivity, compliance, reimbursement, and patient tracking.

The business is seeing steady growth in its annual recurring revenue (ARR), which gives the company and investors revenue visibility.

For the three months to 31 December 2021, Volpara added almost US$1.1 million of ARR. The ARR reached US$21.5 million. In that quarter, subscription receipts rose 51% to NZ$6.7 million.

Its market share has now reached more than 35% of US women being screened, up from the prior quarter of 34%. Its software-as-a-service (SaaS) churn/client loss remains low.

The company is looking to upsell more of its products to clients, which could help the average revenue per user (ARPU). ARPU over the installed base was US$1.47 on 31 December 2021, with the average ARPU for deals in the third quarter of US$1.65.

The ASX share is also looking to grow in the lung cancer space. It entered the lung cancer screening world in 2019 when it acquired MRS Systems, with a market share of 8%.

Volpara says that software technology ‘stacks’ are similar, “except diagnostic tools are more compelling in the lung space due to the complexity of doing lung biopsies as compared to breast”.

Volpara believes the commercial opportunities in lung cancer screening are at least equal to breast screening as lung screening ramps up. It estimates the market could be $400 million in the US alone.

It’s currently rated as a buy by Morgans, with a price target of $1.94. That’s 54% higher than Thursday’s closing price of 89 cents.

The post 2 great ASX shares to buy in April: experts appeared first on The Motley Fool Australia.

More reading

• Is this why the Temple & Webster share price surged over 6% today?
• 2 high-growth ASX shares to buy today: brokers
• 7 small-cap ASX shares that have been oversold: Wilsons
• Do ASX biotech shares offer ‘good buying’ after the sell-off? Experts weigh in
• Temple & Webster (ASX:TPW) share price hits 52-week low, top broker tips 90% upside

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Temple & Webster Group Ltd and VOLPARA FPO NZ. The Motley Fool Australia owns and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped into the red again. The benchmark index fell 0.6% to 7,442.8 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market looks set to end the week on a positive note following a solid night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 39 points or 0.5% higher this morning. In the US, the Dow Jones rose 0.25%, the S&P 500 was up 0.4%, and the Nasdaq edged ever so slightly higher.

Oil prices rise

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a decent finish to the week after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.75% to US$96.98 a barrel and the Brent crude oil price is up 0.3% to US$101.34 a barrel. Further sanctions on Russian oil boosted prices.

Iron ore price falls

BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) shares could have a subdued finish to the week after the iron ore price pulled back. According to Metal Bulletin, the spot benchmark iron ore price dropped 3.2% to US$155.05 a tonne.

Dividends being paid

A number of ASX 200 shares will be paying their latest dividends on Friday. This includes funerals company InvoCare Limited (ASX: IVC), administration services company Link Administration Holdings Ltd (ASX: LNK), logistics infrastructure company Qube Holdings Ltd (ASX: QUB), and logistics solutions platform provider WiseTech Global Ltd (ASX: WTC).

Gold price rises

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a decent finish to the week after the gold price pushed higher. According to CNBC, the spot gold price is up 0.6% to US$1,934.7 an ounce. Traders were buying gold as an inflation hedge.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

More reading

• Yield curve inversion is bad news for ASX shares except for this sector
• What’s the outlook for the Cochlear share price in April?
• Why are ASX 200 tech shares having such a dire day?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Andromeda Metals, ARB, BCI Minerals, and WiseTech shares are tumbling lower

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

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The CSL Limited (ASX: CSL) share price struggled through the March quarter despite plenty of good news being released by the company.

In fact, the biotechnology giant’s stock tumbled 7.76% last quarter, ending the period trading at $270.05.

For comparison, the S&P/ASX 200 Index (ASX: XJO) ended the quarter trading relatively flat with where it started, recording a gain of just 0.74%.

So, what moved the CSL share price over the three months ended 31 March? Let’s take a look.

What happened to the CSL share price last quarter?

The CSL share price had some notable ups and downs over the course of the March quarter.

The first came with the announcement of the completion of CSL’s share purchase plan on 14 February.

The share purchase plan – first announced in December – raised $750 million for CSL’s acquisition of Vifor Pharma.

The company received applications of $942.7 million for the capital raise, which offered new shares in the company for $253.57 apiece. As a result, it had to scale the offer back.

However, as The Motley Fool Australia’s James Mickleboro reported, the company was hit with a negative note from S&P Global Ratings that same day.

All in all, the CSL share price fell 1.99% on 14 February. Fortunately, it was soon boosted by the release of the company’s half-year results.

Over the six months ended 31 December, CSL’s revenue rose 5.3%, while its net profit after tax (NPAT) slipped 2.8%. The company’s dividend stayed at US$1.04 per share.

However, its bullish view on plasma collections and its financial year 2022 earnings likely helped lift the CSL share price.

It gained 8.51% on the day of its earnings’ release and a further 5.05% the following day.

The final piece of price-sensitive news released by the company last quarter dropped after the market closed on 3 March.

Then, CSL announced 74% of Vifor Pharma’s shares were tendered under a public tender offer.

That was slightly less than the company’s goal of 80%. Nevertheless, CSL said it would waive its acceptance rate condition and declare the offer successful.

Following the tender offer, CSL commenced a tender period for subsequent acceptance of the offer. As a result, the acquisition was on track to be finished by the middle of 2022.

The CSL share price gained just 0.31% on the news.

What else might have driven CSL’s stock last quarter?

That’s all the price-sensitive news released by CSL in the March quarter. However, there were a few more happenings that might have helped boost market sentiment toward its shares.

The company reportedly ditched efforts to create an antiviral treatment for COVID-19 in January. It will instead be focusing its $1 billion-a-year research program on other projects.

Additionally, CSL’s influenza vaccine was granted new approvals by regulators in March. As a result, it can now be administered to children above the age of two.

The post Why did the CSL share price go backwards in the March quarter? appeared first on The Motley Fool Australia.

More reading

• The CSL dividend is being paid today. Here’s what you need to know
• This ASX share changed me FOREVER: fund manager
• Here’s what $10,000 invested in CSL shares 5 years ago looks like now
• How did the CSL share price perform in March?
• Why is the CSL share price climbing on Wednesday?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX travel shares descended today on a tough day for the market.

The Flight Centre Travel Group Ltd (ASX: FLT) slid 2.74%,  Webjet Limited (ASX: WEB)  gravitated 2.86%, and Qantas Airways Limited (ASX: QAN) descended 1.96%.

Meanwhile, the Helloworld Travel Ltd (ASX: HLO) share price fell 2.40%, while Corporate Travel Management Ltd (ASX: CTD) dropped 2.54%.

Let’s take a look at why these travel companies had such a shocking day.

Travel chaos predicted

ASX travel shares followed the pattern of their US counterparts. The American Airlines Group Inc (NASDAQ: AAL) fell 2.58%, United Airlines Holdings Inc (NASDAQ: UAL) descended 3.67%, and Delta Air Lines Inc (NYSE: DAL) dropped 3.69% in Wednesday’s trade in the US. US airlines fell amid rate rise fears.

News from the White House that the USA has no plans to scrap COVID-19 testing requirements may also have weighed on travel shares. In a video shared on Twitter by The Post Millennial, Whitehouse COVID-19 advisor Jeff Zients said: “There are no plans to change the international travel requirements at this point.”

ASX travel shares Flight Centre, Webjet and Qantas all have a presence in the USA market.

Travel chaos in the lead up to Easter may also be concerning travel shareholders. Hundreds of international flights are being cancelled due to COVID-19 travel shortages, CBS News reported. Australian passengers were recently warned to arrive at the airport at least two hours early for domestic flights amid airline staff shortages, the Daily Mail reported.

Rising oil prices may also be impacting ASX travel shares. International benchmark Brent crude oil is up 1.45% to US$102.57 per barrel at the time of writing, Trading Economics data shows. Fuel is a major cost for airlines, and the oil price impacts the cost of fuel.

ASX travel share recap

In the past year, Qantas shares have fallen 7.41%, Webjet shares have fallen 2.86%, while Flight Centre shares have leapt 4.96%.

Helloworld Travel shares have soared 10.41%, while Corporate Travel shares have exploded 22.35%.

In contrast, the S&P/ASX 200 Index has returned more than 7% in the past year.

The post What went so wrong for ASX travel shares today? appeared first on The Motley Fool Australia.

More reading

• Why did the Qantas share price have such a tough time of it today?
• The Webjet share price is tumbling 5% on Thursday. Could this be why?
• The Flight Centre share price is diving 5% today. What’s next in April?
• ASX travel shares have been flying higher over the past month. Here’s why
• Why the Flight Centre share price travelled 12% higher in March

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Helloworld Limited. The Motley Fool Australia owns and has recommended Helloworld Limited. The Motley Fool Australia has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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As Richard Carlson once said, “Reflection is one of the most underused yet powerful tools for success.” Investors spend a lot of time looking ahead, but in this article, we take a moment to reflect upon the last month in ASX All Ordinaries shares.

If you were to simplify what investors want to achieve into one short sentence, it would probably be something along the lines of — “find and invest in the big winners while avoiding the big losers”.

And so, we found the best and worst performers of the All Ordinaries in March to offer some reflection.

Lithium developer takes out the top spot among All Ordinaries

It’s hard to beat a company whose shares have skyrocketed 108% in a single month. Though it might be hard to believe, that is exactly what lithium developer Lake Resouces N.L (ASX: LKE) achieved in March.

Taking a look at what the company got up to during the month, you might begin to see what instilled such excitement among shareholders. For instance, Lake Resources found itself being added to the S&P/ASX 300 Index (ASX: XKO).

In addition, the company raised $39 million through the execution of its at-the-market subscription agreement with Acuity Capital.

Finally, on 29 March this ASX All Ordinaries share announced it had linked up with Japan-based Hanwa Co Ltd. According to the announcement, an offtake proposal of 25,000 tonnes of lithium carbonate per annum had been made. Furthermore, Hanwa suggested it was considering a meaningful equity investment in Lake Resources.

Missing the target in March

Not every ASX All Ordinaries share could be as fortunate as Lake Resources. For 88 Energy Ltd (ASX: 88E), it was a plain painful month — where did it all go wrong for the oil explorer? It’s time for some more reflection.

Unfortunately, 88 Energy released a company update on 30 March which sent shareholders running. As per the announcement, 88 Energy was unable to obtain fluid samples from its target zones in the Merlin-2 well, situated in Alaska.

The news douses investors’ hopes of striking a well rich with oil. In turn, this ASX All Ordinaries share shaved off 63% in March.

The post Guess which 2 ASX shares were the best and worst All Ordinaries performers in March appeared first on The Motley Fool Australia.

More reading

• 5 ASX mining shares rocking all-time highs on Friday
• Why is the Lake Resources (ASX:LKE) share price surging 16% higher to a new record high?
• The ASX 200 just had its longest winning streak since 2017. What’s doing?
• 5 ASX lithium and green metals shares hitting new 52-week highs today
• Why 88 Energy, Gold Road, Sigma, and Star shares are dropping

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investing in the financial markets is no doubt as much an art as it is a science, as with all skilful practices.

That’s an important distinction, because there’s a relationship between art and emotion, provides George Mather in The Psychology of Visual Art.

However, it’s also important to realise that successful investing is as systematic and science-based as it gets, especially in today’s data-driven world.

Such that computers, algorithms, machine learning, proprietary high-frequency trading bots and the likes have swarmed over financial markets in the past decade. Not to mention the rise of quantitative finance in recent years as well that’s seen some of the largest hedge funds ever roll out onto the scene.

According to Mordor Intelligence, “algorithmic trading accounts for around 60-73% of the overall US equity trading”, and “the algorithmic trading market is expected to witness a [compound annual growth rate] CAGR of 10.5%” through until 2027.

Why the shift?

Much of the overhaul in the way financial markets operate revolves around the fact that algorithmic and quantitative trading methods supposedly back-out the emotion involved with investing. Investigations by The Socio-Economic Review found that ‘algo’s’ are “allegedly more rational and efficient than human traders, and less prone to emotionally motivated decisions,” to hammer in that point.

Behavioural finance tells us that humans are notoriously bad forecasters, are bad at mental accounting, suffer from cognitive and emotional biases, and are fraught with logical errors in decision making. It’s just the way we are.

For example, most investors are deemed to be loss averse, rather than being solely risk averse. What that means is, they value a loss greater than they value a win.

Consider this – numerous studies find that “a 50% chance of losing $100 must be offset by a 50% chance of gaining $200” – in other words, the upside must be twice that of the potential loss for most people to get comfy.

If it remains a 50/50 chance, the bet is often deemed to be too risky (because many aren’t strong at mental accounting either, remember?). The potential for a win is valued lower than the potential for an equal sized loss.

Fundamentally, these form the bedrocks as to why there’s been a structural shift towards the new electronic market ‘participant’ – to mitigate the risk of human error. As Oscar Wilde Said, “I don’t want to be at the mercy of my emotions. I want to use them, to enjoy them, and to dominate them”. Presumably, most market pundits would feel the same way.

Controlling emotion is actually so important, that some say harnessing the market’s psychology is essential in understanding price action and profiting from this.

“The swings we see in investment markets are far greater than can be justified by movements in investment fundamentals alone – i.e. profits, dividends, rents, interest rates, etc,” Shane Oliver of AMP Capital told Livewire.

“In fact, investor emotion plays a huge part,” he added.

Oliver also said:

A bull market runs through optimism, excitement, thrill and ultimately euphoria by which point the asset class is over loved (and usually overvalued too) – everyone who is going to buy has – and it becomes vulnerable to bad news. This is the point of maximum risk. 

Once the cycle starts to turn down in a bear market, euphoria gives way to anxiety, denial, fear, capitulation and ultimately depression at which point the asset class is under loved (and usually undervalued) – everyone who is going to sell has – and it becomes susceptible to good (or less bad) news. This is the point of maximum opportunity. 

Dampen that emotion

“Key message: investor emotion plays a huge roll in amplifying the investment cycle,” Oliver also remarked, adding that investors should avoid assets where the crowd is “euphoric and convinced it’s a sure thing”.

What to do, Oliver says?

“[F]avour assets where the crowd is depressed and the asset is under loved”.

That, he posits, is obviously far easier than done, hence why the market has taken such a shine to systematic and data-based investing methods in the first place.

Instead, focus on the long-term – which, unsurprisingly according to this data, has shown to be “solid and relatively smooth,” Oliver says – and recognise that investment returns are a function of time as much as anything.

“Since 1900 for Australian shares roughly two years out of ten have had negative returns but there are no negative returns over rolling 20-year periods. (It’s roughly two & a half years out of 10 for US shares since 1900.),” Oliver commented.

Not to mention that, amidst several global recessions, a number of wars, housing crises, Russian debt default, the GFC, and most recently, Covid-19 (just to name a small few), the S&P/ASX 200 index (ASX: XJO) has still climbed from 1,487 in 1992 to 7,442 at the close of trade on Thursday, a 400% return.

That’s worth thinking about.

The post Investing in ASX shares? How to avoid the ’emotional rollercoaster’ appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for the Cochlear share price in April?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• ASX 200 midday update: Magellan jumps, tech shares tumble
• 2 ASX tech shares that are cheap enough to buy now
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX shares are under pressure along with global equities as the bond yield curve inverted, but there’s one ASX sector that could do very well in this environment, according to a leading broker.

The yield curve inversion refers to shorter-term US government bond yields rising above longer-term yields.

Investors are fretting because history has shown that an inverted yield curve precedes an economic recession.

A downturn would usually sink ASX shares as company earnings will fall in such an environment.

Inverted yield curve is good news for these ASX shares

However, the inverted yield could trigger a bull run for gold, according to Morgan Stanley. If that’s the case, this is good news for ASX gold miners like the Newcrest Mining Ltd (ASX: NCM) share price and Evolution Mining Ltd (ASX: EVN) share price.

“The yield inversion between the two- and 10-year has often been regarded as an indicator for an oncoming recession”, said Morgan Stanley.

“Prior to 2019, the last persistent inversion occurred in 2006-07, which was followed by a multiyear bull run for gold.”

Outlook for the gold price

The gold price is stuck at around US$1,900 an ounce for several weeks and experts are divided on its next move.

The gold price outperforms when the yield curve inverts and the spot gold price is well above consensus.

But Morgan Stanley believes that there are several factors, apart from the yield curve, that could push the precious metal higher.

Earnings upgrade potential for ASX gold shares

“The current yield environment, coupled with geopolitical uncertainties, high rates of inflation and US 10-year real rates and TIPS remaining negative, offers scope for gold upside potential, especially in light of current consensus estimates for the commodity”, said the broker.

“Current spot prices are slightly above CY22 MS and consensus estimates.

“However, if gold price forecasts for CY23 were to move higher and spot prices persist, there would be substantial upside risk to earnings for gold equities.”

These developments are enough to convince Morgan Stanley to change its negative bias stance on ASX gold shares.

Best ASX gold shares to buy now

The broker noted that the share prices of all gold shares under its coverage are pricing at a commodity price under the current spot price of approximately US$1,920 an ounce.

Its top buy picks in the sector are the Newcrest share price and Northern Star Resources Ltd (ASX: NST) share price.

“NCM remains our top pick for the long term, as several projects move towards FID”, said Morgan Stanley.

“NST has the highest FCF generation of our coverage and offers the most sensitivity to upside gold prices, with lowest downside due to well-priced hedges.

“NST also has a near-term catalyst with its brownfield expansion at KCGM.”

The post Yield curve inversion is bad news for ASX shares except for this sector appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Is Newcrest Mining considered a defensive ASX share?
• 5 things to watch on the ASX 200 on Wednesday
• Why has the Northern Star (ASX:NST) share price gained 23% in 2 months?
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Brendon Lau owns Newcrest Mining Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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