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The Santos Ltd (ASX: STO) share price is edging higher during Tuesday afternoon. This comes after the energy giant announced its CEO has offloaded a number of Santos shares. 

At the time of writing, Santos shares are swapping hands for $7.30, up 0.55%.

Santos CEO sells down Santos shares

Investors appear to be unfazed by the company’s latest news, sending the Santos share price into positive territory.

According to a company announcement, Santos chief executive Kevin Gallagher sold a parcel of his shares through an on-market trade.

In total, 400,000 Santos shares were offloaded on 23 February for an average price of $7.14 per share. This equates to a lump sum of roughly $2.86 million in Gallagher’s pockets.

The company listed the reason for the sale was to pay off “historic and pending personal tax obligations”.

It’s worth noting that this is not uncommon as directors and CEOs alike sell for various reasons over time.

A catalyst for the Santos shares remaining afloat today despite the selldown can be attributed to some recent broker notes.

The team at UBS cut its price target by 8.2% to $8.90 for Santos shares. Based on the current share price, this implies a potential upside of 21%.

Furthermore, Morgans and Macquarie also reduced their rating by 1.6% to $9.00, and 1.1% to $9.30, respectively.

It seems that all three brokers believe that the Santos shares are currently undervalued.

About the Santos share price

The Santos share price has gone almost nowhere over the last 12 months, registering a slight loss of 1%.

Although, when looking year to date, the company’s shares have accelerated by around 15%.

In particular, the past month has been extremely positive for investors, with Santos shares up 7%. This comes off the back of rising energy prices which have had a profound impact on the company’s share price.

Based on today’s price, Santos commands a market capitalisation of approximately $24.6 billion, with 3.39 billion shares on hand.

The post The company’s CEO just sold $2.8 million worth of Santos (ASX:STO) shares. Should investors be worried? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• The oil price has just hit an 8-year high. What might this mean for ASX shares?
• 5 things to watch on the ASX 200 on Thursday
• Santos (ASX:STO) share price climbs amid ‘major milestone’

Motley Fool contributor Aaron Teboneras 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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The Whitehaven Coal Ltd (ASX: WHC) share price has just enjoyed a stellar month.

Whitehaven shares surged nearly 20% between market close on 31 January and 28 February. And it seems the good run is continuing into March, with the coal miner’s shares currently up 5.92% today at $3.40.

Let’s take a look at why investors might be interested in this share.

What happened to Whitehaven in February?

The Whitehaven Coal share price climbed steadily in February, with only a few minor dips. Rising coal prices and positive broker outlook may have helped the company’s shares.

Analysts responded well to Whitehaven’s financial results in February. As my Foolish colleague James reported, Goldman Sachs lifted its price target on the company’s shares to $3.90.

The company’s shares climbed nearly 4% on February 18 on the back of this news.

Goldman described Whitehaven as a “compelling de-gearing and capital returns story”. Analysts also highlighted the positive thermal coal price outlook due to supply issues in Indonesia, Australia, and Russia.

Whitehaven reported a 1,601% surge in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to a record of $632 million in its H1 FY22 results on 17 February. Revenue also surged 106%, while net profit after tax soared 460%. The Whitehaven Coal share price fell on the day the results were released. However, it rebounded strongly the following day.

Commenting on the results, CEO and managing director Paul Flynn said:

High prices for thermal coal have driven record half year earnings and cash flows.

In a world where access to reliable and affordable energy is more important than ever, our investment thesis is a compelling one.

The surging coal price has also likely impacted investor sentiment in Whitehaven. Between market close on 31 January and 28 February, the thermal coal price soared 23% from US$222.75 to US$274.50 per tonne.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has exploded 116% in the past year. This year to date, Whitehaven shares have soared 29%.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 5% over the past year.

Whitehaven has a market capitalisation of about $3.3 billion, based on its current share price.

The post Why did the Whitehaven Coal (ASX:WHC) share price surge 20% in February? appeared first on The Motley Fool Australia.

More reading

• Whitehaven (ASX:WHC) share price tipped as a buy amid ‘compelling de-gearing and capital returns story’
• Another record: Whitehaven (ASX:WHC) share price sinks 6% despite NPAT soaring to new heights
• Are ASX mining shares the place to be right now?
• 3 ASX 200 shares tipped to shine bright in 2022

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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Australians poured $3 billion into funds invested in environment, social, and governance (ESG) shares in 2021, indicating 2022 could see more ASX watchers turning to the ‘ethical’ side of investing.

Calastone ­– the network that processes 95% of Australian managed fund flows ­– found the amount of cash invested in ESG equity funds more than quadrupled last year, surging 338%. And it likely hasn’t hit the ceiling yet.

Let’s take a look at what this year could bring for the ESG investing movement.

Australian investors turn to funds focused on ESG shares

Talk of ASX-listed ESG shares has escalated in recent years. And that seems to be good news for ESG-focused equity funds.

Calastone has analysed more than 500,000 buy and sell orders every month since 2019. It found the tables turned for ASX ESG investing in 2021.

Last year, $2 of every $10 invested in funds by Australians was placed in ESG equity funds. That’s despite such funds reporting cash outflows as recently as 2019.

Calastone managing director, head of Australia and New Zealand, Teresa Walker believes the amount of cash Aussies invest in funds focused on ESG shares could soon surpass what’s being placed in traditional managed funds.

It’s also speculated ESG funds could also eventually take capital from traditional funds.

“Inflows to ESG funds have grown exponentially, following trends we are seeing elsewhere in the world and we expect this to continue in 2022 as economies reopen,” Walker said.

“The value of ESG funds under management is still dwarfed by traditional categories, so there is a lot of headroom to grow further.”

That’s not just good news for ESG fund managers. It’s also a positive for Aussies looking to diversify their investments.

Generally, ESG funds don’t simply stick to the ASX, instead buying ‘ethical’ shares from all over the world.

“In 2021, for example, three-fifths of ESG cash flowed into global ESG funds, compared to less than half the cash devoted to non-ESG equity funds,” Walker said.

How do Aussies stack up against the world?

Aussie investors’ excitement over ESG equity funds is dwarfed by their international peers.

In the United Kingdom, $8 of every $10 put into equity funds for the first time in 2021 was invested in ESG strategies.

In Europe, the amount of capital invested in traditional funds fell in 2021 as investments in ESG offerings doubled.

But Australia leads the world in one aspect. For every $10 put into fixed-income funds last year, $4 went to fixed income funds focused on ESG strategies.

Which ASX 200 shares are considered ESG investments?

Not all investors will be interested in putting their savings into equity funds.

Luckily there are plenty of ESG shares listed on the ASX.

While the factors that make an ASX share ESG are subjective, some of the leading holdings of the SPDR S&P/ASX 200 ESG EFT (ASX: E200) include:

• BHP Group Ltd (ASX: BHP)
• CSL Limited (ASX: CSL) and
• National Australia Bank Ltd (ASX: NAB)

The post ‘A lot of headroom to grow’: Is 2022 the year ASX investors turn to ESG shares? appeared first on The Motley Fool Australia.

More reading

• How might the conflict in Ukraine impact the iron ore price?
• Own NAB (ASX:NAB) shares? Here’s why the bank has been ruffling some customer feathers
• Which ASX 200 shares have delivered the biggest dividend payout increases this earnings season?
• Which ASX shares might be impacted by Probuild’s collapse?
• The oil price has just hit an 8-year high. What might this mean for ASX shares?

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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The S&P/ASX 200 Index (ASX: XJO) is on course to start the month in a positive fashion. In afternoon trade, the benchmark index is up 0.8% to 7,105.9 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Dubber Corp Ltd (ASX: DUB)

The Dubber share price is down 8% to $1.35. Investors have been selling this call recording software company’s shares following the release of its half year results. While those results revealed strong top line growth, they also showed that Dubber’s half loss had quadrupled to $31 million.

Evolution Mining Ltd (ASX: EVN)

The Evolution share price is down almost 5% to $4.07. This is despite there being no news out of the gold miner on Tuesday. However, with investors flooding back into risk assets today, safe haven assets have taken a hit. It isn’t just Evolution that is falling. The S&P/ASX All Ordinaries Gold index is down almost 2% this afternoon.

Sandfire Resources Ltd (ASX: SFR)

The Sandfire share price is down almost 13% to $5.84. Investors have been selling this copper miner’s shares after brokers responded negatively to its recent results. One of those is JP Morgan, which has retained its sell rating and cut its price target to $5.00. Not only were the miner’s results below its forecasts, the interim dividend of 3 cents per share was 2 cents less than it was expecting.

Zip Co Ltd (ASX: Z1P)

The Zip share price is down 5.5% to $2.09. This morning the buy now pay later provider’s shares returned from a trading halt following the completion of a ~$150 million institutional placement. These funds were raised at a 14% discount of $1.90 per share and will be used to support its growth. The market has also given a lukewarm response to news that Zip has signed an agreement to acquire Sezzle Inc (ASX: SZL).

The post Why Dubber, Evolution, Sandfire, and Zip shares are dropping appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to sell today
• Here’s why ASX gold shares just had their best month in 2 years
• Why is the Sezzle (ASX:SZL) share price falling following Zip’s takeover offer?
• Why is the Sandfire (ASX:SFR) share price fizzling 11% today?
• ASX 200 (ASX:XJO) midday update: Zip shares tumble, AUSTRAC takes aim at Crown

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 Dubber Corporation and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Dubber 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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Yesterday we looked at three ASX shares brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Magellan Financial Group Ltd (ASX: MFG)

According to a note out of UBS, its analysts have retained their sell rating and cut their price target on this fund manager’s shares to $15.40. This follows the release of another update which revealed a further reduction in its funds under management and news that a ratings agency has downgraded its flagship Global Fund. The Magellan share price is trading at $17.92 this afternoon.

Reece Ltd (ASX: REH)

A note out of Citi reveals that its analysts have retained their sell rating and cut their price target on this plumbing parts company’s shares to $16.83. While Reece delivered a solid half year result last month, it isn’t enough for a change of rating. It continues to struggle to find a way to justify the multiples (34x FY22e earnings) that the company’s shares trade on. The Reece share price is fetching $19.97 on Tuesday.

Zip Co Ltd (ASX: Z1P)

Analysts at Macquarie have retained their underperform rating and cut the price target on this buy now pay later provider’s shares by almost 50% to $1.85. This follows news that Zip is acquiring Sezzle Inc (ASX: SZL) and raising $200 million to support the growth of the two businesses. Macquarie isn’t sure about the price Zip is paying for Sezzle. It also has concerns over rising bad debts and expenses, which has led to sharp reductions its earnings forecasts. The Zip share price is trading at $2.10 on Tuesday afternoon.

The post Leading brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

More reading

• Why is the Sezzle (ASX:SZL) share price falling following Zip’s takeover offer?
• ASX 200 (ASX:XJO) midday update: Zip shares tumble, AUSTRAC takes aim at Crown
• Why is the Zip (ASX:Z1P) share price sinking 11% today?
• These were the worst performing ASX 200 shares in February
• 5 things to watch on the ASX 200 on Tuesday

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 ZIPCOLTD FPO. 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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The Avita Medical Inc (ASX: AVH) share price is skyrocketing today after the company released its financial results for a six month “transition period” ended 31 December 2021.

The company announced in December 2021 that it wanted to change its fiscal year from June 30 to December 31. That’s why Avita is reporting for a six-month period today.

At the time of writing, the Avita share price is 23% higher at $3.16.

Avita Medical share price surges as revenue spikes 37%

Key takeouts from the company’s earnings results today:

• Revenue increased 37% to $14 million, compared to $10.2 million the same time last year
• Completed enrolment in two clinical trials with the goal of submitting premarket approval (PMA) supplements in 2022
• Received FDA approval of the PMA supplement for Recell Autologous Cell Harvesting Device
• Approved application for commercialisation of the Recell system in Japan
• $55.5 million in cash and equivalents at the end of the period
• $49.3 million in short-term and long-term marketable securities, with no debt.

What happened this period for Avita Medical?

The company recognised a 37% gain in revenue to $14 million, underscored by its Recell commercial revenues of $13.8 million. Recell is a system that allows medics to use a patient’s own skin cells to produce ‘spray-on’ skin in the treatment of acute burns.

Avita also extended the shelf life of Recell and this led to a 300 basis point increase in gross profit margin to 86% compared with 83% last year.

It also saw a 7% increase in operating expenses due to “ongoing development of a next-generation automated skin preparation device, pre-commercialisation planning for Recell launches in soft tissue reconstruction and vitiligo, as well as increased hands-on professional education and training events”.

The jump in revenue carried down vertically through Avita’s P&L. The company’s net loss decreased by $1.5 million to $14.4 million, helped by stronger margins as well.

As well, so far in 2022, the company has received approval of the PMA supplement for Recell in the US and was awarded an application for the commercialisation of Recell in Japan.

Management commentary

Speaking on the results, Avita CEO Dr Mike Perry said:

We are pleased with the terrific results that we are achieving with RECELL in US burn centres, as well as with our recent achievement of many key corporate milestones. Our success in burns will help us prepare for and is expected to increase our future adoption with respect to commercialisation in much larger markets for soft tissue reconstruction and vitiligo in the second half of 2023.

What’s next for Avita?

Avita forecasts total revenues to grow by 20% year on year in CY22. It expects approximately $30 million at the top, with an additional $300,000 in contract revenues.

The company expects US BARDA contract revenues of approximately $0.3 million in 2022. That’s down from $7.9 million last year, as several contract terms have been completed.

But the company is confident in its focus for the year ahead:

As we emerge from COVID-19, we expect further Recell adoption in US burn centers where we are focusing our commercial efforts. The adoption of Recell, and its positive patient outcomes and safety profile, positions us very well for broader commercial expansion planned for soft tissue reconstruction and vitiligo indications in the second half of 2023 following anticipated FDA approval.

Avita Medical share price snapshot

In the last 12 months, the Avita Medical share price has collapsed more than 44% and is down 9% this year to date.

However, during the past month of trading, the company’s shares have soared 16% and, on today’s results, are now more than 25% in the green this week alone.

The post Avita Medical (ASX:AVH) share price soars 23% as earnings stage a comeback appeared first on The Motley Fool Australia.

More reading

• Avita (ASX:AVH) share price jumps 6% following FDA approval

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. owns and has recommended Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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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A message from our CIO, Scott Phillips:

“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.”

————           

Volatility in the iron ore price is expected to continue as the frightening situation in Ukraine pushes onwards. This leaves investors wondering how might a prolonged conflict affect the price of the steelmaking commodity.

Since November, iron ore has swung dramatically between ~US$92 per tonne and US$150 per tonne. More recently, prices have cooled off and returned to US$136.50, where it sits now.

What does curtailed iron ore supply mean for prices?

The market for iron ore is a large one — estimates put the figure somewhere around 2.3 billion tonnes in 2021 alone. Notably, Australia is the largest producer of the commodity — with companies such as Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) digging up the bulk of it.

In comparison, Ukraine and Russia’s contribution to iron ore supply is relatively small. However, in the world of supply and demand, even slight disruptions to the equation can play out in the iron ore price.

In specific terms, Ukraine usually shovels around 40 million tonnes of iron ore into the market each year. Likewise, Russia typically adds around another 25 million tonnes per year.

Running some quick numbers, the two countries currently involved in a conflict make up close to 3% of the global iron ore supply. And it appears the situation is already beginning to have an impact on the market.

For example, one of the world’s largest steel producers — Nippon Steel — is assessing alternative high-grade iron ore pellet suppliers. The reason is, Ukraine makes up 14% of imports for the more premium form of raw iron ore material. Reportedly, the steelmaker is eyeing off a new supply from Brazil and Australia.

The demand shift into a more constrained supply could give rise to a higher iron ore price. However, analysts at Macquarie Group Ltd (ASX: MQG) are mindful that nearly 158 million tonnes of ore are sitting in port inventories.

How are producers holding up?

Despite a potential tailwind in the near term, the recent trajectory from ASX-listed iron ore companies has been divided. For instance, here’s how some of the largest players performed over the past month:

• Rio Tinto — up 8.5%
• BHP Group — up 4.7%
• Fortescue Metals Group Limited (ASX: FMG) — down 8.6%
• Mineral Resources Limited (ASX: MIN) — down 21.2%

Potentially investors are taking into account Macquarie’s estimates of a US$100 iron ore price by the end of the year. Though, the unpredictable events playing out in Ukraine throws a spanner into the works of forecasts.                                           

The post How might the conflict in Ukraine impact the iron ore price? appeared first on The Motley Fool Australia.

More reading

• Tell him he’s dreamin’: Are the Fortescue (ASX:FMG) green hydrogen plans realistic?
• The latest Rio Tinto (ASX:RIO) dividend is the biggest in Australian history. What’s next for the miner?
• Why Betmakers, Fortescue, Suncorp, and Tyro shares are falling
• 5 ASX 200 shares trading ex-dividend today
• 2 high-yield ASX dividend shares for March 2022

Motley Fool contributor Mitchell Lawler owns Macquarie Group 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 recommended Macquarie 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. At the time of writing, the benchmark index is up 1% to 7,119.9 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are storming higher:

IDP Education Ltd (ASX: IEL)

The IDP Education share price is up over 8% to $28.47. This follows news that some of the student placement and language testing company’s major shareholders have offloaded shares this morning at a small premium to the last close price. Given that ~$84 million worth of shares were able to be sold without a discount appears to indicate that someone on the buy-side saw a lot of value in them.

IGO Ltd (ASX: IGO)

The IGO share price is up 8% to $11.78. This morning the mining company provided an update on its talks with Glencore regarding the potential acquisition of the CSA Copper Mine. According to the release, the two parties have concluded their talks without coming to an agreement. It appears as though the market was not keen on the deal, especially given that a capital raising may have been required.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price has jumped over 13% to 12.7 cents. This follows news that the lithium explorer has upgraded the lithium resource estimates of its North American Lithium (NAL) and Authier projects. The total new lithium resource is double its previous estimates.

Yancoal Australia Ltd (ASX: YAL)

The Yancoal share price has surged 15% higher to $4.00. Investors have been buying this coal miner’s shares following the release of its full year results. Yancoal reported a 56% increase in revenue to a record of $5.40 billion and a profit after tax of $791 million. This strong form allowed Yancoal to reinstate its dividend.

The post Why IDP, IGO, Sayona Mining, and Yancoal shares are storming higher appeared first on The Motley Fool Australia.

More reading

• Yancoal (ASX:YAL) share price surges 15% as dividends merrily return
• ASX 200 (ASX:XJO) midday update: Zip shares tumble, AUSTRAC takes aim at Crown
• Why is the IGO (ASX:IGO) share price rocketing 8% today?
• Sayona (ASX:SYA) share price lights up 18% as lithium resource doubles
• Sayona Mining (ASX:SYA) share price halted ahead of lithium news

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 Idp Education Pty 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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The ASX share market continues to be very volatile. But today, the volatility is actually sending prices higher. ASX tech shares in particular are seeing some rocketing gains.

It has been a difficult time to be a shareholder of many of the ASX’s most well-known tech names.

The market has been focused on what the effects of strong inflation could have on interest rates and what this might mean for asset prices.

But some ASX tech shares have come soaring back today, recovering some of that lost ground.

Xero Limited (ASX: XRO)

The Xero share price is up more than 5% today.

On 24 February 2022, the Xero share price had fallen 34% from the start of the year. But since that low, Xero shares have risen by 6%.

But, the cloud accounting software provider is still down around 32% in 2022.

In the company’s FY22 half-year result for the six months to 30 September 2021, its total subscribers increased by 23% to 3 million. The annualised monthly recurring revenue (AMRR) grew by 29% to $1.13 billion. Xero’s gross profit margin also increased by 1.4 percentage points to 87.1%.

Block Inc CDI (ASX: SQ2)

The Block share price is currently up more than 13% at the time of writing.

The ASX tech share was recently listed on the ASX. But between 20 January 2022 and 24 February 2022 it fell by 34.3%. But since that low, it has soared 51%.

Block is one of the world’s largest payment businesses. The business owns both Square and Afterpay.

Block recently announced its fourth quarter and full-year result to investors, which didn’t yet include Afterpay in the numbers. Block’s gross profit rose 62% year on year to $4.42 billion. It also made $1 billion of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). This result was released on 25 February 2022.

SEEK Limited (ASX: SEK)

The SEEK share price is up by more than 5% today.

Despite the rise today, SEEK shares are still down 17% since the start of the year.

A couple of weeks ago the business announced its half-year result. Continuing operations rose 59%, EBITDA jumped 83% and the net profit after tax (NPAT), excluding significant items, surged 147% to $124.2 million.

The post 3 ASX tech shares going gangbusters today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Block (ASX:SQ2) share price is surging 13% today
• Why Adbri, Appen, Block, and Life360 shares are storming higher
• Back on the horse! ASX tech shares stage stunning comeback following sell-off
• ASX 200 (ASX:XJO) midday update: Block rockets, Blackmores sinks
• Block (ASX:SQ2) share price rockets 39% today as profits soar

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 Block, Inc. and Xero. The Motley Fool Australia owns and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended SEEK 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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“It is important to note that, at the individual level, all market participants, whether they are less knowledgeable individual investors or experienced money managers, may act irrationally.” – CFA Institute

Anyone watching the news today understands there are a number of crosscurrents feeding into global stock markets right now.

Themes of inflation, interest rates, geopolitical tensions, conflict in Europe – and who could forget our old friend COVID-19 – have rocked global equity investors in 2022.

The benchmark S&P/ASX 200 Index (ASX: XJO) has slipped 4.3% into the red so far this year, even after staging a small recovery this past week or so. Sector-specific and thematic indices are down even further, as seen on the chart below.

With these undertones driving market volatility, it’s no wonder that some investors are feeling the pressure on their portfolios. Gone are the days of ‘SWAN’ (sleep well at night) investments in the current macro-climate.

As the Chartered Financial Analyst Institute points out, everyone is susceptible to these kinds of emotions. In essence, it’s what separates us as humans from the computers and bots that also trade the markets.

But what to do in these uncertain times to protect capital, ensure liquidity, and cover the significant downside events?

Consider high-quality shares as an ‘inherent’ risk control

First of all – life comes with a deal of uncertainty. No one knows the future and those who pretend to are shown the door time and time again (especially in finance).

Whether it’s making predictions of financial markets under starlight using ‘financial astrology‘ or even complex econometric, statistical models, there is no human, computer, or company that will get it right every time.

Hence, one has to adopt a systematic approach in embracing the unknown and clearly distinguish between what is uncertainty and what is risk, according to Kauri Asset Management’s George Wong.

One particular tried and tested mantra that factors in both risk and reward is to focus on high-quality shares, Wong wrote on Livewire last week.

“Investing in high-quality companies is an inherent way to mitigate downside risk during uncertain periods, and often presents a low-risk, high-reward situation,” he said.

“The risk of irreversible loss of capital for high-quality companies with strong fundamentals is low. By nature, these companies tend to be resilient and often bounce back stronger than before.”

Risk and uncertainty are two separate things

High-quality companies have shown to be more resilient in times of market sensitivity and are less ‘jittery’ in times of volatility, Wong says.

And that’s precisely how he says to navigate the investment landscape in times of uncertainty – by focusing on the fundamentals of a business and capitalising on “rare chances to add high quality stocks to your portfolio”.

However, if one is afraid of uncertainty, these opportunities may pass, Wong says. This, he says, is why it’s so important to separate uncertainty and risk.

One way in which to achieve this is to prioritise a long-term investment horizon and focus on a systematic approach to investing – especially for those in their younger years.

This can help to cancel short-term noise and encourage investors to remain confident in their investment convictions which should be based on fundamentals anyway, Wong reckons.

“As long as we have a system with which we can prepare ourselves mentally in dealing with uncertainty, and methodically evaluate investment opportunities, then uncertainty will afford us more opportunities to become successful investors,” the financial advisor remarked.

“Keep in mind, if businesses like banks and insurers can establish highly profitable operations on the very premise of accepting uncertainty, we also have the same opportunity.”

The post Fretting over ASX share market losses? Expert explains how to ’embrace uncertainty’ appeared first on The Motley Fool Australia.

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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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