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The BHP Group Ltd (ASX: BHP) share price has rallied 8% in the past month, bouncing off a 2-month low of $45.61 on 21 June to trade at $50.19 early Wednesday morning.

Shares in the iron ore major continue to move in a volatile fashion, sliding to short-term lows before quickly bouncing back to all-time highs.

BHP share price tumbles despite upbeat quarterly update

Looking at the recent performance of the iron ore major, the BHP share price has tumbled 5.07% this week after a record close of $51.87 on Friday.

This weakness was overshadowed by a sharp selloff in the broader market, with major indices such as the Dow Jones Industrial Average and S&P/ASX 200 Index (ASX: XJO) sliding a respective 2.99% and 1.31% during Monday and Tuesday trading sessions.

The US market has faltered under increasing concerns of a resurgence in COVID-19 cases and the delta variant.

Despite a disappointing week on the ASX so far, BHP has released its fair share of positive news.

On Tuesday, the company released its fourth-quarter and full-year update, citing production that was in line with guidance and strong pricing for its commodities.

Overall, BHP CEO Mike Henry said the company was “in great shape”.

Our operations are performing well, we continue our track record of disciplined capital allocation, and our portfolio is positively leveraged to the megatrends of decarbonisation, electrification and population growth.

Iron ore prices hold up despite weak outlook

Looking ahead for the BHP share price, there are consensus expectations that iron ore prices will weaken in the medium to long term.

A June quarterly report from the Australian Government’s commodity forecaster, Office of the Chief Economist (OCE) said that:

Prices are forecast to average around US$150 a tonne in 2021, before falling to below US$100 a tonne by the end of 2022, as Brazilian supply recovers and Chinese steel production softens

The last time iron ore was trading at US$100 a tonne was back in June 2020 when BHP shares were fetching around $35 a share.

Despite increasing expectations of moderating prices, iron ore has remained well above the US$200 level.

The post The BHP (ASX:BHP) share price is up 8% in the past month. Here’s why appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Kerry Sun 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 AMP Ltd (ASX: AMP) share price is having a year to forget.

Over the past 12 months, shares in the financial institution have fallen nearly 40%. The S&P/ASX 200 Index (ASX: XJO) is up about 21% in the same time period – a gigantic 61 percentage points reversal against the beleaguered company.

Here we will take a look at some of the biggest stories that have affected the AMP share price.

The AMP share price over the last year

Controversies

AMP has been embroiled in much controversy over the last 52 weeks. It started on the tail end of the Hayne Royal Commission findings into the banking sector. AMP came in for scathing criticism for its conduct – including alleged deductions of service fees and premiums from deceased customers.

Criminal proceedings were brought against the bank for allegedly deducting fees for financial advice to customers who did not receive said advice. These were recently dropped by ASIC.

When the public’s ire looked like it was fading, it rallied again when reports of sexual misconduct at senior levels of the company were made public.

Boe Pahari was promoted to Chief Executive of AMP Capital, despite the board being made aware of several allegations of sexual misconduct against him. Initially deciding not to fire anyone, the company did an about-face and removed Pahari from his role. The Chair, David Murray, also resigned in the wake of the scandal.

Pahari received a $1 million bonus for his 53 days in the role.

The reputational damage, plus serious questions over AMP’s governance structures, could have caused the massive decline in the AMP share price.

Aborted takeover bid and split with AMP Capital

In October 2020, Ares Management Corp (NYSE: ARES) approached AMP with an offer to buy 100% of the company at $1.85 per share – note this is 75% higher than its current market price.

Despite drawn-out negotiations, the takeover did not eventuate. A new joint venture between the companies was proposed in February in its place. Ares would take over 60% of its private markets business for $2.3 billion. The deal fell through one month later, delivering another blow to the AMP share price. Eventually, AMP decided to demerge its private markets business with a float on the ASX.

Financial performance

During this time, which also saw the departure of its CEO one week after denying he would leave, the company underperformed financially.

At the end of July last year, AMP downgraded its profit expectations for FY20 due to a range of factors, such as market volatility and a credit downgrade.

Its half-year performance for FY21 wasn’t much better. The AMP share price dropped 9% when it announced a 33% decline in net profits after tax for the 6 months ending 31 December.

Foolish takeaway

Obviously, it has not been a good 12 months for AMP shareholders. The company’s share price continues to break 52-week lows, seemingly every trading day. Only yesterday it hit another low of $1.05 per share.

It’s been a year to forget for many – doubly so for those invested in the AMP share price.

The post The AMP share price is trailing the ASX 200 by 60% over the past year appeared first on The Motley Fool Australia.

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• It hasn’t been a great 2021 so far for the AMP (ASX:AMP) share price
• ASX 200 rises, Macquarie up, Rural Funds launches capital raising

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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Experts are warning of more pain for the Australian dollar after its big crash, but that’s good news for ASX 200 shares.

The Aussie is currently sitting at around US73.3 cents, its lowest since November last year. Forecasters are predicting it could fall below US70 cents in the coming months, reported the Australian Financial Review.

That would be a good outcome for the S&P/ASX 200 Index (Index:^AXJO) as our bigger companies tend to exporters.

ASX 200 shares benefiting from a battered Aussie dollar

This means a material portion of their revenue is generated in US dollars. The exchange rate will give these ASX 200 shares a boost when they convert these sales into Australian dollars.

Some notable ASX 200 shares with large US dollar exposure include the James Hardie Industries plc (ASX: JHX) share price, Aristocrat Leisure Limited (ASX: ALL) share price and Resmed CDI (ASX: RMD) share price – just to name a few.

ASX 200 mining shares to also get a boost

ASX mining shares are also in this category as commodities are bought and sold in US dollars – notwithstanding the inverse correlation between commodity prices and the greenback. After all, prices of many commodities are hovering at multi-year, if not record highs.

ASX miners with large domestic operations like the Fortescue Metals Group Limited (ASX: FMG) share price and Newcrest Mining Ltd (ASX: NCM) share price are even better placed. This is because their cost base is largely denominated in the weaker local currency.

ASX shares at the sharp end of the exchange rate

But a retreating Aussie will also create losers. These tend to be ASX small cap shares as the group are net importers of goods and services. Their margins could get squeezed as their costs rise and they are unable to pass on the increases to consumers.

ASX investors worried about inflation will also have a new reason to fret. A falling Aussie will add to inflationary pressure at a time when markets are alive to this threat on share valuations.

What’s causing the Australian dollar to lose ground?

So why is the Aussie battler looking so battered and bruised? The expanding lockdowns of our big cities due to the more transmittable delta-variant of COVID-19 is to blame.

The Reserve Bank of Australia may not be able to taper its quantitative easing (QE) program as quickly as the market expects in light of this economic blow.

QE refers to the buying of bonds and other assets by the central bank. This increases liquidity in our financial system to stimulate growth, but it depresses the currency.

Hit by growth jitters

Currency traders are also abandoning currencies like ours that’s linked to global growth as other countries in Asia and Europe struggle to contain the delta virus.

It was only a month ago that forecasters were convinced the Aussie was going to crack US80 cents a share, noted the AFR.

But as they say, one month is a long time in markets.

The post Forecast crash in Aussie dollar to under US70 cents to boost these ASX 200 shares appeared first on The Motley Fool Australia.

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• Polynovo (ASX:PNV) share price bounces off 10-month lows, up 3% today

Motley Fool contributor Brendon Lau owns shares of Aristocrat Leisure Ltd., Fortescue Metals Group Limited, James Hardie Industries plc, and Newcrest Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. 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 Kogan.com Ltd (ASX: KGN) share price is storming higher on Wednesday morning.

In early trade, the ecommerce company’s shares are up 5% to $12.35.

Why is the Kogan share price rising?

Investors have been bidding the Kogan share price higher after it released a business update which revealed an improvement in its performance.

It advised: “Following the Company’s continued focus on improving customer value, trading performance in June 2021 saw an acceleration in the delivered Gross Sales, Gross Profit and Adjusted EBITDA , ahead of the performance in April and May 2021.”

According to the release, Kogan achieved gross sales of $1,177.7 million in FY 2021. This was an increase of 52.5% on the prior corresponding period. This figure was boosted by the acquisition of Mighty Ape, which added $80.3 million of gross sales. Excluding Mighty Ape, Kogan’s gross sales would have been up 42.1% year on year to $1,097.4 million.

This strong top line growth was driven by the shift online and a solid increase in active customers. The release reveals that active customers grew by more than 46% over the 12 months to 3,207,000 for Kogan.com. Whereas the Mighty Ape business had 764,000 active customers at the end of the financial year.

Softer profit growth

Things weren’t quite as positive for its operating profits due to its significant inventory issues in the second half.

Kogan reported adjusted EBITDA of $61.1 million for FY 2021, up 23.1% year on year. This is a sharp slowdown on the adjusted EBITDA growth rate of 184.4% it reported in the first half.

Once again, the acquisition of Mighty Ape was a boost. Excluding Mighty Ape’s operating profit of $6.9 million, Kogan’s adjusted EBITDA would have been up 9.2% year on year to $54.2 million.

Inventory issues

Potentially giving the Kogan share price an extra boost today was an update on the inventory issues it has been facing. Positively, it revealed that it ended the period with its inventory in a much better position.

Commenting on the issues, it said: “The Company utilises data and analytics in forecasting its operations to enable the delivery of the right products to customers at the right time. Given the turbulent trading and social environment over the last year, forecasting consumer needs has been harder than ever for the Company.”

“The Company took the view late last year that the levels of demand during the first half of FY21 would likely continue into the second half, and potentially grow further still. The Company invested in inventory and operational capacity to be able to fulfil that growth. As is now clear, the Company’s expectations weren’t accurate and as a result the Company purchased too much stock. This led the Company to focus on strong promotions to bring inventory to the right level for the relative size of business, and this promotional activity combined with high warehousing costs has impacted financial performance in the second half,” management added.

Positively, these issues appear to be behind the company now, thanks potentially to recent lockdowns which sent consumers back online again.

“Following the end of the second half, the Company can now say that the efforts to bring down levels of inventory have come a very long way, and inventory is approaching the right level for the business. The Company expects improved efficiency moving forward,” it concluded.

Where next for its shares?

Given that the Kogan share price has rebounded strongly during the recent lockdowns, the market may have already priced in some of this improvement. This could potentially hold back the Kogan share price somewhat on Wednesday.

The post Kogan (ASX:KGN) share price up 5% on business update appeared first on The Motley Fool Australia.

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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 shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com 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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The Nitro Software Ltd (ASX: NTO) share price has been a positive performer on Wednesday.

In morning trade, the global document productivity software company’s shares are up 2.5% to $3.33

This latest gain means the Nitro Software share price is now up 58% over the last 12 months.

Why is the Nitro Software share price charging higher?

The Nitro Software share price is rising today after the company announced a new product launch and a major integration for its software.

According to the release, the company has launched Nitro Sign as a standalone subscription product as part of a new comprehensive, flexible pricing, and packaging model for the Nitro Productivity Platform.

Management believes the launch of Nitro Sign as a standalone subscription product and the recent addition of native Mac, iPad and iPhone capabilities, means the Nitro Productivity Platform is now more powerful than ever. It notes that it offers customers a full suite of workflow productivity solutions to meet any business need on the most popular systems and devices.

It also highlights that the increased scale of the Nitro Productivity Platform comes at a critical time for organisations around the world. With businesses dealing with the ongoing impacts of the COVID-19 pandemic, they are accelerating the shift from slow-moving, paper-based processes to more efficient digital document workflows.

This shift is evident in Nitro Software’s usage statistics. It revealed that more than 2 billion documents were opened in Nitro PDF Pro during 2020. Furthermore, over 1 million Nitro Sign eSignature requests have been made in the first six months of 2021, which equals the number of requests for the entirety of 2020.

Salesforce integration

Also giving the Nitro Software share price a lift was news that it is integrating the Nitro Productivity Platform with Salesforce. It is the provider of the world’s leading customer relationship management (CRM) software.

Management expects the integration to help customers accelerate the closing of sales contracts and other critical agreements.

Nitro Sign and Nitro PDF Pro already integrate with other key systems used by organisations every day, including Zapier, Power Automate, SharePoint and cloud providers Box, Dropbox and Microsoft OneDrive.

Nitro Software’s Co-Founder and Chief Executive Officer, Sam Chandler, said: “As years of offline-to-online migration are compressed into months by COVID-19, more and more organisations are turning to us for solutions to dramatically improve their document workflow productivity. With the increased scale, capability and flexibility of the Nitro Productivity Platform, we are able to offer our customers the ability to tailor individual productivity solutions that remove barriers to growing their businesses in this fast-changing world.”

The post Nitro Software (ASX:NTO) share price rises on Salesforce news appeared first on The Motley Fool Australia.

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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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software 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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The Whispir Ltd (ASX: WSP) share price is on the move on Wednesday morning.

At the time of writing, the communications workflow platform provider’s shares are up 7% to $2.82.

Despite this gain, the Whispir share price is still down 23.5% in 2021.

Why is the Whispir share price charging higher?

The catalyst for the rise in the Whispir share price on Wednesday has been the release of its fourth quarter update.

That update revealed that Whispir finished the year in a positive fashion, leading to solid recurring revenue growth over the full year.

According to the release, the company finished the period with annualised recurring revenue (ARR) of $53.6 million. This represents an increase of 28.5% on the prior corresponding period and 6.6% on the third quarter.

Management advised that this quarter on quarter growth was driven largely by existing customers increasing their usage on the Whispir platform. This led to customer revenue retention standing at 115.9% at the end of the period.

Also supporting its growth was the addition of 51 net new customers during the quarter, taking its total to 801. This represents growth of 27.1% over the 12 months.

In respect to cash, Whispir quarterly cash receipts of $13.5 million, which was 18.9% higher than the prior corresponding period. This left the company with cash and equivalents of $49.2 million at the end of June. Management believes this leaves it well-funded to accelerate its growth strategy.

Whispir’s CEO, Jeromy Wells, said: “The structural shift by organisations to digital stakeholder communication continues to gain momentum and we are seeing this through new customer sign-ups and increasing usage across our existing customer base.”

“To capitalise on this growing demand, we are investing in artificial intelligence and machine learning to accelerate the development of our data-led product roadmap. Sales and marketing activities also continue to be a focus as we support new and existing customers across all key regions, including our largest market opportunity in North America,” he added.

While no guidance was given for the year ahead, Mr Wells appears confident on the company’s prospects in FY 2022.

He concluded: “Looking ahead we see substantial opportunity for growth in the underserved North American SME market, and our capital raising earlier in the year positions us well to continue unlocking these opportunities in FY22.”

The post Why the Whispir (ASX:WSP) share price is jumping 7% today appeared first on The Motley Fool Australia.

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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 shares of and has recommended Whispir Ltd. The Motley Fool Australia has recommended Whispir 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

You might be wondering if investing when the stock market is at or near its all-time high is a good idea. Before you decide, it’s worth considering two factors: your risk tolerance and your investment time horizon. It’s also worth looking at what has resulted from investing at previous all-time highs. Historically speaking, there has rarely been a bad time to put money to work assuming it’s money geared for long-term investing.

Here, we’ll go over some of the most important factors in deciding whether you should really be investing in the stock market right now.

Your risk tolerance

Some people have an insatiable tolerance for investment risk: No amount of bitcoin tokens or GameStop stock is enough. For others, it’s quite the opposite. No matter the type of investor you are, you should be evaluating risk from the standpoint of your total portfolio. That is, you should consider your entire financial situation and then assign risk from there.

Next, realize that there are two key attributes of risk tolerance: your ability to take risk and your willingness to take risk. You might be a multimillionaire with an above-average ability to take risk, but you might not have the willingness to do so because you don’t feel there’s much to be gained as a result. In another case, you might have a very high willingness to take risk but have other obligations that prevent you from adopting such a strategy. Simply put, risk tolerances vary widely.

There’s also a psychological risk when it comes to investing: Some people literally can’t sleep at night knowing their money is in danger of losing value. Stock market risk most famously comes in the form of volatility, or the tendency for investment values to fluctuate in either direction (at least in the short term). While it’s somewhat in vogue to ignore the importance of being able to sleep at night, you’d be smart to exercise caution before you take on more risk than you can personally bear.

Your investment time horizon

With regard to time horizon, you should only be investing money in the stock market that you won’t need for at least three years — some people even advocate five years as a minimum time frame. Regardless, if you’re planning on using the money in six months for a down payment on a home or a large college tuition bill, you shouldn’t be investing it in the stock market.

One of the keys to determining your time horizon for various buckets of money is to create an asset allocation as part of a complete financial plan. You might start with an emergency fund — money meant to cover short-term expenses in the event of job loss or other emergencies.

From there, you can build a portfolio of stocks, bonds, and other investments that reflects your ability to take risk over specific periods of time. Money in a child’s education fund meant for use in several decades can be earmarked as a long-term account whereas money meant for a home renovation next year will require short-term management.

In brief: A long time horizon — say, of at least five years — is a sign you’re ready for a stock market investment.

What if the market is at an all-time high?

Bears beware: The fact remains that over long periods of time, the stock market has rarely lost money. If you had invested money at all of the previous all-time highs — despite the crazy volatility often found in between — you’d have come out ahead. You may have even come out very far ahead depending on the specific time period during which you began.

Investing now has a few important advantages. First, the sooner you invest, the sooner you’ll be eligible to collect dividends, for example, and accumulate more shares. This is the very essence of compounding. Through compounding asset values, you’ll be shocked at how fast your money can grow.

Next, investing now will start your holding period for preferential long-term capital gains tax treatment. Long-term capital gains rates reward investors who have held stocks and bonds for over a year. Over time, you want as much of your income as possible taxed at as low a rate as possible — the sooner you start investing, the sooner this will happen.

Invest, but have a strategy in place

The stock market — without question — can make you a very wealthy individual if you stick to the basics. Invest early and often, sell only when necessary, and focus on the long term. But before you do, make sure to take a thorough look at your entire financial picture and be entirely honest with yourself about your appetite for risk as well as your relevant investment time horizon. If everything checks out, proceed confidently and invest now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Should you really be investing in the stock market right now? appeared first on The Motley Fool Australia.

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Sam Swenson, CFA, CPA has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Mineral Resources Limited (ASX: MIN) share price has taken a downward turn in the last week.

After hitting an all-time high of $61 last Thursday, Mineral Resources shares closed yesterday’s trading session at $58.14. That’s a tumble of around 4.5% in the past week.

Let’s take a look at how the Mineral Resources share price has performed and what’s driving shares down.  

Mineral Resources shares tumble with overall market

Mineral Resources has not released any price-sensitive news over the past week that could explain the decline in its share price.

It may be that the mining services company is feeling the effect of weakness in the overall market.

Since last Thursday, the S&P/ASX200 Index (ASX: XJO) itself has tumbled more than 100 points.

As a result, many shareholders might be prompted to lock in their profits after the outstanding performance of Mineral Resources shares over the past year.

Snapshot of the Mineral Resources share price

Mineral Resources shares have outperformed in the last 12 months.

The company’s share price has continued to trend higher over the past year, hitting new high after new high.

Shares in Mineral Resources have surged more than 137% in the last 12 months, and more than 48% since the start of the year.

What’s been fuelling recent success?

Mineral Resources is a mining services company that also has a portfolio of mining operations across lithium and iron ore.

The company’s business revolves around mining services, commodities, infrastructure and energy. These mining services include contract crushing, recovery of base metals, logistics, and accommodation.

The surging price of spot iron ore has helped fuel the Mineral Resources share price over the past 12 months. At the close of trade yesterday, iron ore was trading at US$219 a tonne.

Mineral Resources claims to be the fifth largest iron ore producer in Australia. The company also has aspirations to triple production to 90 million tonnes per annum over the next five years.

In addition to iron ore, Mineral Resources has two high profile lithium projects which have contributed to the company’s prospects.

Based on the current share price, Mineral Resources Limited has a market capitalisation of nearly $11 billion.

The post Why is the Mineral Resources (ASX:MIN) share price struggling this week? appeared first on The Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram 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 Amcor Plc (ASX: AMC) share price has been under the pump in the last couple of months. While shares in the global packaging company are up 1.9% since 30 June, it’s been tough going for a couple of months.

Amcor shares surged higher to $16.05 per share on May 7. Since then, investors have watched the shares slide 4% in approximately 10 weeks to $15.41 at Tuesday’s close.

So, what’s driving the current volatility in the Amcor share price?

Why the Amcor share price has struggled since May

Let’s start with why the packaging company’s value jumped in May to start with. The major factor sparking that surge was the release of the group’s third quarter trading results for FY2021.

Amcor announced net income up 47.5% on the prior corresponding period (pcp) to US$267 million for the quarter ended 31 March 2021. For the first 3 quarters combined, net income was up 58% on pcp to US$684 million.

Climbing net sales figures, combined with the falling cost of sales, helped boost earnings and investors spirits. The Amcor share price jumped higher as a result, closing May 7 at $16.05 per share.

However, it’s been largely downhill since then. It’s worth noting that there haven’t been any price-sensitive announcements from the packaging group since May.

That hasn’t stopped investors from selling down in a volatile patch for the packaging group. That means there hasn’t been a clear catalyst for the recent share price softness we’re seeing reflected in Amcor’s valuation.

One factor could be the rise of the Delta strain both across Australia and more generally across the globe. COVID-19 restrictions crimped demand for packaging and strained supply chains when it first broke out in March 2020.

Foolish takeaway

While the Amcor share price has struggled since May, it’s not all bad news for investors. Shares in the packaging group are still up 1.7% year-to-date and flat on a last twelve months basis.

The post The Amcor (ASX:AMC) share price has struggled since May appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall 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 shares of and has recommended Amcor 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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The Australian share market is historically due for a correction, according to one expert.

Fairmont Equities managing director Michael Gable noted that we just saw the 2021 financial year close with the All Ordinaries Index (ASX: XAO) heading up 26%.

“Its best performance in 34 years — as you would know, the share market is unlikely to repeat this performance,” he said in a memo to clients.

“If the easy money has been made off the COVID lows, then what can we expect from here?”

Unfortunately history is not on investors’ side.

“We… tend to have a correction every 18 to 24 months, and it has been 16 months since the last one,” said Gable.

“Many are betting that the market has run too hard in the face of increasing inflationary expectations, the re-emergence of COVID cases, and a sluggish vaccination rollout.”

How to dodge the 2021 share market correction

Despite the pessimism, Gable reckoned the share market would still end up positive for the 2022 financial year. But it will require hard work on the part of individual investors.

“Gains will be harder to come by,” he said.

“Last year we had a ‘rising tide lifts all boats’ scenario that made it seem so easy that every second millennial is now an expert trader. I suspect that reality will hit home this year, don’t you?”

To clinch the gains on offer, Gable recommended investors be very alert and not be passive about which ASX shares to buy and sell.

“It will involve more than just buying and holding,” he said.

“Those of you that have been around a while know that buying and holding doesn’t always work and I am sure you can think of more than one stock that should have been sold a lot earlier.”

Finance commentator Peter Switzer also said this week that even if a short-term correction does occur, it won’t be anything like the bloodbath seen in March 2020.

“There’s a lot more certainty about what will happen compared to the frightening days when the virus threat closed down the world economy, Italians were dying and hospitals weren’t able to handle the avalanche of patients,” he wrote on his website.

“There’s a pile of stimulus from governments worldwide. Interest rates are set to make consumers spend and businesses invest.”

He added that Australia now has coronavirus vaccines.

“This scare will escalate the jabbing between now and Christmas,” Switzer said.

“We learnt yesterday [more] Pfizer is on the way and that will be a huge stimulation for vaccinations… This is the kind of game-changing development that will suppress excessive negativity of big stock market influencers.”

The post Yes, the ASX is due for a correction. But don’t worry appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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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