Tag: Motley Fool

This morning, the Mesoblast limited (ASX: MSB) share price jumped 3.14% to $5.25 after the company received a positive recommendation from the Data Safety Monitoring Board (DSMB) to continue its phase 3 trial of remestemcel-L in patients with acute COVID-19. The positive news, however, was not sufficient to sustain the Mesoblast share price amid wider share market falls with the company now trading at $5.04 at the time of writing.  

What moved the Mesoblast share price?

The Mesoblast share price edged higher today when the company announced that the independent DSMB has recommended the continuation of the phase 3 trial of remestemcel-L in patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection. This follows the completion of the trial’s first interim analysis.

Previously, remestemcel-L was given to 30% of randomly selected trial patients with a placebo given to other patients. Both groups also received maximal care. According to the announcement, the primary end point was mortality within 30 days. 

Next, under the phase 3 trial, up to 300 patients will be trialled with one out of two given remestencel-L by injection and the other receiving a placebo. Both the patient and the medical staff will be unaware if the placebo or the investigative treatment is being administered. The primary end point is mortality within 30 days and the second endpoint is days alive off ventilatory support within 60 days. Recruitment for the trial is expected to be finalised in quarter four of the 2020 calendar year. 

Mesoblast Chief Medical Officer, Dr Fred Grossman, commented on the recommendation, stating; “We are very pleased with the recommendation by the DSMB. This important trial seeks to confirm whether remestemcel-L improves survival in ventilated COVID-19 patients with moderate to severe ARDS, where death rates remain high despite best existing treatments.”

Remestemcel-L is an investigative therapy that uses stem cells from the bone marrow of an unrelated donor to treat inflammation in the human body.

More about Mesoblast

Mesoblast develops cellular medications and has a broad portfolio of commercial products and late stage product candidates. It is listed on both the ASX and the Nasdaq.

Early in September, Mesoblast announced that it had received ethics approval to trial its investigative treatment, remestemcel-L, on COVID-19 patients in Australia.

In August 2020, Mesoblast announced it had revenue of $32.2 million in the 2020 financial year, an increase of $16.7 million compared to the 2019 financial year. It had a 13% reduction in loss after tax compared to the 2019 financial year, posting a loss of $77.9 million. Mesoblast had $129.3 million cash on hand at 30 June 2020.

The Mesobast share price is up nearly 400% since its 52 week low of $1.02, it has returned 145.85% since the beginning of the year. The Mesoblast share price is up 252.45% since this time last year.

More reading

• Why Brainchip, De Grey, Mesoblast, & SKYCITY shares are pushing higher
• The Mesoblast share price rocketed 40% higher in August: Is it too late to invest?
• Mesoblast share price flat on Australian phase 3 COVID-19 trial news
• These were the best performing ASX 200 shares in August
• Up 38% in August, is the Mesoblast share price a buy?

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is crashing notably lower. At the time of writing the benchmark index is down a sizeable 2.6% to 5,952.1 points.

Four shares that are falling more than most today are listed below. Here’s why they are dropping lower:

The Appen Ltd (ASX: APX) share price has tumbled 7% lower to $32.51. This follows a broad selloff in the tech sector on Friday following a heavy decline on Wall Street’s Nasdaq index overnight. This latest decline means the Appen share price has now lost around 25% of its value in a little over a week. I think this has brought it down to a very attractive level.

The Kogan.com Ltd (ASX: KGN) share price has crashed 11% lower to $19.29. This decline also appears to be due to the aforementioned tech selloff. Though, Kogan may have fallen more than most today due to its incredible gains in 2020. This is likely to have led to profit taking from some investors on Friday. Even after this decline, the Kogan share price is up over 150% since the start of the year.

The OZ Minerals Limited (ASX: OZL) share price has dropped 4% to $14.40. This morning analysts at Ord Minnett downgraded the copper producer’s shares to a lighten rating with a $14.50 price target. The broker made the move on valuation grounds after a sharp rise in the OZ Minerals share price over the last few months.

The ResMed Inc. (ASX: RMD) share price is down 5.5% to $24.09. As well as the broad market selloff, ResMed has come under pressure after Macquarie reiterated its underperform rating and $20.00 price target on its shares. It believes that the medical device company’s shares are expensive relative to its near term growth potential.

More reading

• ASX 200 down 2.75%: Afterpay & Appen sink lower, SKYCITY pushes higher
• 4 ASX shares I’m looking to buy today
• Why the Afterpay share price crashed 9% lower today
• Why you should buy ASX copper miners in this market meltdown
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200

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 Kogan.com ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Kogan.com ltd and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The biggest piece of news ASX investors woke up to this morning was the massive crash that US-listed tech shares have just had overnight on the Nasdaq exchange.

Just like our ASX tech shares like Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P), Sezzle Inc (ASX: SZL) and Xero Limited (ASX: XRO), US tech shares have been on an absolute tear in recent weeks. Before today, Apple Inc. (NASDAQ: AAPL) shares were up more than 20% int he last month.

It gets better. Tesla Inc. (NASDAQ: TSLA) shares also had a phenomenal month, up more than 50% before last night’s crash.

It’s a similar (although not quite as impressive) story with Amazon.com Inc. (NASDAQ: AMZN) and Alphabet Inc. (NASDAQ: GOOG)(NASDAQ: GOOGL).

So if you were living in the United States, you might be salivating at how these tech shares had such a nasty night last night. Apple was down 8%, Tesla down 9% and Amazon down 4.6%. Overall, the Nasdaq Composite (an index tracking the exchange that most big tech shares are listed on) was down 4.96% last night.

Pity we live in Australia, right?

Well, not so fast. We do in fact have a Nasdaq-tracking exchange-traded fund (ETF) here on the ASX. It goes by the name of the BetaShares NASDAQ 100 ETF (ASX: NDQ). NDQ holds all of the big tech names, including the FAANGs, Tesla and Microsoft. And yes, NDQ units are down 5.62% at the time of writing to $26.53.

Sold?

Should we use this opportunity to buy into the Nasdaq?

Well, first thing’s first, I don’t think we should get too carried away with today’s moves. We investors are very good at forgetting history all too quickly. Yes, last night’s fall in the tech sector was dramatic, and not one we’ve been accustomed to seeing over the past 5 or so months. But it’s also relatively inconsequential. Remember, it was only 2–3 weeks ago that NDQ (and the Nasdaq index) was hitting the levels we are seeing today for the first time. Back then, the ‘Nasdaq was at record highs’. Today, ‘the Nasdaq is plunging’. We’re at the same level people.

After the incredible run up we’ve seen in tech stocks over the past month, a correction was almost inevitable in my view. We are just seeing that play out today. The hype from Apple and Tesla’s stock splits was never going to last forever.

Yes, the Nasdaq has pulled back today. But no, it’s not a raging bargain in my eyes. We just dipped back a few weeks is all.

So if you’re still bullish on the Nasdaq (or Apple, or Tesla) as a market-beating investment over the next decade, by all means, invest at today’s levels. But don’t think you’ve grabbed yourself a bargain just yet!

More reading

• ASX 200 down 2.75%: Afterpay & Appen sink lower, SKYCITY pushes higher
• 4 ASX shares I’m looking to buy today
• Why the Afterpay share price crashed 9% lower today
• NASDAQ plunges 5%. What next?
• Another buy now, pay later company is listing on Monday

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS, Xero, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, BETANASDAQ ETF UNITS, and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Betmakers Technology Group Ltd (ASX: BET) share price is today falling sharply as the company announced managing director, Todd Buckingham, is selling 8.5 million shares. The Betmakers share price is currently down 9.26% to a price of 49 cents.

The company also announced that it has appointed a United States resident as a non-executive director to aid in its growth agenda.

What does Betmakers do?

Betmakers is an Aussie racing data supplier involved in the development and provision of data and analytics products. The company specialises in the production and distribution of racing content and the provision of data for the business to business wagering market. The group’s revenue channels include Australia, the United Kingdom and the US.

Betmakers is focused on providing innovative industry and bookmaker solutions to improve industry coverage and the consumer experience.

US board appointment

The Betmakers share price is dropping sharply lower today although this likely has little to do with its new US board appointment. The company has announced that it has taken the next step in its global growth strategy by appointing a highly credentialed director to assist Betmakers with its international expansion.

Matt Davey will assist the board and management, bringing with him a deep knowledge of the US gaming and wagering market. Mr Davey was previously CEO of NYX Gaming Group, which was sold to Scientific Games Corp.

What’s moving the Betmakers share price?

More likely contributing to the Betmakers share price decline is news that company founder, Todd Buckingham, is selling 8.5 million shares. However, it must be noted that Mr Buckingham is partly using the sale of shares to fund the exercise of 16,667,000 options and cover the associated tax obligations. As a result, his interest in the company will actually increase to 14.6 million shares from 6.5 million.

Regarding the sale Mr Buckingham stated:

As a founder of BetMakers, I am very proud of what the team has achieved over the last few years and the value that we have created for our shareholders. I am delighted that we have been able to build such a strong business which is now expanding into the US and other markets. I am incredibly excited about the next phase of the Company’s growth strategy and I am exercising my options so that I can continue to participate in the BetMakers growth story.

Foolish takeaway

The Betmakers share price has been on an impressive run so far this year, gaining a huge 250%. While an insider sell down is never good news, shareholders can take refuge in the fact that Mr Buckingham is increasing his interest in the company. The Betmakers share price decline is perhaps more likely as a result of the Nasdaq Composite’s pull back overnight. 

More reading

• 3 small cap ASX shares I’d buy with $1,000
• Betmakers share price on watch as revenues rocket 39%

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has crashed notably lower following a very disappointing night of trade on Wall Street. The benchmark index is currently down 2.75% to 5,944.2 points.

Here’s what has been happening on the market today:

Tech shares sinking lower.

The tech sector has come under significant pressure on Friday after Wall Street’s tech-heavy Nasdaq index crashed 5% lower overnight. At the time of writing the likes of Afterpay Ltd (ASX: APT), Appen Ltd (ASX: APX), and WiseTech Global Ltd (ASX: WTC) are all trading notably lower. The latter two are down 7% at the time of writing. This has led to the S&P/ASX 200 Information Technology index falling over 4%.

Quarterly rebalance.

This morning S&P Dow Jones indices announced the quarterly rebalance of the ASX 200 index. The benchmark S&P/ASX 200 will see five changes later this month. Five new companies will be added to the index on 21 September, this includes buy now pay later provider Zip Co Ltd (ASX: Z1P). Joining Zip will be airport operator Auckland International Airport Limited (ASX: AIA), risk management company AUB Group Ltd (ASX: AUB), and gold miners Ramelius Resources Limited (ASX: RMS) and Westgold Resources Ltd (ASX: WGX).

Banks shares tumble.

The big four banks have not been immune to the market selloff on Friday. All four banks are dropping notably lower, but the worst performer has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price. At the time of writing the banking giant’s shares are down almost 3%.

Best and worst performers.

There are not many ASX 200 shares pushing higher on Friday. In fact, at lunch there are just 6 out of 200 shares in positive territory. The best performer has been the SKYCITY Entertainment Group Limited (ASX: SKC) share price with a gain of almost 2%. Investors have been buying its shares since the release of its full year results yesterday. The worst performer is the Appen share price with a 7% decline following the tech selloff.

More reading

• Why Appen, Kogan, OZ Minerals, & ResMed shares are dropping lower
• After the crash, is it time to buy this Nasdaq ETF?
• Why Brainchip, De Grey, Mesoblast, & SKYCITY shares are pushing higher
• 4 ASX shares I’m looking to buy today
• Why the Afterpay share price crashed 9% lower today

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 WiseTech Global and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is crashing lower on Friday. In late morning trade the benchmark index is down 2.6% to 5,952.9 points.

Four shares that have not let that hold them back are listed below. Here’s why they are pushing higher:

The Brainchip Holdings Ltd (ASX: BRN) share price is up 5% to 52.5 cents. This appears to have been driven by news that the artificial intelligence technology company’s shares will be added to the S&P/ASX All Technology Index at the next quarterly rebalance. In addition to this, earlier this week Brainchip announced a collaboration with VORAGO Technologies. This collaboration is intended to support a Phase 1 NASA program for a neuromorphic processor that meets spaceflight requirements.

The De Grey Mining Limited (ASX: DEG) share price has climbed 3.5% to $1.31. Investors have been buying the gold-focused mineral exploration company’s shares after it was added to a major index at the next rebalance. De Grey’s shares will be added to the ASX 300 index on 21 September. Its shares have been on fire this year after some very positive drilling results at its Hemi prospect.

The Mesoblast limited (ASX: MSB) share price is up 1.5% to $5.17. This morning the biotech company revealed that the independent Data Safety Monitoring Board (DSMB) has recommended that it continues with its Phase 3 trial of remestemcel-L in patients with moderate to severe acute respiratory distress syndrome due to COVID-19 infection. This follows the completion of the trial’s first interim analysis.

The SKYCITY Entertainment Group Limited (ASX: SKC) share price is up 2% to $2.53. This morning analysts at Credit Suisse retained their outperform rating and lifted their price target on its shares to NZ$3.00 (A$2.77) following the release of its full year results. Its result came in ahead of expectations and the broker was pleased with its trading update.

More reading

• 3 defence ASX shares set for explosive growth
• ASX 200 rises 0.8%, investors bet on SkyCity
• The Mesoblast share price rocketed 40% higher in August: Is it too late to invest?
• Why IOOF, SKYCITY, Starpharma, & Telix shares are storming higher
• ASX 200 up 1%: Big four banks charge higher, SKYCITY impresses, Xero tumbles

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The record run in United States tech shares came to an abrupt halt overnight. The Nasdaq Index plunged more than 5%, its biggest one-day fall since March.

The sell-off has continued in the Australian market, with the S&P/ASX200 Index (ASX: XJO) down 2.4% at the time of writing. In my opinion, the sell-off could be a buying opportunity for long-term investors. On that note, here are 4 ASX shares I’m looking to buy today.     

Afterpay Limited (ASX: APT)

Afterpay has been a bellwether of overall market enthusiasm during the pandemic. At the time of writing, the Afterpay share price is trading nearly 4% lower for the day.

Although there have been some absurd valuations floating around, I think Afterpay could still be a buy. With online shopping and eCommerce platforms thriving during the lockdown period, Afterpay could see continued momentum in the medium term.

Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare is the third largest provider of clinical laboratory services in the world. The company operates pathology and radiology services in Australia and seven other countries including the US.

Despite the COVID-19 pandemic disrupting most companies, this ASX share has emerged stronger. This is largely due to the company’s role in COVID-19 testing around the world.

Sonic was able to offset initial falls in base revenue with revenue from COVID-19 testing. This was reflected in the company’s impressive FY20 annual report.

ResMed Inc (ASX: RMD)

ResMed has emerged as a leader during the pandemic.

The RedMed share price has struggled, however, after the company reported its annual report for FY20. For the full-year, ResMed delivered a 15% constant currency increase in revenue of US$2,957 million. In addition, the company reported a 32% surge in net income to US$692.8 million.

Despite the impressive performance, the ResMed share price has languished since reporting, largely due to the company’s subdued outlook for FY21. However, in my opinion, ResMed is a quality healthcare company that has excellent growth potential in the long term.

Wesfarmers Ltd (ASX: WES)

During the initial lockdown period, many people flocked to complete home improvements and also set up home offices.

Wesfarmers owns both Bunnings and Officeworks, which are two businesses that obviously benefitted from these trends.

In my opinion, Wesfarmers has great exposure to the emerging ‘stay at home’ economy. This should ensure growth for the company in the medium to long term, which is why it’s on my buy list.

Foolish takeaway

As readers may deduce, the shares I have picked (apart from Afterpay), have little exposure to the tech sector. The tech sector has seen great momentum recently. In my opinion, this has been fuelled largely by retail investors looking for exposure to both growth and defensive earnings.

As a result, I think it would be wise to stay out of the sector for the time being. Therefore, I have taken a longer-term approach and chosen companies that are more exposed to health and essentials services.

Another point to consider is that the US has a Labour Day holiday on 7 September. In my experience, sell-offs before a long weekend are commonplace. Many investors will be looking to take profits and reduce their exposure over the holiday period.

Taking these factors into consideration, today’s price action on ASX shares could be seen as a buying opportunity. However, it is important to note that markets have rallied extremely hard in the past five months. As a result, this could also be the start of a more prolonged sell-off.

More reading

• Why the Afterpay share price crashed 9% lower today
• Another buy now, pay later company is listing on Monday
• How to build a recession-beating ASX share portfolio
• 2 of the best ASX healthcare shares to buy today
• Why a recession shouldn’t matter for the ASX share market

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers Limited. The Motley Fool Australia has recommended ResMed Inc. and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Afterpay Ltd (ASX: APT) share price has been out of form on Friday and is on course to end the week with a sizeable decline.

In early trade the payments company’s shares fell as much as 9% to $76.13.

They have since recovered a touch but are still down a disappointing 5% to $79.68.

Why is the Afterpay share price dropping lower?

Investors have been selling Afterpay and other ASX tech shares on Friday after Wall Street’s tech-focused Nasdaq index crashed lower overnight.

The Nasdaq index fell a sizeable 5% on Thursday night in what appears to have been a move driven by profit taking after some very strong gains in 2020.

One of the worst performers was the Apple share price. It lost a massive 8% of its value overnight.

However, it is worth noting that even after the Nasdaq’s sizeable decline, the famous index is up an incredible 26% since the start of the year despite the global pandemic.

What about other tech shares?

It isn’t just the Afterpay share price that is under pressure on Friday. Australian investors are selling a wide range of popular tech shares this morning.

Among the declines are the Appen Ltd (ASX: APX) share price and the Xero Limited (ASX: XRO) share price. At the time of writing, Appen shares are down 6% to $32.65 and Xero shares are over 4% lower at $96.26.

The WiseTech Global Ltd (ASX: WTC) share price is another poor performer. The logistics solutions company’s shares have fallen 7% to $27.70.

The Kogan.com Ltd (ASX: KGN) share price has also fallen by the same margin, along with fellow high-flying ecommerce company Redbubble Ltd (ASX: RBL).

Is this a buying opportunity?

When the dust settles on this selling I think there will certainly be a few buying opportunities.

The one that jumps out most to me is Appen. With its shares now down 25% from their 52-week high, I think it could be an opportune time to make a long term investment.

More reading

• 4 ASX shares I’m looking to buy today
• Another buy now, pay later company is listing on Monday
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• 5 things to watch on the ASX 200 on Friday
• Why Redbubble and this ASX share just stormed to record highs

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 Kogan.com ltd, WiseTech Global, and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re interested in building your wealth, then I believe the best way to do this is by investing with a long term view.

This is because by investing with a long time horizon, you get to benefit from the power of compounding.

Compounding is what happens when you earn interest on top of interest. Or in the case of investments, returns on top of returns.

It explains why generating a 10% per annum return on a $25,000 investment becomes $27,500 after one year and then approximately $65,000 in 10 years.

But which shares can you grow your wealth with? Listed below are two top ASX shares that I believe could provide strong returns for investors over the next decade and beyond:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX share to consider buying for the long term is Aristocrat Leisure. This gaming technology company’s shares have fallen heavily in 2020 because of the pandemic. However, with casinos now reopening, I expect demand for its industry-leading poker machines will soon rebound. In the meantime, its fledgling Digital business has been booming during lockdowns and is generating material recurring revenues. When these two businesses are finally pulling together, I expect its earnings growth to accelerate.

Pushpay Holdings Group Ltd (ASX: PPH)

Another option to consider buying and holding is Pushpay. It is a fast-growing donor management platform provider for the faith and not-for-profit sectors. Unlike Aristocrat Leisure, it has been a big winner from the pandemic. The temporary closure of churches and the shift to a cashless society have accelerated demand for its platform this year. So much so, management is expecting its earnings to double in FY 2021. Looking further ahead, it is targeting a 50% share of the medium to large church market. This is a US$1 billion opportunity, which provides it with a significant runway for growth.

More reading

• 2 ASX shares I’d buy in a heartbeat
• 3 fantastic ASX growth shares to buy and hold
• Why it makes sense to invest in ASX tech shares
• These ASX stocks at earnings risks as the Aussie is forecast to hit US80 cents
• 4 ASX growth shares I’d buy in September

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Well that was quick.

And brutal.

But it wasn’t unexpected.

‘It’ is the 5.23% fall in the NASDAQ composite index overnight.

Tesla Inc (NASDAQ: TSLA) shares fell 9%. Apple Inc (NASDAQ: AAPL) was down 8%.

Google’s parent company, Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), dropped 5%, while Amazon.com, Inc (NASDAQ: AMZN) gave up 4.6%. (I own shares in those two).

ASX futures are down 2% at the time of writing.

As I said, brutal.

But no, not unexpected.

Which is different from ‘I predicted it’.

I didn’t.

But yesterday, I did send a Slack message to the Investment team. I wrote:

“Google up 4% overnight. I’m officially reinstating #TheReckoning”.

#TheReckoning, in case you’re wondering, is part-joke, part-serious comment. Tech stocks have been super-hot over the past few months.

In part, completely justified by growing sales and profits, much of it boosted by the economic side-effects of COVID-19.

But some of it is pure P/E expansion. (At least for those companies that actually have earnings!).

Now, we can look at P/E expansions two ways:

1. The market was undervaluing these companies, and the P/E expansion is ‘catching up’ to reality; or

2. The market was correctly valuing these businesses, and the P/E expansion is the market getting carried away.

Now, as I said, #TheReckoning is partly in jest, too.

Investors have routinely undervalued technology businesses over the past decade.

An inability or unwillingness to see the sort of long-term compounding potential of some of these companies means that share prices have routinely been too low.

After all, I still own my Amazon and Alphabet shares. That’s not the action of a sensible investor who thinks they can predict share price falls, is it?

But then, that’s an oxymoron in itself.

The sensible investor doesn’t try to predict.

Not because the future isn’t worth knowing, but because it’s just not knowable.

And the degree of difficulty is magnified over shorter time periods.

Believing Amazon will be more valuable in 10 years is one thing.

Imagining I can guess what each zig and zag will look like, between now and then, is something else entirely.

And, of course, to try would be folly.

But it was also folly to expect these companies’ shares to go up in an accelerated straight line forever.

Apple shares were up by more than 30% in the last 6 weeks.

Amazon was up 22%.

Tesla had risen 50%.

And, as I said to the team, Google had risen 4% in a single trading session on absolutely no news.

Yes, shares are volatile.

They do often move on no news.

But as they say, once is happenstance, twice is a coincidence, three times is enemy action.

Or, in this case, something that should have investors paying attention.

Hence that comment.

Be careful, though, of people who say ‘we needed a pullback’. That’s rubbish.

Same with ‘we were due for a correction’.

Even worse ‘corrections are healthy’.

Either the commentator in question is lazy, or reaching for boilerplate explanations that make no sense.

(Those same people rarely say ‘we needed a run-up’ or ‘we were due for a fast increase’. They’re just peddling seemingly comforting cliches.)

Unless those very same people made those comments before the fall, you can assume they’re just retro-fitting a convenient narrative.

With all of that said, though, as I said, I’m not surprised.

Remember, too, that your emotions lead you astray.

Does today’s 5% fall in Google shares feel painful? You bet.

But after yesterday’s 4% rise, I’m barely down 1%, in total, in the last two days.

If Google had dropped 0.5% yesterday and another 0.5% today, I wouldn’t be writing these words.

Similarly, after the huge drops overnight, the other tech companies I mentioned are simply up ‘hugely’ rather than ‘phenomenally’ over the past 30 trading days.

Kinda puts it in perspective, right?

Today’s headlines will shout ‘NASDAQ plunges 5%’ or similar.

They could (and probably should) equally say: ‘NASDAQ up 33% this year’.

Kinda changes the perspective a little, no?

I do think investors, at large, have got ahead of themselves.

Yes, maybe big (and small) tech was undervalued in March and April.

Maybe those share prices deserved to go higher, as investors realised how resilient they were, as a group, in the face of COVID-19.

And, for the record, I do expect the NASDAQ to outperform the broader US market (and probably the ASX) over the next decade.

But not every company.

Not at every price.

When share prices rise, quickly, it’s tempting to believe the narrative.

That, somehow, they ‘deserve’ these higher prices.

So remember Warren Buffett’s warning: “You pay a high price for a cheery consensus”.

Our market will likely fall, today.

Perhaps by a lot.

If I was a betting man, I’d suggest that our tech sector will bear the brunt — and the higher they’ve flown, the harder they’ll likely drop.

In some cases, today’s falls might be a buying opportunity. In others, it’ll be the overdue removal of some hot air.

Which makes it a good time to reconsider your portfolio.

Do you really own those shares because you think it’s an attractive price for a quality company that is likely to justify its market cap with future performance?

Or do you own it because the shares have been going up, and so you’ve created a convenient, if flaky, investment thesis to justify it? 

“In the short run, the market is a voting machine…” Lots of votes over the past few months, but probably not many today.

“…But in the long run, it’s a weighing machine.” Today is a good time to grab the scales, and make sure you’re getting what you’ve paid for.

But remember: on average, even if the market falls hard, today, Australian shares will still be up by more than 35% since the March lows.

Kinda puts it in perspective, doesn’t it?

Fool on!

More reading

• Microsoft, Apple, and Alphabet led the stock market lower on Thursday
• Is the Nasdaq’s 600-Point Plunge the End of the Bull Market?
• Why the Zip share price is plummeting 15% today
• This is the one investment Warren Buffett says almost everyone should make
• A strange thing is happening with index funds…

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Scott Phillips owns shares of Alphabet (C shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Tesla. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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