Tag: Motley Fool

An ASX dividend share offering a yield of over 14% is enough to catch almost any investor’s eye. After all, a yield that is almost triple what you can get from a typical savings account or a term deposit is a fine opportunity. Especially considering inflation is running at a hot 8% or so at the moment.

So let’s check out the Smartgroup Corporation Ltd (ASX: SIQ) share price today and see if this 14% dividend yield is worth a second look.

Smartgroup is an ASX 200 share that offers employee management services. Think salary packaging, vehicle leases, and payroll administration.

So let’s get right to it. Smartgroup has a fairly impressive record when it comes to paying out dividends. Back in 2015, this company’s maiden annual payout came to 14 cents per share. But by 2021, Smartgroup was forking out 49.5 cents per share.

And 2022 was a record year for payouts. For one, investors received a final dividend of 19 cents per share, fully franked, on 23 March this year. This was followed by an interim dividend of 17 cents per share, also fully franked, in September. That brought the annual total to 36 cents per share for 2022.

This alone would give Smartgroup a trailing dividend yield of 7.58% on the current share price of $4.75 (at the time of writing). That’s 10.82% grossed up with the full franking.

SIQ yield

But Smartgroup wasn’t done with those two payments in 2022. The company also paid out a special dividend this year. In conjunction with the March final dividend, Smartgroup also doled out a fully franked special dividend worth another 30 cents per share. This took its annual total for 2022 to a whopping 66 cents per share.

If we take this figure instead, we get to a trailing dividend yield of 13.89%. That’s a massive 19.84% grossed-up with full franking.

So is this too good to be true?

Let’s dig in.

This stupendously large trailing dividend yield comes from the payment of the special dividend.

Now Smartgroup, when announcing this special dividend, didn’t really state how it was funded or why management chose to pay it out. But due to its ‘special’ nature, it could be optimistic to assume it will be a regular feature of Smartgroup’s earnings.

Saying that, Smartgroup has paid out a special dividend before. In fact, it did so in both 2019 and 2021, as well as 2022.

As we discussed earlier, it has also been fairly steady in delivering annual dividend pay rises to investors as well.

Additionally, the company seems to be in rude financial health. in its last annual earnings report (covering 2021), which was delivered in February, Smartgroup declared a 3% rise in revenues and a 7% lift in net profits after tax, adjusted for amortisation.

Operating earnings before interest, tax, depreciation, and amortisation (EBITDA) were also up 8% over the previous year.

Is Smargroup well placed to continue its massive dividends?

So in light of this growth, it’s very possible that Smartgroup can continue to afford to fund its dividends at 2022’s levels going forward. That’s especially so if its full-year numbers for 2022 are even better than those delivered for 2021.

Dividend payments are never guaranteed on the ASX. But there are few warning signs we can point to that indicate Smartgroup is not in a position to build on the impressive dividends it has paid out this year.

The post 14% dividend yield! Should I buy this ASX 200 share for passive income? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Could this beaten-down ASX 200 share be packing nearly 20% upside now?
• Why Core Lithium, Invictus Energy, New Hope, and Smartgroup shares are sinking
• Why PolyNovo, Smartgroup, Star, and WiseTech shares are falling

Motley Fool contributor Sebastian Bowen 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 positions in and has recommended SMARTGROUP DEF SET. 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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ASX uranium shares haven’t joined in the broader energy stock rally in 2022.

Though 2023 could present a different picture.

Soaring fossil fuel prices have sent the S&P/ASX 200 Energy Index (ASX: XEJ) up 39% year to date.

Yet most ASX uranium shares remain in the red.

For example, in 2022:

• The Paladin Energy Ltd (ASX: PDN) share price is down 7%
• Bannerman Energy Ltd (ASX: BMN) shares are down 35%
• The Deep Yellow Limited (ASX: DYL) share price has lost 27%
• And Boss Energy Ltd (ASX: BOE) shares have fallen 2%

Now, it’s worth noting that all of the ASX uranium shares named above enjoyed very strong share price gains in 2021. Paladin shares, as one example, soared 267% over the full year. So a bit of a pause or retrace this year wasn’t entirely unexpected.

But with nations across the world revisiting nuclear power as a reliable baseload source with negligible carbon emissions, ASX uranium shares could shine brightly again in 2023 and the years ahead.

Could this new UK plan help boost ASX uranium shares?

The United Kingdom doesn’t make the list of nations with the most nuclear power plants in the pipeline. That honour goes to China, which has some 17 large-scale nuclear power stations under construction.

However, the UK is eager to extricate itself from the global energy crisis while moving away from coal and gas-fired power.

As The Times reports, Business secretary Grant Shapps is this week expected to announce the proposed creation of a new body called Great British Nuclear.

Great British Nuclear intends to develop 20 to 30 small modular nuclear reactors, built by Rolls-Royce.

The modular reactors are significantly cheaper to develop than traditional large-scale plants, with each reported to be able to power a million homes.

Australia’s uranium trove

On completion, the modular reactors will need uranium to provide that power, as will the score of large-scale reactors being constructed in China and other nations the world over.

And with Australia sitting on the world’s largest proven uranium reserves, ASX uranium shares could see the good times of 2021 come knocking once more.

The post Could this new UK plan help boost ASX uranium shares in 2023? appeared first on The Motley Fool Australia.

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More reading

• Why City Chic, Deep Yellow, Objective Corp, and Pilbara Minerals shares are falling
• Feed and yellow cake: Fundie’s 2 ASX shares to buy that you’ve not thought about
• Why has the Paladin Energy share price surged 11% in a month?

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The market may be starting the week in the red but that hasn’t stopped a couple of ASX mining shares from surging higher.

Here’s why these mining shares are starting the week on a high:

Nico Resources Ltd (ASX: NC1)

The Nico Resources share price has jumped 25% to 77.5 cents.

Interestingly, this is despite there being no news out of the nickel focused mineral exploration company on Monday, which could mean it gets hit with a price query from the ASX later.

It seems that some investors are keen to get hold of the company’s shares ahead of the release of an updated mineral resource estimate in early 2023 for the Central Musgrave Project.

Management recently stated that more detailed geological and grade modelling is expected to result in an uplift in the projects high-grade tonnage, which is expected to contribute positively to the project economics and payback period for the project.

Odyssey Gold Ltd (ASX: ODY)

The Odyssey Gold share price is up 18% to 4.6 cents this morning.

This follows the release of an update on drilling activities at the Highway Zone at the gold explorer’s Tuckanarra JV Project.

According to the release, the company made an exceptional bonanza-grade gold oxide intersection during recent drilling. It also revealed that high grades were intersected in a predicted high grade shoot.

Managing Director, Matt Briggs, commented:

This stunning result continues to confirm the extent of wide, high-grade mineralisation which has already been intersected in the adjacent drill holes, again highlighted by this exceptional intercept of 43m @ 8.3g/t Au from 41m.

Extensive mineralisation of this grade and width further establishes the Highway Zone as a broad structure that reinforces the project’s potential for open pit mining.

The post 2 ASX mining shares flying over 18% higher on Monday appeared first on The Motley Fool Australia.

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More reading

• 5 ASX shares for investing in the fastest growing Aussie companies of 2022
• 2 reasons to buy Amazon before 2023 and 1 reason to sell
• Why is the Liontown share price sinking 9% on Monday?
• Vulcan share price gains on lithium project update
• Pilbara Minerals share price higher on ‘game changer’ project with Calix

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 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 Scott Phillips.

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Looking to invest in ASX growth shares? Well, we have good news for you.

Australia’s fastest growing companies of 2022 have been identified and they include a few names Aussie investors are likely familar with.

So, which ASX shares have been posting massive growth lately? Keep reading to find out.

Fastest growing Aussie companies of 2022 crowned

It’s been a big year for some notable ASX stocks – they’ve been included in the 2022 AFR Fast 100 list, with two coming in among the top 10 fastest growing Aussie companies of 2022.

The list is presented by the Australian Financial Review in association with Pemba Capital Partners and PwC. It encompasses 100 companies boasting a compound annual growth rate (CAGR) of as much as 330% between financial year 2020 and financial year 2022.

5 ASX shares among Australia’s fastest growers

Which ASX share will give investors exposure to the fastest grower on the Aussie bourse this year? It’s WISR Ltd (ASX: WZR).

The company has been crowned the fastest-growing ASX-listed entity, coming in seventh place on the AFR Fast 100 List. The fintech stock provides consumer finance products.

It posted $7 million of revenue in FY20, growing that to $59 million in FY22. Not to mention, it surpassed $1 billion in loan originations over the three months ended March 2022.

Next up is ASX digital marketplace operator Camplify Holdings Ltd (ASX: CHL). It came in as Australia’s ninth fastest-growing company. The company connects owners of recreational vehicles with hirers.

Camplify’s shares hit the ASX in June 2021. It boasted nearly $3 million of revenue in FY20. That figure grew to $16 million in FY22.

Another ASX newbie has joined Camplify on this year’s list, with telco and internet service provider Pentanet Ltd (ASX: 5GG) taking out spot number 25. Pentanet floated on the exchange in January 2021.

The company brought in $5 million of revenue in FY20, growing that to $16.8 million in FY22.

Just two spots lower lies Credit Clear Ltd (ASX: CCR). The company is in the fintech business, providing receivables management solutions.

In FY20, the company brought in $11 million. By FY22, that had grown to $21 million.

Finally, drone detection software provider DroneShield Ltd (ASX: DRO) has been crowned Australia’s 37^th fastest-growing company of 2022.

It posted around $11 million of revenue for the 12 months ended 31 December 2021. That was up from $5.6 million in the prior period.

The post 5 ASX shares for investing in the fastest growing Aussie companies of 2022 appeared first on The Motley Fool Australia.

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More reading

• 2 reasons to buy Amazon before 2023 and 1 reason to sell
• Why is the Liontown share price sinking 9% on Monday?
• Vulcan share price gains on lithium project update
• Pilbara Minerals share price higher on ‘game changer’ project with Calix
• One of the world’s richest investors just sounded a big-time warning for Wall Street

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. has positions in and has recommended Camplify Holdings Limited and DroneShield Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pentanet Limited. The Motley Fool Australia has recommended DroneShield Ltd. 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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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.

Amazon (NASDAQ: AMZN) is one of the most well-known e-commerce companies on the planet. Investors watched its market value soar to more than $1.8 trillion during the earlier days of the pandemic. And over time, the company has delivered a lot more than groceries or books to your doorstep. It’s also delivered top-notch earnings growth and share performance.

This year, though, the stock is heading for a 44% decline. Why? Amazon isn’t immune to the pressures hurting the entire retail sector. I’m talking about higher inflation and general economic woes. Now, as we head toward 2023, you may be wondering what to do about this beaten-down stock. Let’s check out two reasons to buy Amazon — and one reason to sell.

1. A steal on a monster margin business

When we think of Amazon, we may focus on e-commerce. But the company’s biggest moneymaker is actually its cloud computing business. That’s Amazon Web Services, or AWS. Last year, AWS made up more than 70% of Amazon’s total operating income. That’s huge.

But here’s what’s even better. AWS’s margins are enormous. Operating margin averages about 30% each quarter. How does that compare to Amazon’s e-commerce margins? In the earlier days of the pandemic, as revenue surged, Amazon’s e-commerce operating margin came in at about 4%.

So, not only is AWS generating revenue in the billions of dollars — but it’s also making a good deal of profit from every dollar sold.

In even more good news, if you buy Amazon shares right now, you’ll get all of this growth for a steal. The stock trades at only 1.9 times sales right now. That’s its lowest by this measure since 2015.

2. Prime is getting stronger

Amazon’s e-commerce business has seen better days. Rising inflation is hurting it in two ways. First, it’s pushed Amazon’s costs — fuel to transport goods, for example — higher. Second, it’s weighing on customers’ wallets. So, they may spend less on Amazon.

But before we give up on Amazon’s e-commerce business, it’s key to look at the growth of its Prime subscription program. In the most recent quarter, Amazon said Prime Video release The Lord of the Rings: The Rings of Power spurred more new Prime subscriptions than any other Amazon original. And the first broadcast of NFL Thursday Night Football sparked the three-biggest hours of Prime signups ever.

Amazon also said this year that members are spending more — and relying more on Prime than ever before.

Prime already includes more than 200 million members worldwide. The recent growth, along with longtime members, should translate into more revenue growth in the coming year. And that could lead to positive share performance.

Reason to sell: Amazon isn’t out of the woods yet.

Today’s economic woes won’t disappear overnight. And neither will the impact they’ve had on Amazon’s earnings. Amazon’s operating income dropped by almost half year over year in the third quarter. And free cash flow has shifted to an outflow over the trailing 12-month period. Amazon’s return on invested capital also is falling. 

Investors may wait for significant earnings improvement before returning to the Amazon story. And if this happens, the stock may slip further — or stagnate in the new year. Some investors who already have gained over time on their Amazon position may be tempted to sell — and invest in a company less sensitive to today’s economic environment.

Should you buy or sell?

The reasons to buy Amazon outweigh the reason to sell this great, long-term stock. It’s impossible to guarantee Amazon stock will recover next year. But today, valuation looks good considering the long-term picture.

AWS’s strength and Prime’s growth may give the stock reason to climb — as soon as next year. And investors who get in on the shares now would benefit.

What if Amazon takes longer to recover? That’s OK too. The company’s leadership in the growth markets of e-commerce and cloud computing mean Amazon stock is very likely to thrive. And that could equal enormous returns over time.

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

The post 2 reasons to buy Amazon before 2023 and 1 reason to sell appeared first on The Motley Fool Australia.

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More reading

• Is Amazon stock really a cheap buy? Here’s what the charts say
• Amazon stock is still a surefire buy despite growth plateau
• Why Amazon stock fell today
• BrainChip share price dips despite ex-Amazon hire
• Does Amazon’s latest healthcare move make the stock a buy?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Liontown Resources Ltd (ASX: LTR) share price is starting the week much like it finished the last one.

In morning trade, this lithium developer’s shares were down as much as 9% to $1.82.

This meant that the Liontown share price was down 17% over the last two weeks.

Why is the Liontown share price sinking?

Investors have been hitting the sell button in the lithium industry again amid ongoing concerns that lithium prices could be about to pullback.

This follows bearish notes out of Credit Suisse and Goldman Sachs recently and soaring COVID cases in China. The latter has led to concerns that demand for lithium from the key market could soften and put pressure on prices.

On Wall Street on Friday, the Sociedad Quimica y Minera de Chile (SQM) share price dropped almost 7%, the Livent Corp share price fell almost 9%, the Lithium Americas share price dropped 7%, and the Albemarle dropped close to 4%.

Is this a buying opportunity?

One broker that is likely to see this as a buying opportunity is Macquarie. Earlier this month, the broker retained its outperform rating and lifted its price target on the lithium developer’s shares to a lofty $3.40.

Based on the current Liontown share price, this implies potential upside of almost 90% for investors over the next 12 months.

While the broker sees economic slowdowns and rising COVID cases in China as a headwind for the lithium market, it still expects sky high prices to remain.

The post Why is the Liontown share price sinking 9% on Monday? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• 5 ASX lithium shares to buy: brokers
• Here are the top 10 ASX 200 shares today
• Why Liontown, Lovisa, Myer, and Whitehaven Coal shares are pushing higher
• Why is the Lake Resources share price smashing the ASX 200 on Monday?

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 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 Scott Phillips.

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The Vulcan Energy Resources Ltd (ASX: VUL) share price is in the green as investors digest the progress of its zero-carbon lithium project.

Vulcan shares closed on Friday trading for $7.08 and are currently trading for $7.14, up 0.85%.

Here’s what’s driving investor interest in the ASX lithium stock.

What did the ASX lithium stock announce?

The Vulcan share price is in the green after the company updated the market on progress at its Zero Carbon Lithium Project in the Upper Rhine Valley brine field, located in Germany.

Vulcan reported it has started 3D seismic survey works on the ground at one of its planned Phase 2 lithium and geothermal energy development areas in the Mannheim district. The company signed a renewable heat offtake agreement with MVV Energie, the utility for the city of Mannheim, in April 2022.

The ASX lithium stock also reported that its lithium pilot plant has produced all the data needed for its definitive feasibility study (DFS). The pilot plant recently confirmed the production of the highest grade, lowest impurity lithium hydroxide to date.

Commenting on the update sending the Vulcan share price higher today, CEO Francis Wedin said:

The Vulcan team is working hard towards developing renewable heating production on a mass scale for Central Europe, combined with sustainable, domestic lithium production for the auto industry, from our Zero Carbon Lithium Project in the Upper Rhine Valley, the largest lithium resource in Europe.

Wedin added:

It is encouraging to see timely approvals for, and execution of, our works on the ground, as we systematically execute very large 3D seismic surveys across the region. These surveys allow us to visualise the sub-surface, to employ industry best-practice modelling and planning for our well developments, which are targeting dual geothermal energy and lithium production.

Vulcan share price snapshot

The Vulcan share price is down 34% in 2022. That compares to a year-to-date loss of 6% posted by the All Ordinaries Index (ASX: XAO).

Longer term, Vulcan shares are up 216% over two years.

The post Vulcan share price gains on lithium project update appeared first on The Motley Fool Australia.

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More reading

• Skin in the game: The ASX share in my portfolio I’m most excited about
• Vulcan share price storms higher on lithium extraction update
• What’s going on with the Vulcan share price today?

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price is edging higher on Monday morning.

At the time of writing, the lithium miner’s shares are up 1.5% to $4.54.

Why is the Pilbara Minerals share price rising?

Today’s gain appears to have been driven by the announcement of a joint venture with clean technology company Calix Ltd (ASX: CXL).

According to the release, Pilbara Minerals and Calix have executed a joint venture agreement for the development of a mid-stream demonstration plant at the Pilgangoora Project.

The demonstration plant has the aim of producing lithium salts via an “innovative midstream value added refining process” that utilises Calix’s patented calcination technology.

Furthermore, the company notes that the objective of demonstration plant project is to deliver a superior value-added lithium product enabling lower product cost, reduced carbon energy intensity, and reduction of waste product logistics.

Pilbara Minerals will own 55% of the joint venture, with Calix owning the balance. Each party will be funding their share of operating and capital costs and Calix will license their patented technology and calcination knowhow into the joint venture.

Management also highlights that a successful demonstration of the calcination technology via the demonstration plant may then lead to its commercialisation with the joint venture licensing the technology to the global spodumene processing industry.

‘A game changer’

Pilbara Minerals’ managing director and CEO, Dale Henderson, commented:

It’s a great privilege to enter this JV partnership with Calix. The Mid-stream project has the potential to be a game changer for our industry. If successful, we will be able to deliver a superior chemical intermediary product to market compared to spodumene concentrate.

This intermediate product offers a higher concentration in lithium and less impurities whilst being produced through a new process that reduces CO2 emissions compared to the traditional process route for hard rock spodumene chemical conversion. This is world-first Australian technology, being developed by two great Australian companies on Australian soil, with the support of the Australian Government – this is an exceptional opportunity for all of us.

Interestingly, unlike the Pilbara Minerals share price, the Calix share price is trading lower on the news.

The post Pilbara Minerals share price higher on ‘game changer’ project with Calix appeared first on The Motley Fool Australia.

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More reading

• Why is the Allkem share price diving 8% today?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why City Chic, Deep Yellow, Objective Corp, and Pilbara Minerals shares are falling
• What could be sending the Pilbara Minerals share price 7% lower today?
• Here’s why ASX 200 lithium shares are ending the week with a fizzle

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 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 Scott Phillips.

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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 probably don’t need the reminder, but this has been an abysmal year for Wall Street professionals and everyday investors, alike. Since hitting their all-time highs between mid-November 2021 and the first couple of days of January, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) have respectively plummeted by as much as 22%, 28%, and 38%. That put all three — at least briefly in the case of the Dow Jones — firmly in a bear market.

Over the past six weeks (or a bit longer for the Dow), all three indexes have given optimists a reprieve. In fact, the Dow Jones is now considerably closer to an all-time high than a fresh year-to-date low. But in spite of this bounce, one billionaire money manager is sounding the warning on Wall Street.

This highly successful billionaire’s actions speak louder than words

Approximately two weeks ago on Nov. 14, money managers and wealthy individuals with more than $100 million in assets under management were required to file Form 13F with the Securities and Exchange Commission. A 13F provides a snapshot of what the brightest minds on Wall Street held in their portfolios at the end of the most recent quarter. It also sheds light on what they’ve been buying and selling.

The standout 13F for the third quarter wasn’t Berkshire Hathaway‘s Warren Buffett. Rather, it was billionaire hedge-fund manager David Tepper of Appaloosa Management. Tepper, who owns the NFL’s Carolina Panthers franchise, is estimated to be worth $18.5 billion, making him one of the world’s richest people.

Based on Appaloosa’s 13F filing, the fund ended the third quarter with stakes in 22 securities. Tepper’s hedge fund completely sold out of eight holdings and reduced its stake in another 12 remaining positions.

Meanwhile, Tepper didn’t buy one share of a single stock or warrant in the September-ended quarter. That’s $1.36 billion in assets under management and not one penny deployed to buy equities at a seemingly reduced valuation. 

In an October interview with CNBC, Tepper was asked whether he liked the risk-versus-reward for stocks, given the current interest-rate environment. Tepper bluntly replied, “I don’t think there’s any great asset classes right now.” He also went on to claim:

I don’t love stocks. I don’t love bonds. I don’t love junk bonds.

Although Tepper echoed Buffett’s sentiment that stocks are a great tool for long-term wealth building, he was quite clear nothing appears attractive, given interest-rate uncertainty, for the time being. 

Effective Federal Funds Rate data by YCharts.

A multitude of metrics suggest the stock market will head lower

Tepper’s very clear warning for Wall Street jives with a number of metrics and historic data points that would seem to suggest the broader market has yet to hit bottom. For example, Federal Reserve monetary policy has, to some degree, foretold market bottoms — but probably not in the way you might think.

Whereas a lot of investors are looking forward to an eventual Fed “pivot” and easing of interest rates, bear markets over the past quarter of a century show that stock market bottoms tend to occur well after rate-easing begins. Following the beginning of rate-easing cycles during the dot-com bubble (2001), financial crisis (2007), and prior to the COVID-19 pandemic (2019), it respectively took 645 calendar days, 538 calendar days, and 236 calendar days for the S&P 500 to bottom. This would suggest there’s a long way to go until stocks find their trough.

A couple of valuation-based metrics spell trouble for Wall Street, as well.

The S&P 500 Shiller price-to-earnings (P/E) ratio (also known as the cyclically adjusted price-to-earnings ratio, or CAPE ratio) is front and center on the warning list. All five instances where the S&P Shiller P/E has crossed above 30 during a bull market rally since 1870 have eventually resulted in a decline of at least 20% for the S&P 500. Further, over the past 25 years, the S&P Shiller P/E ratio has bottomed out during most corrections and bear markets around 22. The Shiller P/E was 29.5, as of Nov. 23, 2022.

The S&P 500’s forward-year P/E ratio is another concern. With the exception of the Great Recession, the broad-based index has bottomed with a forward P/E of 13 to 14 on numerous occasions since 1995. Its forward P/E on November 23 was 17.5.

Even outstanding margin debt, which I’ve previously expounded on in greater detail, suggests the bear market bottom isn’t in.

Take Tepper’s advice… all of it

If this multitude of metrics and historic data points are accurate, the short-term pain for investors may well extend into 2023 and validate David Tepper’s cautious tone. But it’s important to digest everything Tepper had to say about the stock market in his interview with CNBC.

Even though the successful billionaire was clear with both his actions and words that there’s nothing worth buying at the moment, he noted on multiple occasions the value of buying equities for the long term. This bit of sage advice has never been wrong — at least when examining the major indexes.

According to data provided by sell-side consultancy firm Yardeni Research, there have been 39 separate declines of at least 10% in the S&P 500 since the beginning of 1950.  Every single last one of these crashes, corrections, and bear markets were eventually cleared away by a bull market rally. This holds true for the Dow Jones Industrial Average and Nasdaq Composite, too.

What’s more, timing the stock market has proved far less important than how much time you spend in the market. A study by Crestmont Research found that if an investor were to have hypothetically purchased an S&P 500 tracking index at any point from 1900 onwards and held that position for at least 20 years, they would have generated a positive total return, including dividends paid, every single time! Crestmont found that the rolling 20-year total returns averaged 10.9% or higher on an annual basis in more than 40% of the 103 ending years it examined (1919 through 2021). 

In other words, even though things appear bleak now, it’s as good a time as any to put your money to work if you have a long-term mindset and companies on your radar that are continuing to execute their strategies and visions. 

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

The post One of the world’s richest investors just sounded a big-time warning for Wall Street appeared first on The Motley Fool Australia.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Bank of Queensland Ltd (ASX: BOQ) share price is falling heavily on Monday.

In morning trade, the regional bank’s shares are down over 6% to $7.07.

Why is the Bank of Queensland share price sinking?

The weakness in the Bank of Queensland share price on Monday has been driven by surprise news that the bank’s CEO is stepping down from the role with immediate effect.

According to the release, a domestic and international executive search for a new managing director and CEO is commencing to find a replacement for George Frazis, who leaves the company effective today and without comment.

The bank explained that it felt that now was the right time for a change of leadership.

What now?

Bank of Queensland’s chair, Patrick Allaway, has taken on the role of executive chairman for the period of the executive search.

The bank notes that appointing Mr Allaway as executive chairman is designed to retain stability and will ensure that the executive leadership team can stay focused on their current roles and responsibilities.

Current non-executive director, Karen Penrose, will be the lead independent director during this period.

‘Different leadership is now required’

Bank of Queensland’s executive chairman revealed that the board decided that a change of leadership was required to take the bank forward. Allaway commented:

George Frazis joined BOQ in September 2019 and has overseen a return to growth in all key channels across the Bank, the successful acquisition and integration of ME Bank, as well as achieving strong progress in the Bank’s technology transformation.

However, the Board has formed a view that different leadership is now required to ensure BOQ can continue to build a stronger and more resilient bank through future cycles. We thank George for his significant contribution to BOQ over the past three years.

The executive search is expected to take upwards of nine months.

The post Why is the Bank of Queensland share price sinking over 6% 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. 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 Scott Phillips.

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