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Las Vegas might invoke the classic image of hedonism but the sobering reality is that Australia is the real home of gambling.

According to the Washington Post, Australia has less than 0.5% of the world’s population but somehow hosts 20% of its poker machines.

Marcus Today founder Marcus Padley says Australia is a nation of punters “whose courage and risk taking is legendary”.

“After all, Australia is a nation built by people who took a risk, simply by coming to its shores,” Padley wrote on his blog.

“The legacy is that half of adult Australians gamble on a regular basis.”

So what has this to do with the stock market?

Short-term traders are taking over, just like the pokies

The point is that much of the finance world is also built around encouraging clients to take risks.

“In the casino, they distract you with flash and feathers and disable you with drink. Meanwhile, somebody has their hand in your back pocket,” said Padley.

“In the share market, they dazzle you with colourful software, trading platforms, average returns, IPOs, dividend yields, franking, charts and the media iced by jargon, urgency and ever-thinning sophistication, whilst someone has their hand in your SMSF.”

Thus, we have many Australians punting on ASX shares, trading them on a short-term basis, all to make a quick buck.

Unfortunately, most of them will lose, especially in a year like 2022.

So with such traders driving stock prices up and down on momentum and fear, what is a sensible investor meant to do?

This is how to cash in as a long-term investor

The only thing to do in this crazy world is to go long, according to Padley.  

“While stock market price integrity has become more fluid, volatile and vacuous, the underlying fundamental value of the companies on whose share prices the gamblers now rely, are still there. In the long term,” he said.

“And no manner of hype and herd will take that away.”

Rather than despise the short-term gamblers, take advantage of the volatility they create. Buy ASX shares when fundamentally sound companies are going for cheap.

“For traditional investors, this is your take home. Do not dismiss the gamblers, welcome them. They are a gift, delivered to you daily.”

The reality, according to Padley, is that short-term trading based on momentum “creates volatility and price extremes”. 

“For the investor, that creates regular, exploitable opportunity. That’s great,” he said.

“You should welcome the stupid into the market. The more uninformed people in the market, the more people there are to exploit.”

The post The share market is full of stupidity: here’s how you take advantage appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Why has the Lake Resources share price tumbled 11% in 10 days?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• The CEO just sold 900,000 of his Whitehaven shares. What’s going on?

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 Scott Phillips.

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was on form again and pushed higher. The benchmark index rose 0.15% to 7,241.8 points.

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

ASX 200 expected to rise

The Australian share market looks set to end the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open 14 points or 0.2% higher this morning. Wall Street was closed for Thanksgiving but European markets ended higher thanks to the prospect of the US Federal Reserve slowing its rate hikes.

Oil prices mixed

Energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a subdued finish to the week after a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is up slightly to US$77.96 a barrel and the Brent crude oil price is down 0.35% to US$85.12 a barrel. Concerns over soaring COVID cases in China appear to be weighing on oil prices.

BHP shares downgraded

The BHP Group Ltd (ASX: BHP) share price may be fully valued now according to analysts at Goldman Sachs. This morning, the broker has downgraded the mining giant’s shares to a neutral rating with an improved price target of $42.90. Goldman made the move due to its “valuation vs. global peers and no upside to revised PT of A$42.9/sh.”

Gold price rises

Gold miners including Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a decent finish to the week after the gold price rose overnight. According to CNBC, the spot gold price is up 0.5% to US$1,754.9 an ounce. The gold price advanced after the US Fed hinted at slower rate hikes.

Rio Tinto named as a buy

Goldman Sachs may not be overly bullish on BHP right now, but it continues to rate Rio Tinto Limited (ASX: RIO) shares as a buy. This morning the broker has reiterated its buy rating with an improved price target of $114.70. It said: “We think the development of Rhodes Ridge has the potential to be significant for RIO’s Pilbara business as it could lift system capacity, utilise spare rail and port infrastructure and help close the FCF/t gap with BHP.”

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

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More reading

• Crude down, stocks up: Here’s what happened to Woodside shares the last time this occurred
• Why has the Lake Resources share price tumbled 11% in 10 days?
• Here are the top 10 ASX 200 shares today
• What this new central bank record could mean for ASX 200 gold shares
• Why is the Newcrest share price having such a cracker day?

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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Fortunately for income investors, the ASX is home to a good number of shares offering attractive dividend yields.

But which ones should you buy over others? To help narrow down your options, listed below are two ASX dividend shares that Goldman Sachs rates as buys. Here’s why the broker rates them highly right now:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share that has been tipped as a buy is footwear and apparel retailer Accent.

Goldman Sachs is a fan of the company and has a buy rating and $2.20 price target on its shares. The broker is bullish due to its exposure to younger consumers. It believes this leaves Accent better positioned in the current environment than many retailers. It commented:

AX1’s diversified product exposure includes a number of product categories which we believe are resilient in the current cycle including youth footwear (Platypus, Hype), youth apparel (Glue, Nude Lucy), performance footwear (TAF), and a higher income consumer (Stylerunner).

As for dividends, Goldman is expecting fully franked dividends of 10.2 cents per share in FY 2023 and 11.4 cents per share in FY 2024. Based on the current Accent share price of $1.65, this will mean yields of 6.2% and 6.9%, respectively.

Adairs Ltd (ASX: ADH)

Another ASX dividend share that Goldman Sachs is bullish on is this furniture and homewares retailer.

The broker currently has a buy rating and $2.65 price target on its shares. Its analysts are positive on the company due to the belief that its core business is far more resilient than the market is giving it credit for. In light of this, Goldman believes recent share price weakness has created a buying opportunity. It explained:

We view the re-affirmed guidance [at its AGM] as a key positive for ADH, and we believe the market is pricing in EBIT that is 11-21% below the guidance range, and 12% below GSe. We view the core Adairs business as resilient in the current environment and do not believe the c.40% discount to discretionary retail peers is justified.

In respect to dividends, Goldman is forecasting fully franked dividends per share of 17 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.25, this will mean yields of 7.6% and 8.9%, respectively.

The post Why Goldman Sachs rates these ASX dividend shares as buys appeared first on The Motley Fool Australia.

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More reading

• 3 ultra-high-yield ASX dividend shares you might regret not buying at these prices
• These are the ASX dividend shares to buy now: Goldman Sachs
• Almost ready to retire? Here’s why I’d be buying up ASX dividend shares right now
• Here’s how I’d invest $20,000 in ASX shares today to double my money
• These growing ASX dividend shares are buys: analysts

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 positions in and has recommended ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Accent Group. 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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Are you looking to add some growth shares to your portfolio?

If you are, listed below are three ASX growth shares that could be worth considering. Here’s what you need to know about them:

Allkem Ltd (ASX: AKE)

The first ASX growth share to consider is Allkem. This lithium miner is aiming to grow its production materially in the coming years. In fact, it is planning to do this in a way that allows it to maintain a 10% share of global lithium supply over the long term. This certainly bodes well for its earnings growth given how insatiable demand for lithium is driving sky high prices.

Macquarie’s analysts are bullish on Allkem and have an outperform rating and $21.00 price target on its shares.

Aristocrat Leisure Limited (ASX: ALL)

Another ASX growth share to consider is Aristocrat Leisure. This gaming technology company has a world class portfolio of poker machines and digital games. The company has also just entered the real money gaming market, which has been tipped to grow materially in the future. Combined, this appears to position Aristocrat perfectly for long term growth.

Morgans is a fan of the company and has an add rating and $43.00 price target on its shares.

Treasury Wine Estates Ltd (ASX: TWE)

A final ASX growth share to consider buying is Treasury Wine. This wine giant owns a number of popular brands including Penfolds, 19 Crimes, and Wolf Blass. Thanks to this high quality portfolio of wines and its premiumisation strategy, the team at Morgans believe Treasury Wine is positioned for “strong earnings growth” over the coming years.

Morgans has an add rating and $15.71 price target on its shares.

The post 3 ASX 200 shares analysts are tipping for stellar growth appeared first on The Motley Fool Australia.

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More reading

• What $10,000 in ASX lithium shares a year ago would be worth today
• Buy this ASX 200 share now while the market’s distracted: expert
• 3 dividend-paying ASX growth shares I would buy to retire rich
• 5 ASX lithium shares to buy: brokers
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates Limited. 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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S&P/ASX 200 Index (ASX: XJO) gold shares could be in for some fresh tailwinds ahead, thanks in part to a spate of recent buying action by global central banks.

The relative performance of the big gold stocks, as you’d expect, is closely aligned to the price of the metal they dig from the earth.

Should the strong central bank demand continue apace, it could offer additional support for bullion prices.

That would be good news for ASX 200 gold shares like Northern Star Resources Ltd (ASX: NST), Newcrest Mining Ltd (ASX: NCM), and Evolution Mining Ltd (ASX: EVN).

Is China behind the surge in gold purchases?

ASX 200 gold shareholders may be familiar with a recent report out from the World Gold Council. That report revealed that the third quarter of 2022 saw global central banks buying bullion at the fastest rate ever, loading up on gold worth some $20 billion.

The central banks of Turkey, Qatar, and Uzbekistan were among the biggest identified buyers.

But as Justin McQueen, senior market analyst at Capital.com, points out, not all of the big buyers are publicly known.

“There have been central banks that have not been identified that have purchased a sizeable amount of gold. Some speculate this may be, in fact, China, as per reports in the Nikkei,” McQueen said.

McQueen added that the central bank buying action provides support for the yellow metal, which by extension should help support ASX 200 gold shares.

According to McQueen:

The rationale is that China would look to reduce their exposure to the US dollar and therefore has been stockpiling on gold. Now while China’s involvement cannot be confirmed, the fact that central banks have been excessively accumulating does provide an undercurrent of support for the precious metal.

Indeed, the world’s central banks together already hold some 20% of all the gold ever mined.

While the United States wasn’t on the list of top buyers in Q3, the US remains the top country for holdings of gold by central banks, with some 8,133 tonnes in its vaults, according to Suisse Gold.

How have these ASX 200 gold shares fared this past month?

The gold price has gained 6.5% since this time last month, currently trading for US$1,756 per troy ounce.

That’s seen ASX 200 gold share Northern Star gain 27% over the month, while shares in Newcrest Mining are up 15%. Evolution Mining has led the charge higher, with the gold miner’s shares gaining a whopping 41% over the month.

For some context, the ASX 200 is up 7% over this same period.

The post What this new central bank record could mean for ASX 200 gold shares appeared first on The Motley Fool Australia.

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More reading

• Why is the Newcrest share price having such a cracker day?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Evolution share price leaps as ASX 200 miner reports ‘outstanding’ new copper-gold find
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday

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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Pilbara Minerals Ltd (ASX: PLS) shares closed in the red today, down 2.85% to $4.78 each, losing almost 11% over the past month.

However, this follows a stupendous run for the ASX lithium share. The Pilbara Minerals share price is up 72% over the past six months despite its recent pullback.

So, is this lithium share a buy? Or has it had its day for now with price weakness expected to continue?

What does top broker Macquarie think?

As my Fool colleague James reported yesterday, Macquarie recommends Pilbara as a buy with an outperform rating.

Following Pilbara Minerals’ latest digital auction, the broker has retained its outperform rating with a 12-month share price target of $7.70. This implies a potential upside of 61% for buyers today.

But earlier in the week, we also reported that Macquarie has reduced its Pilbara Minerals holdings in its model portfolios.

So, what’s going on?

Does Macquarie still like Pilbara Minerals shares?

Firstly, let us explain what a model portfolio is. Brokers publish these portfolios as a way of helping their clients keep their investments up-to-date and growing.

This saves clients the expense and inconvenience of having to check in with their brokers too often or having to ask their advice on every personal trade they want to make.

However, changes to model portfolios do not indicate an official buy, sell, or hold recommendation.

According to The Australian, Pilbara Minerals shares were among a bunch of other high-profile ASX 200 shares that were either kicked out of the model portfolios or reduced.

Among ASX mining shares, BHP Group Ltd (ASX: BHP) and South32 Ltd (ASX: S32) were kicked out and Pilbara Minerals was reduced. But it was only reduced a little bit — from the #1 spot in the ‘growth’ model portfolio to the #2 spot. Hardly a disendorsement.

So, essentially the answer to the question is, ‘yes’. Macquarie is still recommending Pilbara Minerals shares as a buy.

Why did Macquarie reduce Pilbara shares in its model portfolio?

Macquarie’s Matthew Brooks explained that the changes to the model portfolios were made to “reduce exposure to earnings risks, while still trying to minimise exposure to highly valued stocks”.

And therein might lie two clues to Macquarie’s slightly reduced model holding in Pilbara Minerals shares.

Firstly, “earnings risks”.

Every commodity-linked ASX share has a degree of earnings risk when commodity prices are unusually high. And for the record, international lithium prices are sky-high. The price of lithium carbonate, for example, is up 200% year over year.

When commodity prices are historically high, miners make a fortune, and sometimes more money than they’ve ever made before. Case in point: The maiden profit reported by Pilbara for FY22 after 17 years of operations.

Secondly, “highly-valued stocks”.

The Pilbara Minerals share price has never traded this high in the 12 years it’s been listed on the ASX.

And even though Macquarie thinks it can go to $7.70 by this time next year, they could also be wrong.

The post Is Macquarie still recommending Pilbara Minerals shares as a buy? appeared first on The Motley Fool Australia.

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More reading

• What $10,000 in ASX lithium shares a year ago would be worth today
• 5 ASX 200 shares Macquarie just recommended its clients buy
• If I’d invested $20,000 in BHP shares at the start of 2022, here’s how much I’d have now
• How I’d aim for $1,000 in monthly income by buying ASX 200 dividend shares
• Experts name 2 ASX 200 dividend shares to buy

Motley Fool contributor Bronwyn Allen has positions in BHP Billiton Limited and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lendlease Group (ASX: LLC) share price has not had a fantastic 2022. Nor has the S&P/ASX 200 Index (ASX: XJO), of which Lendlease is a part of, to be fair. But while the ASX 200 has gone backwards by around 4.5% over the year to date, Lendlease shares have dropped by a far more depressing 28.9%.

This ASX 200 property development company has had a tough year, to be sure. Back in August, Lendlease reported that it had booked a statutory loss after tax of $99 million for FY2022, a big turnaround from the profit of $222 million from FY 2021.

Core operating profits after tax also fell heavily, dropping 27% to $276 million. Lendlese also trimmed its dividend, giving investors a final dividend of 11 cents per share instead of the 12 cents that investors enjoyed last year.

So it probably goes without saying that Lendlease investors are in the mood for some good news. Well, they might have it this week.

Directors back up the truck on Lendlease shares

A series of ASX releases put out yesterday show that not one, not two or three, but five Lendlease directors have been buying up shares in their own company.

We have Elizabeth Proust, who picked up 10,000 Lendlease shares for a price of $7.92 each on 21 November.

David Craig went even heavier, buying 32,939 shares for $7.93 each on 21 November.

Philip Coffey bought a similar amount, 30,000 shares, also for around $7.93 each.

Anthony Lombardo went even harder. He has added 45,000 at $7.85 a share.

Michael Ullmer takes the cake, though.  He picked up 50,000 shares for $7.926 each on 21 November.

Lombardo and Ullmer are Lendlease’s most senior directors. Lombardo is the company’s global CEO and managing executive director. Ullmer is Lendlease’s chair.

So no doubt shareholders will be buoyed by seeing such commitment to the company coming from the top. But we’ll have to wait and see if the directors have played this one right.

At the current Lendlease share price, this ASX 200 property share has a market capitalisation of $5.47 billion, with a dividend yield of 2.07%.

The post This ASX 200 share is down 29% in 2022, and 5 directors are buying up big this week appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Why Bravura, Domino’s, Lendlease, and Woolworths shares are sinking
• Bell Potter names 9 ‘champion’ ASX 200 shares to buy for the next five years
• Which ASX 200 shares could benefit from the federal budget?

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 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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As with the rest of the big four banks, the Westpac Banking Corp (ASX: WBC) dividend is among the most popular options for income investors on the Australian share market.

For decades, Australia’s oldest bank has shared a good portion of its profits with shareholders.

This continued in FY 2022, with the company recently declaring a final dividend of 64 cents per share, bringing its full year dividend to $1.25 per share.

Based on the current Westpac share price of $23.92, this represents a fully franked 5.2% yield for investors.

Where next for the Westpac dividend?

The good news is that one leading broker believes it is onwards and upwards from here for the Westpac dividend.

According to a recent note out of Goldman Sachs, it is expecting the bank to increase its dividend to a fully franked $1.48 per share in FY 2023. This will be a solid 18.4% increase year over year and equates to an attractive forward yield of 6.2%.

Goldman expects this positive trend to continue in FY 2024 and is forecasting another 7.4% increase to $1.59 per share. This represents another very attractive fully franked dividend yield of 6.65% for investors.

The broker’s forecasts for the Westpac dividend end in FY 2025. For that year, once again, its analysts expect the banking giant to be in a position to increase its dividend.

In FY 2025, Goldman is expecting the bank to reward its shareholders with a fully franked $1.69 per share dividend, which will be an increase of 6.3% year over year. Based on where Westpac’s shares trade today, investors would receive a generous 7.1% dividend yield.

Should you invest?

Based on the above, it would be hard to argue against Westpac shares being a great option for income investors with limited exposure to the banking sector.

Goldman Sachs certainly thinks this is the case. It currently has a conviction buy rating and $27.60 price target on its shares. This implies potential upside of 15% for investors over the next 12 months.

The post Here’s the Westpac dividend forecast through to 2025 appeared first on The Motley Fool Australia.

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More reading

• Morgans names the best ASX 200 dividend shares to buy
• Are ASX 200 bank shares a buying opportunity hiding in plain sight?
• If I’d invested $1,000 in Westpac shares at the start of 2022, here’s how much I’d have now
• Brokers say these ASX 200 dividend shares are buys
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 Newcrest Mining Ltd (ASX: NCM) share price is taking off on Thursday as gold miners lead the S&P/ASX 200 Index (ASX: XJO)’s gains.

Materials shares involved with the precious metal are among the top-performing stocks on the index right now. The ASX 200 is up 0.26% at the time of writing.

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) is up 1.17% and the S&P/ASX All Ordinaries Gold Index (ASX: XGD) has gained 2.63%.

The Newcrest share price is outperforming the motley crew of indices, gaining 2.79% at the time of writing to trade at $19.88.

So, what’s helping to drive the gold stock higher on Thursday? Let’s take a look.

Newcrest share price outperforms on Thursday

It likely won’t come as a surprise that Newcrest shares are gaining alongside the price of gold today.

Gold futures lifted 0.3% overnight to trade at US$1,745.60 an ounce, according to CommSec. And the yellow metal is in the green again today, with the December contract rising 0.55% to US$1,755.20, as per CNBC data.

Gold’s latest climb comes while the US dollar slips amid the release of the US Federal Reserve’s latest policy meeting minutes. They showed that the central bank appears to be looking to moderate interest rate hikes, Reuters reports.

The gains posted by the Newcrest share price today are dwarfed by those of many of its ASX 200 peers.

The Chalice Mining Ltd (ASX: CHN) share price is up a whopping 8.8% at the time of writing. The St Barbara Ltd (ASX: SBM) share price is also rocketing, lifting 8.6%.

Unfortunately, today’s gain hasn’t proved enough to boost the Newcrest share price out of its 2022 slump. The stock has dumped 18% since the start of the year. It’s also 17% lower than it was this time last year.

For comparison, the ASX 200 has fallen 5% this year and 2% over the last 12 months.

The post Why is the Newcrest share price having such a cracker day? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Why did ASX 200 gold shares lag the index today?
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday

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 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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1) It’s another solid day for the S&P/ASX 200 Index (ASX: XJO), up 27 points or 0.38% on Thursday afternoon.

In what feels (to me at least) like the year from hell for stock market investors, the ASX 200 is down just 1.9% over the past 12 months. By contrast, on Wall Street, the S&P 500 Index (SP: .INX) has fallen 14%, with the Nasdaq Composite (NASDAQ: .IXIC) down almost 29%.

The resources sector has been powering the ASX 200 index higher, with coal and lithium the standout commodities. The Whitehaven Coal Ltd (ASX: WHC) share price has soared more than 255% over the past year, while the Core Lithium Ltd (ASX: CXO) share price has jumped 160% in the same period.

You have to go all the way down to the 18th best ASX 200 index performer over the past 12 months to find a non-resources company, that being Computershare Limited (ASX: CPU), its shares rising by 41%. Bringing up the rear is poor old Magellan Financial Group Ltd (ASX: MFG), its shares crashing 71% over the past year.

Therein lies the tale of the tape for investors… great for commodities, awful for many industrials and most technology shares, including those who invest in US markets. 

Count me in the latter group, despite some individual success, like the takeover of MSL Solutions Ltd (ASX: MSL) at an 80% premium, and my largest position – Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) – being up 10% over the course of the last year.

2) Still, I live to fight another day. I hold a decent cash balance, and hold out recovery hopes – over the next three to five years – for my beaten-down ASX growth stocks.

In these times when the macro – particularly inflation and, therefore, interest rates – is driving the direction of the markets, it’s easy to get caught up worrying about the next day or week, rather than keeping your investing eyes on the horizon.

Howard Marks of Oaktree Capital is one of Wall Street’s legendary investors. In his latest memo, Marks tells us mere mortals…

“The vast majority of investors can’t know for sure what macro events lie just ahead or how the markets will react to the things that do happen.”

He basically says – for any number of reasons – that investors should pay little attention to macro events. He also reminds us that volatility – effectively, the short-term movements in share prices – is just a temporary phenomenon, and that most investors shouldn’t attach importance to it. 

As markets continue to gyrate mostly to the tune of the words of central bankers, particularly the Federal Reserve, Marks reminds us “what really matters is the performance of your holdings over the next five or ten years”.

“Invest in companies that will become more valuable over time,” says Marks. It’s as simple as that.

3) The Hyperion Small Growth Companies Fund has had a rough 12 months, down 27% as fast-growing stocks have been taken to the woodshed.

In February 2021, Morningstar selected Hyperion Asset Management as the overall Fund Manager of the Year, and over the long term, the fund has soundly outperformed its S&P/ASX Small Ordinaries Accumulation Index benchmark. 

Writing in its October update, the Hyperion Small Growth Companies Fund says that, while they are seeing “persistent short-termism from market participants”, they remain confident in the “strong fundamentals and sustainable competitive advantages” of the companies in their portfolio.

Hyperion’s base case is that lower growth and lower inflation appear to be the most likely long-term scenario, an environment they believe their portfolio companies “will produce materially higher earnings growth than the broader market over the long term due to their superior value propositions, strong pricing power and low penetration rates”.

You have to admire the fund’s conviction, with its top five holdings making up more than 50% of its portfolio, being Wisetech Global Ltd (ASX: WTC), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), Xero Limited (ASX: XRO), Domino’s Pizza Enterprises Ltd (ASX: DMP), and Lovisa Holdings Ltd (ASX: LOV). 

None are cheap, even after the share prices of all apart from Wisetech and Lovisa have taken a pasting this past 12 months, yet the fund is clearly backing them all to deliver in the years ahead, damn the short-term volatility.

I’m hoping the Hyperion Small Growth Companies Fund is right, not least because I have a similar investing style and own some of the same companies (check disclosures below). 

For growth investors, these past 12-18 months have been tough to watch and tougher to invest through as we’ve watched the value of our portfolio wither away, sometimes quickly, other times by way of slow death.

Taking lessons from above, as we look forward, here are three things that give me comfort…

1. The huge winners of the next 12-24 months are rarely the same companies that have just seen their share prices shoot to the moon. In particular, I’m looking at the air coming out of many ASX lithium stocks, and I wouldn’t be surprised to see much tougher times ahead for many ASX coal stocks. When everything resources goes up, it’s worth remembering they are called commodities for a reason.
2. Although mindful that Howard Marks says we should pay little attention to the macro, I’m willing to stick my neck out and say I think most of the pain from interest rate rises is already behind us. There will still be bumps ahead, and potentially recession in the US, Europe and New Zealand (but probably not Australia), but I don’t think we’ll see huge falls in quality growth stocks going forward.

3. Over the long term, profit growth drives share price growth. Not valuation. Not interest rates. Not Putin, Trump, the RBA or the Federal Reserve. Hyperion is backing its top five holdings to keep growing for many years to come. Do that, and today’s lofty valuations will be largely meaningless… over the long term.

The post Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200 appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• What $10,000 in ASX lithium shares a year ago would be worth today
• Why Core Lithium, Invictus Energy, New Hope, and Smartgroup shares are sinking
• Why is the Core Lithium share price getting crushed on Thursday?
• Who sold $154 million worth of Xero shares this week?

Motley Fool contributor Bruce Jackson has positions in Berkshire Hathaway (B shares), MSL Solutions Limited, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares), Lovisa Holdings Ltd, WiseTech Global, and Xero. 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 positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Berkshire Hathaway (B shares), Dominos Pizza Enterprises Limited, and Lovisa Holdings 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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