Motley Fool Australia

Motley Fool Australia

Since 1993, millions of investors have trusted The Motley Fool for simple, down-to-earth investing research.

One lucky ASX winner, or just good common-sense investing?

ASX shares are up, Richard Goyder and Marius Kloppers join the ranks of the optimists, Dean Morel gets excited, and our ‘one trick pony’ keeps doing somersaults. The Motley Fool‘s War on Pessimism continues.

Well, that didn’t last long.

On Thursday the S&P/ASX 200 fell 71 points, or 1.7 per cent, to close at 4,181.9. It was the biggest one-day fall of 2012.

Were you nervous? Were you fearful of a coming market crash?

Just when you thought it was time to sell all your shares and pile into the so-called safe haven of gold, along comes this in the U.S…

Source: Fool.com, market close Thursday 16th February 2012.

By the time the U.S. market closed Thursday, the S&P 500 index had jumped to near its highest level in nearly 3 years.

On Bloomberg, Brian Barish of Cambiar Investors said “I don’t see what the case is for the market collapsing.”

Greece: Gone yesterday, saved today, tomorrow’s a new day…
On Friday The Australian Financial Review reported the euro zone is putting the finishing touches to a second bailout deal for Greece for finance ministers’ approval on Monday.

The European situation, and particularly the ongoing Greek tragedy, has long been weighing on investor’s minds. Will they default, or won’t they? Will the euro collapse, or not? Do Greek public sector employees like working a 35 hour week?

I think we know the answer to one of those questions. As to the others, it’s anyone’s guess.

It’s the Asian century, stupid
Amidst all these European political shenanigans, it’s easy to lose sight of the bigger picture for Australian investors, namely that we are now more dependent on Asia than Europe.

It’s what’s happening in China that we should be looking at, and not Europe.

Now we’re not foolish (note the small ‘f’) enough to realise a European recession or a euro collapse won’t have an effect on the global economy, including China. It will.

But will it stop the great urbanisation and industrialisation of China? Or the growth of the sleeping giant, India? Not likely.

Also on Bloomberg, admittedly when talking about the U.S economy, Liz Ann Sonders of Charles Schwab Corp hit the nail on the head…

“We’re more important to Europe than Europe is to us. U.S. economic numbers have been much better than expected. I’m pretty optimistic…”

One of the best starts in over 40 years
We’re pretty optimistic too, but realistic. Our War on Pessimism continues…

It’s worth remembering, world sharemarkets have had a good start to 2012. As we wrote a couple of weeks ago, ASX shares were on track to post their eighth-best January since 1970.

The strong start to 2012 has seen the bulls in the ascendency, some big winners being…

  • Fortescue Metals Group (ASX: FMG): Up 30 per cent
  • Toll Holdings (ASX: TOL): Up 20 per cent
  • Atlas Iron Limited (ASX: AGO): Up 20 per cent
  • Lynas Corporation (ASX: LYC): Up 21 per cent
  • Flight Centre Limited (ASX: FLT): Up 27 per cent

Oh, and one other…

  • Maverick Drilling & Exploration (ASX: MAD): Up 225 per cent

Luck, or good management?
More than one reader recently accused us of being a one trick pony with Maverick, saying “anyone can get lucky with a specky.”

We presume our reader is suggesting Maverick was a speculative recommendation. We suggest he reads the original write up in The Age and Sydney Morning Herald and make up his own mind. We particularly refer to this paragraph…

Maverick presents a compelling risk reward picture, with limited downside and excellent market trouncing upside potential.

Speculative, or just common-sense investing? You decide.

Regular readers will know we have a few more tricks up our sleeves, and a few more ponies.

But, even our harshest critics might have to admit the Maverick trick is a pretty good trick. From my own personal cost base, the stock has now roughly quadrupled.

We admit, we have been a little excited by Maverick’s rapid ascent. We’ll back off now and leave it to the day traders to fight over end-of-day share prices and lofty target prices.

An investor’s best friend
We Fools focus on longer investing time frames than a day, a week or even 6 months. We look 3 and 5 years to the future.

That said, we won’t complain if our stocks go on a good run in the short-term, and we won’t be afraid to sell if the company becomes over-valued, but when it comes to successful investing, time is your best friend.

ASX company reporting season remains in full swing. Our Investment Analyst Dean Morel is all over it, keeping a very close eye on our Share Advisor stocks, and keeping a look out for the next big winners of tomorrow.

Without giving anything away, let me just say, after having a 40 minute one-on-one call with the CEO of a fast growing yet seemingly overlooked company, he is very excited.

You just don’t get that sort of access to company executives in the ASX 200 companies. It’s an advantage we hope to exploit, for the benefit of you, our Foolish readers and members.

Life is good, Australia is good
Speaking of ASX 200 companies, few come larger than Wesfarmers Limited (ASX: WES).

It’s a bellwether of the Australian economy, seeing as it owns Coles, Bunnings, Kmart, Target, Officeworks, plus has a fertilizer, chemicals and energy division, an insurance division and a resources division.

Wesfarmers is the nation’s largest employer with almost 200,000 employees and more than 450,000 shareholders.

I was interested to read the comments of CEO Richard Goyder in The Australian Financial Review (We’d have jumped at a chance to have a 40 minute one-on-one analyst briefing with Mr Goyder, but suspect he’d be a little too busy for that…maybe next time, hey Richard?)

…Australia is as good a place in the world at the moment as any to be doing business…Underlying, the Australian economy is very sound and there are good prospects. Overall employment remains pretty strong in this country and I hope that continues…

Take that, doomsayers. Rack it up as another win for the optimists.

And here’s another win for the optimists…
Speaking of optimists, BHP Billiton (ASX: BHP) CEO Marius Kloppers is one of us too.

On the ABC’s Inside Business, in an interview with Alan Kohler, Mr Kloppers said…

Alan, I’m a little concerned that your last three questions all started with the word problem. The way that I look at it is that there may be an opportunity here…

As for Alan Kohler, we suspect his glass may be half empty.

The Foolish bottom line
Back to the sharemarket…

We don’t know where the market will go today, tomorrow or next year. But we do know opportunities abound, particularly amongst smaller industrial and technology companies. Stay tuned.

Sure, companies like Wesfarmers, Woolworths (ASX: WOW) and Telstra (ASX: TLS) will pay you a steady and decent dividend, and form a solid base for your portfolio, but if it’s action you’re after, you might have to do a little more digging.

More ponies, anyone?

Attention: If you are looking for ASX investing ideas, look no further than “The Motley Fool’s Top Stock for 2012.” In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

Of the companies mentioned above, Motley Fool General Manager Bruce Jackson has an interest in BHP, TLS, WES, WOW and MAD. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Click here to be enlightened by The Motley Fool’s disclosure policy.

The One ASX Pick You MUST Add to Your Portfolio

Top Motley Fool analysts just identified their #1 ASX pick for 2014, a small-cap stock that could be poised for big gains (and offers a fat, fully franked dividend!).

Discover all the details now, including the name and code, in this FREE investment report, "The Motley Fool’s Top Stock for 2014."

See all posts by Bruce Jackson
The Motley Fool