The key to successful ASX investing is doing the simple things right, reinvesting your dividends, and focusing on the long-term, writes The Motley Fool.
The ASX/S&P 200 (INDEX: ^AXJO) is stuck.
After an encouraging start to 2012, it now can’t seem to break away from the 4300 level.
No doubt some candlestick, Bollinger band or moving 42½ day average (with pike) will be able to explain this phenomenon, but we put it down to ‘much ado about nothing.’
And nothing is the operative word.
The Australian economy is doing nothing. Nationwide unemployment is doing nothing. And the Reserve Bank of Australia is doing nothing…until next month anyway.
Even Maverick Drilling & Exploration (ASX: MAD) is doing nothing, its share price stuck around $1.20. Trading volumes have dried up too. The Foolish world is patiently waiting for the much anticipated oil reserves upgrade, due late this week, or early next week. The tension is palpable…
Speaking of Maverick, we received an email from John, who took issue with us taking credit for Motley Fool Share Advisor Investment Analyst Dean Morel being the person who brought Maverick to the attention of the investing public…
“I have enjoyed receiving your emails and views on shares and the state of the world economy generally. You have clearly shown the ability to tip some good buys, but might be time to stop giving yourself wraps on MAD. RBS Morgans, which has a much wider client network than yourselves, has had a buy on MAD for over a year, when shares were about 19 or 20 cents. I think they might claim to be the ones who brought MAD to the attention of the general public.”
Dancing in the streets of Texas
Fair enough. We’re not going to argue.
The Motley Fool’s purpose is to help the world invest better. Investors who bought Maverick at around 20 cents and held through to now — no matter where they heard it first — will be dancing in the streets, oil bulls and investing geniuses for life.
Six-bagger winners in such a short space of time are few and far between. And remember, Maverick was not some highly speculative penny share…it had cashflow and assets. It’s now got more of the latter, and the former will surely follow higher.
For fear of flogging a bucking bull, we’ll move on…
A top stock
We’re aware a number of Motley Fool readers own shares in M2 Telecommunications (ASX: MTU), not surprising since Dean Morel named it his top stock for 2012.
M2 has had a good run, gaining 22 per cent so far this year, including its 9 cent dividend…not too bad at all, we think you’ll agree.
Yesterday M2 announced a transformational acquisition of Primus Telecom Holdings for $192.4 million.
M2 is a Motley Fool Share Advisor watchlist stock — one of a group of six companies that are on Dean’s radar, but didn’t quite make it to be his top monthly ASX stock recommendation.
In yesterday’s email update to Share Advisor members, Dean said…
“The acquisition delivers M2 around 165,000 customers, the well-recognised iPrimus and Primus brands, a team of approximately 500 people including the long-serving and experienced management team, and the national Primus network including data centres and metro fibre rings, providing the capability to sell and support next generation cloud based services.
This is a transformational deal for M2, as it adds next generation telecom capabilities to its product suite; in particular data centres and IP Telephony.”
Dean will update Share Advisor subscribers next week with his latest thoughts on M2, including advice on how to deal with the company’s renounceable rights entitlement offer.
If the last four words of the above sentence sound like gobbledy gook to you, we suspect you’re not alone.
But never fear. We’ve enlisted the help of Motley Fool Investment Analyst Scott Phillips to explain…
“’Renounceable rights’ is a fancy name given to the opportunity you have to buy more shares in a company, but with no obligation to do so – and importantly, you can sell those rights on the market if you don’t wish to take up the opportunity to buy more shares.
It’s a shareholder friendly way of raising capital, as it doesn’t force you to take part, and allows you to ‘cash out’ the opportunity if you so desire.”
An eye on Spain, but for different reasons
You may have seen Scott recently on the Sky Business ‘Lunch Money’ program.
He’s usually the one urging investors to stop worrying about the yields on Spanish bonds and instead focus on the long-term wealth creation opportunities that abound on the sharemarket.
And, he might even say he’d welcome a good old fashioned sharemarket correction, as it would enable him to buy shares in his favourite companies at even better prices – companies like Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), OrotonGroup Limited (ASX: ORL) and Telstra Corporation (ASX: TLS).
Wealth beyond your wildest dreams
Trading in M2’s rights starts tomorrow (Wednesday) and lasts until Friday 4th May.
There is absolutely no rush to take any immediate action.
Patience, dear Fools, patience.
When it comes to investing, patience is absolutely key.
We know it’s tempting to pile into a hot stock for fear of missing out on further gains. We know it’s tempting to bail out of a falling stock for fear of it falling even further.
Fear is no way to invest.
Instead we urge you to focus on the business, not the share price. Over time, the simple strategy of buying good businesses at good prices will serve you well.
If you get it right, and studiously reinvest your dividends, the long-term wealth creation opportunities could be beyond your wildest dreams.
If you’re looking for income from your shares, look no further than “Secure Your Future with 3 Rock-Solid Dividend Stocks”. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.
- 10 stocks better than a lottery ticket
- The grass-roots way to multi-bagger returns
- Don’t let the ASX take your rights!
Bruce Jackson has an interest in Maverick Drilling & Exploration, Berkshire Hathaway and Telstra. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available.
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