2 reasons I'm not buying Macquarie Group Ltd shares today

Macquarie Group Ltd (ASX:MQG) is Australia's biggest and best investment bank and I wouldn't be surprised to see it go higher but…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Macquarie Group Ltd (ASX: MQG) is Australia's biggest and best investment bank.

Although I wouldn't be surprised to see its share price go higher in the short term, there are a few concerns I cannot stomach at today's prices.  

Macquarie share price

Source: Google Finance

As can be seen above, Macquarie Group shares have proven to be an excellent investment… if you get the timing right.

It pains me to say 'you need to get the timing right'. But there are two reasons why I won't be buying Macquarie shares today.

1. Cyclicality

No surprises here but Macquarie's business is cyclical. While the bank has made significant changes to its business since the global financial crisis of 2008, its profits are highly sensitive to movements in broader financial markets.

That means we may get a chance to buy shares in Macquarie at a more compelling valuation, in time. For the patient investor, waiting a few years to buy shares in a quality company is a no-brainer.

2. Black box.

Macquarie has a diversified business, in terms of its geographical reach and its operations. What's more, some of its businesses are not as transparent as others. Meaning, it can be difficult to get a decent read on each part of the business and determine how it is performing.

That's not always a bad thing. But when you do not have certainty in your research and analysis you should demand a wider margin for error before you invest.

That's another reason I'm waiting for a better entry point.

Foolish Takeaway

At today's prices, Macquarie's shares are a little expensive for my liking and there appear to be more reasons to not buy today. Remember, patience won't lose us money.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. You can follow him on Twitter @OwenRask. 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 Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »