If you've been betting against technology shares, or just waiting it out on the sidelines as tech share prices boom, you may want to skip ahead a little.
Yesterday, overnight Aussie time, the NASDAQ-100 (INDEXNASDAQ: NDX) hit yet another new record high gaining 1.4%. The index of the largest 100 tech-oriented shares is now up 29% year-to-date, and up 64% from the 23 March low.
As Ed Moya, senior market analyst at Oanda, wrote:
The love for technology stocks grew as the favorite pandemic plays, such as Apple and Tesla saw strong demand. No one wants to short this market, so we are seeing investors just rotate back into technology stocks today.
The Apple Inc. (NASDAQ: AAPL) share price gained 2.2%, sending its market cap above US$2 trillion (A$2.8 trillion).
Meanwhile the Tesla Inc (NASDAQ: TSLA) share price rocketed 6.6%. Year-to-date, Tesla's share price is up an eye-popping 365%, and up 454% from its 18 March low. (Short sellers, I did warn you to skip ahead!)
Australia's tech shares are also on the rise again today. At the time of writing, BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) shares are up 0.68%.
This technology exchange-traded fund (ETF) holds some of Australia's largest and most innovative tech companies. ATEC's share price is up 9.13% so far in August and up 100% since its 23 March low. For comparison, the All Ordinaries Index (ASX: XAO) has gained 38% since 23 March.
Clearly, technology shares have been the big winner in 2020. And with the uptrend firmly in place, there's good reason to remain bullish on the best tech shares.
But if you're a long-term investor — which I believe is the best way to grow your wealth over time — there are other shares you may want to look at adding to your portfolio.
It hasn't been a great year for ASX energy share prices
When the price of the resource you produce dives, your share price tends to follow it down.
And that's largely been the case with Australia's energy shares.
Liquified natural gas (LNG) spot prices, for example fell below US$2 per million British thermal units (MMBTU) in the wake of COVID-19.
Tumbling energy prices took their toll on some of the ASX leading energy shares.
The Santos Ltd (ASX: STO) share price cratered more than 69% from its January peak through its 19 March low. Since the low, the Santos share price is up 110%, though year-to-date it remains down 30%.
The Origin Energy Ltd (ASX: ORG) share price also fell more than 56% from its January highs to its 23 March low. Despite a 45% rebound from that low, Origin's share price is still down 35% since 2 January.
But if your investment horizon stretches out a few years, both these companies could deliver a lot of share price growth from here.
Today, LNG spot prices are back in the US$4/MMBTU range. That's well below its peak price. And it may not return to peak prices.
But with the Australian government backing cheap energy to revive domestic manufacturing and put some money back into household pockets, well-placed energy shares don't need a return to peak prices to be profitable.
As the Australian Financial Review (AFR) notes:
Queensland Premier Annastacia Palaszczuk called on the Morrison government to match her government's $5 million commitment to a feasibility study into a new gas pipeline from the Bowen Basin.
She said Queensland had already unlocked 20,000 square kilometres of land for domestic gas supply.
"The gas pipeline will support further gas supply for manufacturing while lowering carbon emissions from existing mines," she said. "And I would welcome a matching commitment from the federal government."
Even Labor frontbencher Bill Shorten put his hat in the ring for LNG to help bring energy costs down, saying:
You can't have a manufacturing sector, from Qenos in Botany and Altona through to foundries, through to the four smelters in aluminium, the steel industry, unless we have low price energy. I think gas does tick some of those boxes.
Santos chief executive Kevin Gallagher puts the emphasis on the long-term outlook here (as quoted by the AFR):
So I am thinking we are beginning to see some green shoots of recovery, but I think there's a bit to go yet and I wouldn't expect to see any material change until some time next year. … These are 20-year projects so it's more about what the market conditions are, the ability for markets to operate, the ability for shipyards to deliver on … construction builds, etc – so you don't have big capex blowouts.
Allan Gray, portfolio manager at Suhas Nayak said:
Origin is well placed to handle the low prices. Given the cost reductions that have occurred and given the reduction of debt that's occurred over the last little while I think they're well placed to navigate the challenges.
While you're unlikely to see many energy shares dominating the financial headlines with huge new weekly share price gains in the short run, longer-term you may wish you'd bought them at today's discounted prices.
