What's happening to the ANZ Group Holdings Ltd (ASX: ANZ) share price might be the least interesting development for the business today. That's despite Australia's fourth-largest bank copping a 1.8% haircut in an ocean of red on the ASX.

ANZ's annual general meeting is today, pushing forward in the face of security concerns. This year's AGM seems shrouded in protests and mounting pressure following a myriad of allegations levelled at the blue-branded bank.

The dissatisfaction among shareholders bubbled up into a message that even outgoing CEO Shayne Elliott couldn't ignore.

Ugly lingering problems for ANZ shares

Management at ANZ is facing the music today, and it appears there's a playlist four songs long:

• Australian Government bond trading scandal
• Alleged withdrawal of fees from deceased customer accounts
• Financing weapons manufacturing
• Remuneration

ANZ has been in hot water for much of the year over its handling of a bond deal. However, the bank's internal review has been unable to discover any wrongdoing. Yet, the concern created by the ordeal has led the Australian Prudential Regulation Authority (APRA) to slap ANZ with a $250 million provision.

Furthermore, newly emerged accusations of ANZ charging fees to deceased account holders have re-stoked the dormant coals left by the Royal Commission into the banking sector. The alleged actions have drawn the attention of Australia's corporate watchdog, the Australian Securities and Investments Commission, which is contemplating pursuing the matter.

Elliott must have preempted the backlash. Announced today, ANZ's CEO will voluntarily forfeit a bonus of $3.2 million in ANZ shares 'in recognition of shareholders' views and to limit the impact on the bank'.

Nevertheless, shareholders voted 40% against the bank's remuneration report, bestowing ANZ with its first strike since the days of the Royal Commission. Keep in mind if a company gets two consecutive strikes, the board faces a shake-up.

Banking in the bush on notice

Branch closures in regional areas have proven to be a thorn in the Big Four's side. The endangerment of bank branches in the bush was raised in today's AGM, where chair Paul O'Sullivan gave an inconclusive answer, stating that regional branches needed to have "commercial viability".

ANZ is exploring different ideas to balance profit and regional service. One option cited is the reduction in operating hours.

The bank signed a moratorium in June to sustain its current regional branches for the next three years.

ANZ shares are up 10% in 2024 despite the bank's profits falling 12.6%.

The post Why ANZ shares are making big news today appeared first on The Motley Fool Australia.

More reading

• How many ANZ shares do I need to buy for $10,000 a year in passive income?
• ASX 200 shares with renewed buy ratings this week
• In the midst of economic turmoil, what does Morgan Stanley say the ASX banks are worth?
• ANZ, NAB, Westpac, and CBA shares: Analysts rate 3 to sell, and 1 to buy
• What's going on with the ANZ share price?

Motley Fool contributor Mitchell Lawler 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.

Aussie stocks face a bloodbath today as the S&P/ASX 200 Index (ASX: XJO) dives 2.2%. That's a considerable decline in a single session, but it still falls short of the murderous scene that blanketed the Nasdaq Composite Index (NASDAQ: .IXIC) while we slept.

Home to some of the world's most dominant technological titans — including Apple Inc (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), Nvidia Corp (NASDAQ: NVDA), and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) — the Nasdaq Composite was calmly humming along until the United States Federal Reserve wedged a stick into the spokes of the stock market.

As the above shows, Big Tech was dealt the ole' left, right, goodnight' in the final two hours of trading: The central bank's interest rate decision and guidance. The words leaving Fed Reserve chair Jerome Powell's mouth were not what many had hoped to hear.

Rate cuts to shift down a gear in 2025

In the fleeting hours of US trading, the Federal Reserve Board announced its third rate cut. The decision takes the baseline lending rate to a target range of 4.25% and 4.5%. Justifying the move, the Fed's statement read:

The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

"Aren't lower rates a good thing?" I hear you shout.

Yes, usually. It frees up more consumer spending, makes debt for businesses cheaper, and — due to a lower discount rate — can increase company valuations. If that's the case, then why did the Nasdaq drop like a sack of potatoes from a tall building…

Markets are always looking forward. Where we are going is more important than where we are or have been. So when the Fed cuts rates but cautions of a slower decline in interest rates than previously expected next year, the latter part will carry more weight.

Each dot on the plot above represents a board member's interest rate forecast. The median dot for 2025 now sits at 3.9%, implying only two cuts next year compared to four in the prior forecast. Similarly, each successive year's median forecast has increased from the previous meeting.

Why it pulverised the Nasdaq

Big Tech was not alone last night. The broader S&P 500 Index (SP: .INX) took a nasty 2.95% downward adjustment, but the Nasdaq's decline was a bloodier 3.56%.

The tech-heavy index probably felt the punch more deeply than the S&P 500 for a couple of reasons.

Firstly, many of the largest Nasdaq-listed companies have greater exposure to discretionary spending — Apple with iPhones, Chip makers with PC and phone purchases, and Tesla Inc (NASDAQ: TSLA) with its electric vehicles. If rates are higher for longer, that might mean you and I watch our pockets for longer as well.

Secondly, investors expect these businesses to have high growth in the good times. If those good times don't materialise, then the 'big upside' fades, leaving a glaring hole in the earnings needed for the market capitalisation to make sense.

Despite all the commotion, the Nasdaq Index is up 31.3% year-to-date.

The post Why Big Tech became a huge wreck across the Nasdaq last night appeared first on The Motley Fool Australia.

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• The pros and cons of buying Qantas shares this month
• How many shares in this high-dividend toll road stock do you need for a $10,000 income stream?
• Which ASX 200 tech stock has Bell Potter just downgraded?
• Stop 'saving', start investing! How to target a $1 million ASX share portfolio

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has positions in Alphabet, Apple, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Microsoft, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Perhaps unexpectedly, 2024 has been a phenomenal year for anyone with a decently diversified share portfolio. The highest Australian interest rate in 13 years has proved insufficient to derail markets, which have kept chugging like a freight train.

Of course, the year isn't over, and anything can happen. But I'll risk prematurely counting my chickens to squeeze in my annual review before everyone is comatose from too much trifle and plum pudding… myself included.

Reflection is a grossly undervalued practice — not just for investing but also in life. After all, "Those who fail to learn from history are doomed to repeat it." By reviewing what has transpired before, we can better understand what should be done moving forward.

As of today, my stock-picking portfolio has returned 63.9% in 2024 (including dividends). How does that compare to the broader market? Below are a few indices to stack it up against:

• S&P/ASX 200 Index (ASX: XJO) gross total return of 12.3%
• S&P 500 Index (SP: .INX) return of 27.6%
• Nasdaq Composite (NASDAQ: .IXIX) return of 35.0%
• iShares MSCI World ETF (NYSE: URTH) return of 22.3%

I won't claim to be some Sage of the Sunshine State. Some years are better than others, and to claim victory as an investor because of one good year would be fallacious. But there is merit in deciphering what worked and trying to replicate the success repeatedly.

What's inside the share portfolio?

In many ways, this year has been a continuation of the last. Again, tech and consumer discretionary have shined bright despite crimped household budgets.

Some of this is arguably fuelled by the excitement surrounding artificial intelligence. This is supported by such companies seeing their valuations soar more from an increasing price-to-earnings (P/E) ratio than profit growth.

It makes the stellar year somewhat hard to celebrate. Yes, in the short term, it's great for the ego and the wealth on paper. However, it's not what you want as an investor in the long run. The premium paid for a slice in a company can not expand forever; eventually, its earning power must support it.

A few of my top holdings, Tesla and Apple, are guilty of this earnings-deficient rally. The heightened premium probably reflects optimism about future profitability as we hopefully emerge from a high interest rate environment.

A few notable changes were made to my share portfolio this year.

• Increased my ResMed position
• Increased my Meta position (the owner of Facebook, Instagram, and WhatsApp)
• Added Aristocrat Leisure
• Added Alphabet (the owner of Google)
• Reduced my Propel Funeral Partners position on dilutionary concerns
• Exited Duxton Water amid worsening execution
• Exited Elders on increasing margin pressure

Ultimately, my big winners of 2024 are Tesla, Palantir, Pro Medicus, ResMed, Meta, and Aristocrat. In many cases, these are companies that have been (and possibly continue to be) misunderstood.

ResMed is a prime example. Investors ditched the sleep apnea maker, worried that weight-loss drugs would demolish its market. So far, the impact has failed to materialise, with some suggesting the Ozempic craze is giving the sleep apnea market a boost.

I think the lesson here is that it pays to build conviction. Once you've built a conviction based on logic, it's much harder to lose money through emotionally driven decisions.

Change afoot in 2025

A big part of investing is knowing thyself.

I have limited mining knowledge. So, what am I doing investing in Lynas and Albemarle?

Both investments were added to my share portfolio several years ago, rooted in basic supply and demand principles.

While I've managed to achieve decent returns from both, it isn't a great way to invest realistically. A business is more than its market, and I don't possess the comprehension to understand whether Lynas or Albemarle are good companies compared to their peers based on their resources.

For the above reason, I'll probably sell a few positions in 2025 and redeploy the money to companies I can better understand.

The post These stocks made my share portfolio a market-beater in 2024 appeared first on The Motley Fool Australia.

More reading

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has positions in Advanced Micro Devices, Albemarle, Alphabet, Apple, Aristocrat Leisure, Block, Commonwealth Bank Of Australia, InMode, Jumbo Interactive, Lovisa, Lynas Rare Earths Ltd, Macquarie Group, Meta Platforms, Palantir Technologies, Pro Medicus, Propel Funeral Partners, ResMed, Shriro, Smartgroup, Sonic Healthcare, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Alphabet, Apple, Block, InMode, Jumbo Interactive, Lovisa, Macquarie Group, Meta Platforms, Palantir Technologies, ResMed, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Macquarie Group, ResMed, and Smartgroup. The Motley Fool Australia has recommended Advanced Micro Devices, Alphabet, Apple, Jumbo Interactive, Lovisa, Meta Platforms, Pro Medicus, and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Mondays can be rough, but at least it's not 'under investigation by the Australian Securities and Investments Commission' rough for most of us. The same can't be said for Ruslan Kogan and David Shafer, as their $17 million payday from options over Kogan.com Ltd (ASX: KGN) shares catches the attention of Australia's corporate canine.

In light of the development, shares in the online retailer are down 1.3% to $5.60. However, that's only slightly worse than the 0.3% fall in the S&P/ASX 200 Index (ASX: XJO) today.

The redness in Kogan's share price is a long way off from the wooden spoon currently held by HMC Capital Ltd (ASX: HMC).

How'd we get here?

To understand the present situation, we must first go back to the beginning.

In 2020, long-term incentives of 3.6 million options and 2.4 million options for Kogan and Shafer were approved with one condition: they must not resign before the FY23 numbers get a green light. The options — which allow the holder to buy shares at a predetermined price and sell at the market price — carried a strike price of $5.29.

The incentive was already 'in the money' when approved because Kogan shares were fetching $7.90 at the time. However, for Kogan and Shafer's options to have any value, the Kogan share price needed to be above $5.29 after the approval of the company's FY23 financial report — the options couldn't be exercised before then.

As fate would have it, profits and investor sentiment deteriorated as the company approached 2023. Kogan shares lost approximately 81% of their value between 2021 and the last day of 2022, as shown in the chart below. If the lousy share price persisted beyond August 2023, the options awarded would be worthless.

In April 2023, Kogan announced a share buyback, a process in which the company buys shares on the stock market to return capital to shareholders. The additional buying can create upward momentum in the share price.

Coincidental timing for Kogan share sale

Kogan shares rallied 105% — above the $5.29 exercisable price — until Kogan and Shafer cashed in their options on 4 April this year for $17 million. To avoid shareholder dilution, the company elected to buy the options from the executives rather than issuing new shares.

Coincidentally, a disappointing market update sent Kogan shares back below that all-important $5.29 price point 22 days later.

This intriguing timing has ASIC interested.

At this stage, there is no implication of wrongdoing. Instead, the watchdog is taking a closer sniff to ensure all is above board.

The post Kogan shares worth $17 million sniffed by corporate watchdog appeared first on The Motley Fool Australia.

More reading

• What is Bell Potter's latest outlook for Kogan shares?

Motley Fool contributor Mitchell Lawler 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 HMC Capital and Kogan.com. The Motley Fool Australia has recommended HMC Capital and Kogan.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One ASX lithium stock refused to budge while the S&P/ASX 300 Index (ASX: XKO) limped lower today.

Australian shares largely followed the mediocre example set by US markets last night. However, shares in Vulcan Energy Resources Ltd (ASX: VUL) didn't move an inch today as the lithium project developer put itself in a trading halt before the opening bell.

The $1.25 billion company's cash balance had been dwindling since its last capital raise in early 2023 and strategic investments from CIMIC Group and Hancock Prospecting, which occurred in June this year.

At the end of FY2024, Vulcan only held the equivalent of A$100 million worth of cash on its balance sheet. For context, the company's operating expenses for the last financial year came in at around A$64 million, implying roughly one and a half years' worth of remaining cash runway.

Scooping up $184 million in cash

As per the update, Vulcan Energy is replenishing its coffers to the tune of A$184 million through three placements:

• €74 million (A$121 million) via a fully underwritten institutional placement
• €26 million (A$43 million) via non-underwritten placement for 'strategic investors'
• €12.2 million (A$20 million) via a share purchase plan

Vulcan stated its cash reserves ahead of the placement sat at €20 million (A$33 million). The additional capital is said to be earmarked to 'fund the commencement of project execution of the Company's Phase One Lionheart Project'.

Specifically, the funding will go towards the field development plan; engineering, procurement, and construction contracts, and other 'critical path execution capital and operating expenditures'.

The shares offered in the placements are priced at $5.85 apiece, almost 12% below the last trading price of the ASX 300 lithium stock. Meanwhile, any shareholders on the register as of 7pm yesterday will have the option of partaking in the share purchase plan up to an additional A$30,000 worth of Vulcan shares.

How this ASX 300 lithium stock has remained unscathed

Despite much of the ASX lithium sector being torn to shreds this year, Vulcan Energy has managed to avoid the punishment. Better still, shares in the company are up a gargantuan 136% to date in 2024.

How can this be the case when the price of lithium has simultaneously languished? That's where it's important to zoom out.

As the chart above shows, this ASX 300 lithium stock has experienced its fair share of brutality. The only difference is Vulcan tussled with the big red candles long before most. By the end of 2023, shares in the company had dropped 82% from their 2021 high.

However, the tides appear to be turning as the developer makes progress towards securing the funding needed to get its first project off the ground. For example, earlier this week, Vulcan received conditional approval of A$196 million from Export Finance Australia.

Now, we'll have to wait and see how successful these three placements pan out to be.

The post Here's why this ASX 300 lithium stock was halted today appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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.

Many Australian homeowners, businesses, and ASX investors are contemplating the trajectory of interest rates in 2025.

Despite Peter Lynch's iconic quote, "If you spend more than 13 minutes analysing economic and market forecasts, you've wasted 10 minutes", each Reserve Bank of Australia decision produces a ripple throughout the economy, shaping how millions of people spend, save, and invest.

Textbook investing might suggest buying good companies and holding, come hell or high water. But, as we all know, life doesn't exactly operate nicely within the confines of logic. Many of us are faced with the realities of balancing mortgages, daily expenses, and investing for our future — a tightrope act where the weight is distributed depending on interest rates.

Will interest rates be cut in 2025?

The clincher comes down to when interest rates will retreat and by how much.

If you're an ASX investor, chances are you want to invest more in the market. Unfortunately, high interest rates prevent many from stashing away more for their future. According to Finder, the average home loan is now siphoning an extra $1,453 — hitting a total of $3,958 — per month out of Aussie back pockets.

In its final decision before 2025, the RBA kept interest rates on hold at 4.35% yesterday. Reassuringly, the board indicated that the inflationary pressures behind high rates are moving in the right direction, but "risks remain".

What could these risks be?

Data collated by HR software company Employment Hero shows a 5.9% increase in wage growth year on year. This could mean the RBA's desired tightening of consumer spending may take longer as households are able to offset some of the rate pain through pay rises. Likewise, retail confidence is improving.

Still, annual inflation is now the lowest it's been since March 2021, as shown above. This is good news for justifying an interest rate cut in 2025. Perhaps the more pressing question is how far into next year can we expect the first cut to occur?

A survey of economists conducted by Finder sheds light on which month the experts are betting on.

Roughly half believe the RBA will first ease rates in May. The next most popular choice is the next RBA meeting in February, as depicted above.

Adelaide Timbrell of ANZ also gave guidance on how much of an interest rate reduction we might see in 2025, telling Finder:

With the economy – notably jobs growth and business conditions continuing to show resilience, we are also shifting our view on the quantum of rate cuts and now expect only two, in May and August 2025. That leaves the terminal cash rate at 3.85%.

Meanwhile, Gareth Aird of the Commonwealth Bank expects the cash rate to be chopped down to 3.35% next year.

What it could mean for an ASX investor

Falling interest rates in 2025 should boost equity portfolios mathematically. The basis for this comes back to some technical calculations involving the discount rate. Theoretically, lower rates make company earnings more valuable to investors.

Another lift can come from cash-heavy investors. As rates decline, money stowed away in savings accounts begins to look lazy. In turn, investors flood back to ASX shares — moving back up the risk curve — in the hunt for better returns.

According to money-managing behemoth BlackRock, large-cap stocks have historically benefitted the most from this shift. Global chief investment officer Tony DeSpirito's research is based on the US market, but a similar response could play out locally.

Specifically, dividend stocks could find renewed interest as rates tick below available dividend yields. For reference, current trailing yields on offer for investors across the 10 largest ASX stocks are as follows:

• Commonwealth Bank of Australia (ASX: CBA) = 3.0%
• BHP Group Ltd (ASX: BHP) = 5.3%
• CSL Ltd (ASX: CSL) = 1.0%
• National Australia Bank Ltd (ASX: NAB) = 4.5%
• Westpac Banking Corp (ASX: WBC) = 4.7%
• ANZ Group Holdings Ltd (ASX: ANZ) = 5.7%
• Macquarie Group Ltd (ASX: MQG) = 2.9%
• Wesfarmers Ltd (ASX: WES) = 2.7%
• Goodman Group (ASX: GMG) = 0.8%
• Fortescue Ltd (ASX: FMG) = 9.7%

It's important to remember, though, that investing in shares is a different beast to cash parked in savings. However, for those willing to take on more risk, the rewards can dampen the impact on a person's passive income machine if interest rates are cut in 2025.

The post What every ASX investor should know about interest rates in 2025 appeared first on The Motley Fool Australia.

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• Which ASX 200 tech stock has Bell Potter just downgraded?
• Stop 'saving', start investing! How to target a $1 million ASX share portfolio

Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia and Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, Macquarie Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended CSL, Goodman Group, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Pro Medicus Limited (ASX: PME) share price is putting on a rare display today.

Shares in the medical imaging software company have fallen on only four days over the past month. Barring an enormous afternoon rally, it appears we're on track for the fifth burgundy-tinged session for Pro Medicus shareholders.

As I write this article, shares are "rolling in the dee-ee-eep" (as Adele would say), down 8.5% to $245.66. Initially, that might sound rather devastating, but context is important. Even with today's blood-stricken performance, the Pro Medicus share price is still 154% better off than where it was situated at the end of 2023.

Why the fall?

Usually, an ASX announcement is the source of such a dramatic daily move. However, if we look at Pro Medicus' releases, we see a lot of nothing since Wednesday last week. Investors must be reacting to something other than news, then.

Without anything concrete to point to, we can only resort to presumptions. My best guess is that some people are choosing to crystallise part of their lucrative positions following a long stretch of exuberance surrounding Pro Medicus.

For example, if you'd invested $5,000 only two years ago into Pro Medicus, that amount would have been worth around $22,800 before today's opening bell. Pair this with an earnings multiple that looks lofty — at a price-to-earnings (P/E) ratio of 310 times — and it's not hard to see why there might be an appetite for profit-taking.

After all, co-founders Sam Hupert and Anthony Hall themselves cashed in about $256.7 million worth of shares last week.

Is the Pro Medicus share price tempting?

Fundamentally, Pro Medicus' valuation looks rich.

If we run some quick numbers, the company's free cash flow yield is around 0.3%. Think of the free cash flow yield as the cash the business pays you for your invested capital — sort of like the interest rate on a savings account.

Now, 0.3% isn't all that appealing compared to the 5% I could probably get on cash right now. Actually, it looks downright unsatisfactory. But that doesn't give us the whole picture. Future earnings ought to be considered, too.

That's where the water begins to get muddy, making it difficult to tell whether Pro Medicus is a good buy.

The company probably needs another decade of tremendous growth to justify its current valuation. Fortunately, the market opportunity for its picture archiving and communication system solutions in the United States might make that possible.

At the recent annual general meeting, Hupert stated:

We think about 85% [of the market] is addressable, including from both a product and commercial point of view. We now have about 7% of the market, a touch more. Doesn't sound like much, but America is a huge market, and no one has gone from 0% or standing start to 7% as quickly as we have.

Let's do some crude estimates based on the above… the last 12 months resulted in $161.5 million of revenue. It's not accurate, but let's just say this represents the 7% current market share. At 85%, it might suggest a 12-fold increase in revenue (85% divided by 7%) — equating to $1,961 million in annual revenue.

If I then assumed a 60% net margin, we'd probably be talking about $1,177 million in net profit. At a 25-times earning multiple, we'd arrive at a market capitalisation of $29.4 billion — approximately 15% higher than it is today.

Based on my rough napkin maths, I'd rather just hold onto my shares for now. However, if the Pro Medicus share price continues to fall, it might start to look interesting for adding to my position again.

The post As the Pro Medicus share price drops 8%, should I buy more? appeared first on The Motley Fool Australia.

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• Down 38% this year, is it finally time to buy low on CSL, ResMed and Pro Medicus shares?
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Motley Fool contributor Mitchell Lawler has positions in Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Making your first ASX investment can be the most daunting step in the compounding journey. It's not too dissimilar from our debut on a bicycle or our first day of school — so many butterflies in the belly you'd think it's a conservatory. Except, investing turns the emotion dial another click clockwise by involving money.

For many Australians, a mental barrier stands between them and long-term wealth creation. The usual outcome is the 'investing thing' goes in the too-hard basket for another year.

There's a real cost to doing this.

In 2024, it's the missed 10% return from the S&P/ASX 200 Index (ASX: XJO) before dividends; or the forgone 28% from the S&P 500 Index (SP: .INX). But even then, the market can be too overwhelming to tackle despite the fruits it can bear.

Only this weekend was I reminded of this proverbial wall when I was at my local optometrist. After helping me pick out a new set of specs, a friendly man named Nick asked what I do for work. Long story short, he shared a desire to start investing but hadn't taken the plunge yet for a few reasons.

The usual suspects: how to know what's a good investment, what broker to use, etc.

One reason caught my attention. It's a completely valid reason, but I also think it's an entirely solvable one.

'All-in' ASX investment hurdle

Nick made a great point, which took me down memory lane of the first investment I ever made.

Part of Nick's challenge in getting started, and I'm paraphrasing here, was, "If you make your first investment and then it falls 10% or 20%, that's scary!" To which I replied, "Yes, that's definitely true! Especially when you're first starting out with $500, which can be a fair chunk of all the money available to you".

In other words, your first ASX investment can feel high stakes because you're 'all-in' on one company from day one. Now, I'll only speak for myself; my investing prowess was fairly minimal on my first attempt. But that's the norm when trying anything for the first time.

For many, the chance of a $500 investment going bad is too great a mental hurdle to overcome. If I had to guess, that's possibly the big reason Nick and countless other Australians are still staying out of the share market.

But it doesn't need to be this way.

See, the anxiousness here probably comes down to volatility. Big and sudden moves in the value of our money can put more knots in a stomach than a ball of string. We're not biologically programmed to see such choppiness and be emotionless.

Welcome to the rock pool

When I was young, I loved splashing around in the rock pool on Shelly Beach, Ballina, during a family vacation. It meant enjoying the ocean without the thumping waves or the risk of getting washed away.

In a way, index-tracking exchange-traded funds (ETF) are the rock pool of the share market.

The waters are generally calmer; you still get to embrace the perks of investing, and even when a big wave strikes, it will probably be softened through diversification.

The pie charts above illustrate the protection afforded by an ETF. For example, a $500 investment in the Vanguard Australian Shares Index ETF (ASX: VAS) would instantly be dispersed across 300 companies, including:

• $47 in Commonwealth Bank of Australia (ASX: CBA)
• $43 in BHP Group Ltd (ASX: BHP)
• $27 in CSL Ltd (ASX: CSL)
• $263 spread across around 290 other ASX companies

Or, if we wanted to focus on the biggest companies in the United States, a $500 investment in the Vanguard S&P 500 ETF (NYSE: VOO) would be immediately diversified across 500 companies, including:

• $35 in Apple Inc (NASDAQ: AAPL)
• $33 in Nvidia Corp (NASDAQ: NVDA)
• $31 in Microsoft Corp (NASDAQ: MSFT)
• $318 spread across around 490 other U.S. companies

Alternatively, the iShares S&P 500 AUD ETF (ASX: IVV) is an ASX-listed investment that also tracks the top 500 US companies.

Like the training wheels of a bicycle or a parent's hand on our first day of school, an ETF can be the safety net we lean on before we build up enough experience and courage to find our feet.

The post Why your first ASX investment is the hardest (and how to make it easier) appeared first on The Motley Fool Australia.

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• Stop 'saving', start investing! How to target a $1 million ASX share portfolio
• The biggest ASX ETFs revealed – are they still buys?
• 3 amazing ASX ETFs that are beginner-friendly
• How to build a $100,000 ASX share portfolio
• Has the ASX 200 or S&P 500 been a better investment this year?

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has positions in Apple, Commonwealth Bank Of Australia, Macquarie Group, Meta Platforms, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Berkshire Hathaway, CSL, Goodman Group, Macquarie Group, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard S&P 500 ETF, Wesfarmers, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Amazon, Apple, Berkshire Hathaway, CSL, Goodman Group, Meta Platforms, Microsoft, Nvidia, Wesfarmers, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Banks and miners are typically the first ASX dividend stocks that come to mind when hunting for decent yields. However, after a tremendous rally in the Big Four banks, an investment in the likes of Commonwealth Bank of Australia (ASX: CBA) just isn't quite the no-brainer buy it once was.

But what if I knew of a company dishing up more than twice the dividends and a delicious amount of potential capital growth? Sounds like the holy grail of investments, right? Or at least one heck of an opportunity for someone hoping to strike a balance between income and growth.

Don't worry; it's not a figment of my imagination. The company is Smartgroup Corporation Ltd (ASX: SIQ), and despite posting a sensational half-year result in August, shares in this billion-dollar business are down almost 8% this year.

Is this ASX dividend stock really paying a 6% yield?

The short answer is yes. The salary packaging, fleet management, and novated lease provider has paid 49.5 cents per share in dividends in the last year. This works out to be a dividend yield of 6.2% based on the current share price.

There's a longer answer, too.

Part of the 49.5 cents is a special dividend. If we remove the 16 cents attributed to a special payment — which usually means it's a one-off — the yield reduces to 4.2%. Nothing to sneeze at, but a savings account might hand out more.

What's important to know, though, is that Smartgroup has paid this special dividend for four years in a row. It doesn't mean it will be paid again next year, but four years running sets quite the precedent for possibly even cranking up the baseline payment.

It all comes down to profits. If Smartgroup's profits flatline or fall, then there's a slim chance of an increase in dividends. Conversely, if the business can continue to grow, then the income component can also expand.

I'm buying more, and not because of the dividends

This is where it gets exceptionally interesting for Smartgroup. While the ASX stock has dividend credentials, the growth on display is beyond what you might normally expect from a high-yielding investment.

In the latest half-year result, Smartgroup's revenue increased 27% to $148.5 million, and bottom-line profits increased 16% to $34.1 million. Consensus estimates have the company earning in the region of $78 million in FY25.

Today, Smartgroup has a market capitalisation of $1,070 million. If we calculate the forward price-to-earnings (P/E) ratio, it comes out at around 14 times FY25 earnings. That's a fairly low multiple for a company posting decent growth.

If I had to guess, my fair value for this ASX dividend stock would be approximately $10.50 per share. Meanwhile, shares were trading hands at $8.01 at the close yesterday, which means there could be 31% of capital appreciation around the corner.

In saying that, I'm a long-term holder of Smartgroup. While the short term looks extremely compelling, the compounding potential in the long run is even sweeter.

The post 6% dividend yield! I'm buying this stellar ASX stock in bulk appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia and Smartgroup. 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 positions in and has recommended Smartgroup. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

We're now 27 days away from our social feeds being bombarded with glossy highlight reels accompanied by the wistful words, "And with that, the 2024 season comes to an end". For most ASX lithium shares, the jar of highlights to pull from looks rather barren for a second consecutive year.

Electric vehicle sales reportedly increased 26% in the first half of this year. Despite the EV demand, the price of lithium has weakened by 19% since the end of 2023. Persisting oversupply of the battery commodity has dragged on the sector, sending the market capitalisation of lithium miners down with it in 2024.

• Pilbara Minerals Ltd (ASX: PLS) is down 39% year-to-date
• Mineral Resources Ltd (ASX: MIN) has fallen 50%
• IGO Ltd (ASX: IGO) is 44% lower
• Liontown Resources Ltd (ASX: LTR) has dropped 59%.

However, the old saying goes, "It's always darkest before dawn". Are ASX lithium shares set to see daylight next year?

The nuts and bolts of lithium in 2025

Companies that make their money from commodities are heavily skewed by the supply and demand of the material. We've seen this play out over the last couple of years as the price of lithium has crumbled by almost nine-tenths of its former glory.

It then goes without saying that where the lithium price goes next year is pivotal.

Opinions are divided on this. According to The Australian Financial Review, analysts over at Morningstar think lithium carbonate prices can leap to US$15,000 per tonne, implying an approximate increase of 50% from today's level.

S&P Global Commodity Insight's forecast is a more conservative estimate. The market data provider expects lithium carbonate to hover between US$9,924 and US$11,627 per ton throughout 2025. At least that would suggest no gut-wrenching falls over the next 12 months.

The team at UBS believes prices for the less-lithium-rich spodumene could rally 17% in 2025. It comes with the caveat that miners need to delay further growth projects for prices to rise, which may not pan out.

All price forecasts aside, UBS' point is an important one. The fate of the lithium sector for next year really boils down to one thing: Will demand exceed supply? For this to occur, either demand for lithium — predominantly from EVs — will need to surge or more producers will need to close their mines.

If more miners close and battery demand grows, the price of lithium could be off to the races.

Which ASX lithium shares are in the box seat?

Assuming the sector prospers, then it becomes a matter of owning the quality lithium companies.

Mineral Resources could prove a winner if Morningstar's team is on the money. The team are optimistic about the besieged mining services company reaching $64, an 81% upheaval in its share price if accomplished.

What about short-sellers' delight, Pilbara Minerals?

Canaccord Genuity has a $3.90 price target on Pilbara shares. Based on the current price of this ASX lithium share, there could be a 60% upside for this $7.3 billion lithium heavyweight. Even the lowest price target of $2.70 from Jefferies suggests ~11% worth of gains to be made in the year ahead.

The post Will 2025 be the year ASX lithium shares make a triumphant return? appeared first on The Motley Fool Australia.

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• 6 ASX 200 shares downgraded by the experts this week
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• Why is everyone talking about New Hope, PLS and Viva Energy shares on Thursday?

Motley Fool contributor Mitchell Lawler 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.

Whoever thought big and boring couldn't beat the market was dead wrong. Westpac Banking Corp (ASX: WBC) shares have wiped the floor with the benchmark index, giving its investors nearly 40% more than the S&P/ASX 200 Index (ASX: XJO) over the last 12 months.

The rally coincides with a full year of the Reserve Bank of Australia's cash rate holding above 4%, giving banks the wiggle room for thicker interest margins. At the same time, the Aussie economy has persevered, dodging a recession to date — another win for lenders' bottom lines.

But with rate cuts expected in 2025, could the Westpac share price soon leave investors red-faced?

Are Westpac shares set to break records?

The Westpac share price needs to blast past $39.64 to set a new all-time high. In today's afternoon trading, shares in the country's third-largest bank by market capitalisation are swapping hands for $33.83, that's only 17% shy of uncharted territory.

In a way, Westpac is already setting records. Today's share price is the highest the bank has seen in seven years and seven months. However, the rapid nature of the gains summons that little voice in the back of one's head that beckons, "Is this too good to be true?"

Analysts at UBS are unconvinced that Westpac shares' jolly good days are over. The UBS team has given the Big Four bank a buy rating and a price target of $37. While that still falls short of the all-time high barrier, it still suggests another 9%-ish upside before dividends.

Before getting too excited, not all forecasts for Westpac are red and rosy. On the other side of the coin is the wealth management and brokerage firm Morgans. Unlike UBS, Morgans has downgraded Westpac and believes the share price could slip to $27.77, implying an 18% downside from here.

Where does Westpac rank among the Big Four?

What if we take a relative view of Westpac's valuation?

The banking major trades on a price-to-earnings (P/E) ratio of 17.7 times earnings. As the chart below shows, this is roughly in the same ballpark as its peers ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB), whereas Commonwealth Bank of Australia (ASX: CBA) shares are a whole other beast.

If — it's a big if — Westpac were to attract the same premium as CBA, we'd be looking at a share price in the realm of $59 (all else being equal). That would mean another 74% capital appreciation still sitting on the table.

There's a big caveat, though.

When taking a relative approach to valuing a business, it's hard to know whether the yardstick — CBA in this case — is reasonably valued itself.

Nevertheless, anyone who has held Westpac shares over the last year is probably not too fussed about trying to replicate 50%-plus returns over the next year. If Westpac did rally another 59%, the bank would reach a market capitalisation of $184 billion, overtaking NAB and CSL Limited (ASX: CSL).

The post Is the wonderous 59% run in Westpac shares nearing its end? appeared first on The Motley Fool Australia.

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• 6 ASX 200 shares downgraded by the experts this week
• In the midst of economic turmoil, what does Morgan Stanley say the ASX banks are worth?
• Forget Westpac, this ASX financials share could have 30%+ upside
• ANZ, NAB, Westpac, and CBA shares: Analysts rate 3 to sell, and 1 to buy
• Buy, hold, sell: Bank of Queensland, Koala, and Westpac shares

Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Today, most of Australia's top 500 publicly listed companies are moving higher. Meanwhile, the Novonix Ltd (ASX: NVX) share price cannot move an inch in either direction.

Anyone who had hoped to hit buy or sell on the shares of this battery materials company is left twiddling their thumbs. The synthetic graphite manufacturer is sitting in a trading halt this morning after making the request ahead of the opening bell.

Before being hit by Frozone today, Novonix also made waves yesterday. As covered by James Mickleboro, the company revealed the inking of a binding offtake agreement with PowerCo during Monday's session, an announcement that flung the share price 30% higher on the day.

Topping up the tank

Novonix is still in its cash-burning phase. Working on reaching the commercial scale of its battery materials production, the company is a cash-hungry beast that needs to be fed.

At the end of June this year, cash and equivalents sat at US$47.1 million, while operating expenses for the trailing 12 months hit US$51.2 million. Using some quick math, we can roughly guess that Novonix would run out of funds in a little under 11 months at that pace of incineration.

Today's announcement outlines how Novonix will inject more lifeblood into its business.

A fully underwritten placement to institutional and sophisticated investors is expected to garner A$44.4 million. For context, this would be equivalent to approximately 55% of the company's operating expenses in FY24.

The Novonix share price is stationary at 96.5 cents. This means today's capital raise will be undertaken at a huge discount to the current market price. Shares will be issued at 60 cents apiece, reflecting a 37.8% markdown.

A further A$5 million is being targeted via a share purchase plan for everyday investors like you and me.

According to the release, the funds are intended for ordering, installing, and commissioning 'key equipment' to hit Novonix's 3,000 tonnes per annum milestone at the Riverside facility in 2025.

Major investor backs the Novonix share price

It appears the company's largest shareholder hasn't lost any faith in Novonix reaching commercial success.

Phillips 66, a United States energy company, will contribute another US$5 million (A$7.7 million) to the earlier-mentioned cap raise. At last check, Phillips 66 owned 15.8% of Novonix at a ballpark worth of A$75 million.

The funding is also said to be helpful in getting Novonix over the line with another government grant. Namely, the chance to assess the U.S. Department of Energy's Office of Manufacturing & Energy Supply Chains (what a mouthful!) grant of up to US$100 million.

Shareholders on the register by 7:00 pm AEDT on 25 November 2024 will be eligible to participate in the share purchase plan.

We may see a retreat in the Novonix share price when it resumes trading. Investors normally don't take too kindly to a heavily discounted capital raising.

The post Why the Novonix share price is frozen today appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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.

Knee-jerk reactions by speculators are often ripe for producing long-term, money-making investments. I think I've found an ASX 300 stock that fits the bill.

The stock market is full of emotions. In the words of the OG value investor, Benjamin Graham, "Individuals who cannot master their emotions are ill-suited to profit from the investment process." Fortunately for us, many participants in this arena are unsuited to keeping a level head in the face of fleeting undulations.

Such short-term thinking is why some perpetually buy high and sell low. If you can look at a business as a business, something that has strong and weak times, opportunities begin popping up where others are frantically exiting.

PWR Holdings Ltd (ASX: PWH) is an ASX 300 stock being treated like temporary trash. I think it's a long-lasting treasure.

Bumpy numbers bring the smackdown

Shares in the automotive cooling solutions manufacturer are down 21% in 2024, as shown below. This wasn't always the case…

On 23 February, the PWR Holdings share price hit $12.94, rallying 34% from the end of 2023. Investors were confident, given the company's 12-month trailing revenue of a record $130 million. Net profits were the same, fattening to a record $23.7 million.

What changed?

In my view, there is little change in terms of the long-term business fundamentals of this ASX 300 stock. However, immediate financial figures receive the most attention. In that regard, PWR revealed it expects first-half net profits to dive as much as 67% from last year to between $3.2 million and $3.7 million

As my colleague Bernd Struben noted, the plummeting profit is due to revenue falling faster than costs can be cut. Specifically, earnings from the company's original equipment manufacturer (OEM) segment are forecast to slump 44%, which management attributed to volatility in the electric vehicle market.

I'd buy this ASX 300 stock for big potential

A company's value is mainly a function of its earnings per share (EPS) over the long term. So why would I think this business offers great potential when its profits are set to plunge 67%?

PWR Holdings founder and CEO Kees Weel makes it abundantly clear costs will be addressed. In the release, Weel states:

We are reducing our cost base to be more aligned to the current trading environment while balancing the opportunities we are pursuing in our Aerospace & Defence business, which continues to give us confidence in this market.

Weel has $69 million worth of motivation to make sure he gets it right. Nothing gives me more confidence than a founder-led company with a major chunk of the founder's wealth tied up in the business.

I don't think PWH Holdings is fundamentally flawed. The ASX 300 stock has been punished for basically a supply and demand mismatch. Personally, I see this situation as a normal event for a company selling a high-end product during an economically difficult time.

The post Down 21% in 2024. This ASX 300 stock looks like a money-making monster appeared first on The Motley Fool Australia.

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• Why this ASX dividend share is a retiree's dream
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• Which ASX 200 tech stock has Bell Potter just downgraded?
• Stop 'saving', start investing! How to target a $1 million ASX share portfolio

Motley Fool contributor Mitchell Lawler 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 PWR Holdings. The Motley Fool Australia has positions in and has recommended PWR Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Some of Australia's top corporate brass have been loading up on Australian equities recently. This past week, insider buying involved some notable ASX-listed companies.

This can be a positive sign for everyday investors like you and me. You wouldn't throw your hard-earned money into a company you didn't believe had strong potential for a good return, and insiders are no different.

Those in the corporate trenches usually see a lot more of the inner workings than the rest of us. If they are optimistic, it says something. They mightn't necessarily be right, though — a crystal ball isn't given upon entry into the C-suite.

Nevertheless, the vote of confidence among those high up is worth noting.

Which companies have recent insider buying?

A handful of big names have attracted the capital of their directors since last week.

The first cab off the ranks is the Dan Murphy's and BWS operator, Endeavour Group Ltd (ASX: EDV). Despite issuing a disappointing trading update earlier this month, independent chair Ari Mervis bought the dip on 14 November.

According to the release, Mervis acquired 100,000 shares in the ASX 200 company at $4.27 a piece, equating to a colossal $640,620.38 investment. Evidently, the chair is undeterred by the company's shrinking operating margins.

Endeavour shares currently trade at $4.34 on Wednesday morning. Goldman Sachs analysts think the bottleshop beast is worthy of a $5.50 price tag, implying a potential 27% upside on the table. If that turns out to be the case, I reckon it's Mervis' shout at the pub.

What's more optimistic than one insider buying shares? Two insiders. Although Stockland Corporation Ltd (ASX: SGP) has had a cracking run over the past year (gaining 25%), two of its directors are still snapping up shares in the property development company.

Stockland directors Robert Johnston and Adam Tindall were buyers on Monday and Tuesday this week. The ASX release shows Johnston nabbed $207,183, only a smidgen less than Tindall's $208,000 investment.

Unlike Endeavour, the buys follow good news. Stockland revealed an upgraded FY25 guidance last week. The group now expects funds from operations between 33 cents and 34 cents per security, improving 1 cent after getting regulatory approval to acquire $1.06 billion of residential communities.

Lastly, Computershare Ltd (ASX: CPU) won a bigger chunk of independent director Gerrard Schmid's wealth last week.

We're not talking about any chump change here. Schmid invested another $291,418 in the financial administration company. This is on top of the director's $150,000 investment back in August.

Computershare's share price has risen 35% in the past year. For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 18% over the same timeframe.

The post Insider buying alert: 3 ASX 200 shares directors are snapping up right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 Goldman Sachs Group. 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.

It is a major achievement to wrangle your finances to where you have enough money to invest. Unfortunately, some of the mentality needed to save can make the start of investing incredibly daunting.

When taking the initial leap, it can feel downright wrong to invest your hard-earned dollars into something that might decrease in value.

The saver in all of us is tugging on your ear and whispering, "That's not responsible when you can keep it in cash and get a small, risk-free return." That same little voice forgets to mention the risk of going backwards in real terms due to inflation.

If I remember my first investment, the scariest part was investing $500 — not an insignificant amount of money for me at the time — in a single company's shares. The concentrated first step meant the stakes were high from the outset. It didn't help it was an extremely speculative stock to begin with.

That's why investing in exchange-traded funds (ETFs) can be a great way to start investing.

It doesn't need to be complicated

Learning the ropes of successful investing can take some time. While I'm a huge advocate of stock picking, the truth is that one bad experience early on can prematurely end what could otherwise be a rewarding financial journey.

I was fortunate. Ole' Queensland Bauxite Limited netted me a tidy profit early, giving me the confidence to forge on. Who knows where my finances would be if the pot stock didn't deliver and I gave up on investing…

Take it from me: the prospects of long-term compounding shouldn't hinge on a no-name company winning the medical cannabis lottery. In hindsight, it was a bit of a numb-skull starting point for my objective of building wealth.

Instead, there are 3 ASX-listed ETFs I would buy if I could turn back time:

• Vanguard Australian Shares Index ETF (ASX: VAS)
• Betashares Nasdaq 100 ETF (ASX: NDQ)
• iShares S&P 500 AUD ETF (ASX: IVV)

These are passive ETFs — meaning they all track an index without any financial manager's intervention.

Three simple investments that instantly provide exposure to, in my opinion, some of the greatest businesses in the world. No need for toiling over pages of financial statements — which is the last thing most investors want to do as a beginner.

Why start by investing in ETFs?

There are a few reasons why ETFs can be a good place to start. I'd say the biggest is stability.

If you've spent weeks (maybe even months) saving to get enough money to invest, nothing will rattle you more than watching the value of a stock drop by 10% a week later. By the way, that alone wouldn't mean it's a bad investment, but it sure as hell feels like it when you've just started.

Because the three ETFs I've mentioned are diversified across literally hundreds of companies, there is a far slimmer chance of a stomach-churning move in a small timeframe. Because of this, you have more time to become accustomed to investing in shares before experiencing a shock.

Plus, having money spread across quality businesses like Nvidia Corp (NASDAQ: NVDA), Meta Platforms Inc (NASDAQ: META), and Commonwealth Bank of Australia (ASX: CBA) is a pretty appealing proposition in my view.

The post Want to start investing? These 3 ETFs can be a great first step appeared first on The Motley Fool Australia.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia and Meta Platforms. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, Meta Platforms, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Meta Platforms, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Some of the world's most prominent stock markets are at all-time highs, including our S&P/ASX 200 Index (ASX: XJO). Yet, the achievement is marred by stomach-contorting signs of an impending stock market crash.

For example, Warren Buffett's investing brilliance presents a disconcerting warning. Known as the Buffett Indicator, the ratio of total United States stock market capitalisation divided by US gross domestic product alludes to the stock market's relative expensiveness.

Right now, this indicator is perched at 201%… beyond 100% is meant to be problematic.

Buffett appears to eat his own cooking. In the last two years and six months, Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) has grown its cash on hand from ~A$142 billion to ~A$470 billion. We're talking more than two times the market capitalisation of BHP Group Ltd (ASX: BHP) worth of cash.

Despite all of this, I am mostly indifferent to the stock market. Even if a bubble and a crash occur, it might have its perks.

How bubbles can be good

Packy McCormick's recent blog, 'The Trump Bubble', explains the upside to bubbles after reading Boom: Bubbles and the End of Stagnation by Bryne Hobart and Tobias Huber.

Yes, this is a reflection of a reflection — reflection inception.

McCormick's takeaways were that bubbles (i.e., the overexuberance of something) can be good. It might be hard to imagine an investor who has to contemplate their portfolio crashing in value. However, before you resign McCormick and me to the looney bin, hear out the thinking.

Hobart and Huber mention the concept of an 'inflection bubble' in their book. This category of bubble is supposedly what catapulted the human race on the Apollo Program, Moore's Law, and the Manhattan Project.

As McCormick puts it:

Bubbles attract resources to important projects that would not make sense to fund or work on under a normal cost-benefit analysis.

Bubbles pull the future forward by concentrating tremendous amounts of financial and human capital on very specific visions of the future.

It sounds reminiscent of the concentrated capital in artificial intelligence stocks and Big Tech recently. Perhaps it means we're in the midst of an AI-led bubble… Even if we are, the innovation produced by it may have set the stage for another productive revolution.

What about the stock market crash when it pops?

So maybe there is a silver lining to the occasional bubbliness. Surely, there is no saving grace for a market crash.

As painful as a crash can be, I think it also has its advantages — especially for investors with decades of compounding still to come.

There are two reasons why a stock market crash doesn't really concern me:

1. I believe that technological progress is bred from creative destruction
2. Crashes provide better prices to accumulate more shares

If you're in it for the long haul, crashes are usually painful in the short term and rewarding in the long run. Just look at the ASX 200 Index from the COVID crash… it fell 32%, but investors are now up 18% from the pre-pandemic high, plus dividends.

That's why I'm fine with a stock market crash. And maybe, after reading this, you are, too.

The post I'm fine with a stock market crash. You might be too appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX All Ordinaries Index (ASX: XAO) is powering higher this morning, while Sayona Mining Ltd (ASX: SYA) shares sit on the sideline.

Shares in the lithium developer are motionless today, abruptly halting their 15% rally in the last five trading days.

Investors of the Moblan and Authier project owner will undoubtedly hope today's trading halt is in preparation for positive news, considering the company's share price is still down 45% year to date.

The undesirable performance mirrors that of the electrifying material Sayona seeks to produce. Lithium carbonate prices have been slashed in half compared to a year ago.

Why Sayona Mining shares are frozen

Details are sparse at the minute. All we have to go in is a brief release on Sayona's trading halt request.

In correspondence to the Australian Securities Exchange, Sayona made the request in relation to a 'corporate transaction and an associated equity raising'.

Not exactly enlightening, is it?

Coincidentally, fellow ASX lithium developer Piedmont Lithium Inc (ASX: PLL) pulled the handbrake on its share price this morning. Both companies cite the same grounds for halting shares — a corporate transaction and equity raising.

Are the two related?

There's a fair chance the two companies are talking about a common linkage.

Piedmont and Sayona have partnered up on projects such as North American Lithium, Authier, and Tansim Lithium projects. So there's the possibility the equity raising could relate to sourcing funds for further development within its joint venture.

Alternatively, Street Talk has said the deal is Sayona and Piedmont agreeing to merge.

If true, the move would follow in the footsteps of other high-profile mergers in recent history, such as Rio Tinto Ltd (ASX: RIO) and Arcadium Lithium CDI (ASX: LTM).

More equity has its pitfalls

With neither Piedmont nor Sayona yet profitable, the two (possibly combined) are on the hunt for cash.

Rumour has it that $150 million is the target for the equity raising.

Sayona recorded a cash balance of $109 million on 30 June 2024, less than half its annual operating expenses in FY2024. Meanwhile, Piedmont posted a cash pile of US$70.2 million at the end of September, almost double the company's operating expenses.

According to today's release, investors should have more information by Thursday morning, if not sooner. At this point, shareholders will learn how much dilution they're facing from securing more funds.

As the chart above shows, the number of Sayona Mining shares more than doubled in the last few years, pulverising future earnings per share (EPS) for its shareholders.

The Piedmont Lithium share price is also down 57% over the last year.

The post Sayona Mining shares on lockdown ahead of lithium deal tea appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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.

The Commonwealth Bank of Australia (ASX: CBA) share price has embarked on yet another record-setting day.

At midday, Australia's most valuable bank fetched $152.18 per share. However, investors pushed the black and yellow bank to a new all-time high of $152.47 earlier in the session.

The sustained push higher means CBA shares now boast a 12-month gain of 49%—pulverising the 17.5% achieved by the S&P/ASX 200 Index (ASX: XJO). Yet, all of the increased valuation is attributable to investors' willingness to pay a greater premium for the banking giant.

As shown in the chart above, CBA's price-to-earnings (P/E) ratio has inflated by 54.5% in the past year. Meanwhile, cash net profits for the financial year have actually declined 2% to $9.84 billion. That's right — investors are paying more for less when it comes to the CBA share price.

Running onto the global stage

The series of record-shattering days for Commonwealth Bank suggests many aren't too bothered by the valuation.

Yesterday, CBA revealed a $2.5 billion profit for the first quarter, which aligned with expectations. Additionally, the bank's customer credit quality showed little sign of deterioration, and home loan arrears remained under control.

All in all, the bank appears stable. Some might even say predictable.

At a time when the future looks hazy in many ways, predictability is a welcomed change of scenery.

The beauty of Commonwealth Bank, and other ASX bank shares like it, is its strong exposure to the Australian property market. While there are many uncertainties over the next decade, one point that is likely to persist is the country's housing shortage.

As such, the perceived safety in property lending growth could be enough for big money to flock into CBA shares.

Whatever the reason, CBA's record-keeping ranks it as the tenth most valuable bank in the world in terms of market capitalisation. With today's gain, the Aussie bank is roughly only $14 billion away from overtaking the Royal Bank of Canada for the ninth spot.

How does the CBA share price compare?

We often hear that shares in the Commonwealth Bank of Australia are expensive relative to its peers. But is it actually true if we look further afield than our own backyard?

Below is a table summarising the P/E ratios of the ten most valuable banks in the world.

As you can see above, the CBA share price trades on the highest earnings multiple of the most valuable banks worldwide.

The post How long can the CBA share price keep this up? appeared first on The Motley Fool Australia.

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Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America, Goldman Sachs Group, and JPMorgan Chase. 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.

Holding onto an ASX stock for a tenfold return requires two indispensable ingredients: a company of exceptional quality and a host of uncommon psychological traits — antifragility, emotional control, patience, and… inertia?

Time and time again, renowned investors label selling too soon as their greatest investing mistake. The formidable fund manager turned philanthropist Peter Lynch states this as he writes, "I sold way too early on Home Depot. I sold too early on Dunkin' Donuts. Why did I do that? I was dumb. With great companies, the passage of time is a major positive."

Inaction is sometimes the greatest offence for wealth creation.

In March 2019, I invested in Pro Medicus Limited (ASX: PME) after recognising its potential as the Netflix of medical file streaming. Since adding the software company to my portfolio, I've sat on my hands for five years and seven months.

The Pro Medicus share price has increased by 1,053% during this time, as shown below, more than 10x. An initial investment of $5,000 would now be worth $57,650.

Such an enormous return is tempting to cash in on. It could pay down a mortgage, pay off a HECS debt, or provide extra cushioning through some difficult times. And yet, while the value has gradually lifted like an ocean tide, I've refrained from selling a single share.

You're probably channelling your best Backstreet Boys impression… Tell me why?

Why I've held on all these years

It would seem logical to sell at a 100% gain, or 300%, or 500%.

Some might say that's good enough.

This is where looking at shares as simply a stock price that goes up or down falls short. Knowing the shares are up 500% gives me none of the actual information I would need to determine whether it is time to sell.

It's the business that matters.

While I endured share price pullbacks of 40%+ twice, the business never gave me any reason to worry.

In FY19, Pro Medicus generated revenue of $50.1 million and a net profit of $19.1 million. Each succeeding year has resulted in a substantial increase in both of these figures, climbing to revenue of $161.5 million and net profit of $82.8 million in FY24.

The ASX stock has consistently reflected a number of other desirable qualities throughout this time. For example, it retained a debt-free balance sheet, remained founder-led with high insider ownership, and refrained from unfettered acquisitions that could have destroyed shareholder value.

Another useful metric for tracking the progression of Pro Medicus' business is its annual deal value. I keep tabs on this by adding to a spreadsheet each time the company secures a new deal for its software.

As shown above, the company has dramatically increased its annual deal value each year since 2019. Although the current year is lower than the last, the overall direction of the trend is positive.

By most measures, Pro Medicus has only improved in quality since I originally invested. So I've never had a good reason to sell.

Surely I'm ready to sell this ASX stock now, right?

Here we are. A return of more than 10x from a company that now trades on a price-to-earnings (P/E) ratio of 259 times. It's obviously time to count my blessings and take my winnings. I mean what justification is there to hold onto this ASX stock still?

I bolded the good in good reason earlier.

This may anger the value investing purists out there. I consider a rich valuation one of the weakest reasons to sell out of a quality company. A 259 times P/E in isolation doesn't tell me much, quite honestly.

In fact, Pro Medicus' earnings multiple has been above 90 times the entire time I've owned a slice of the business, as displayed below.

At the very beginning of this article, I mentioned inertia. Let me explain what I mean by this.

My default is a steady state. I don't take action on my portfolio without a strong external force. There needs to be a meaningful change in the directional force of a company to disrupt my resting condition. An excessive valuation is not enough. I need a collapse in the quality of the business to teeter my inertia towards selling.

The reason I take this approach is because humans — myself included — nearly always fail to comprehend the true magnitude of potential for a great business.

Few ever imagined Apple in the early iMac days being more than a maker of PCs. No one dreamt that Netflix would evolve from a DVD-by-mail movie rental business pre-2007. There are many examples.

My point is, even now, I have no valid reason to sell Pro Medicus shares as a long-term investor. Maybe that will make me look like a goose in hindsight. So be it. That's the price of being an optimist.

The post This ASX stock 10x my money. Here's why I haven't sold a single share appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Apple and Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Apple, Netflix, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two of the biggest gaming shares inside the ASX 200 index have unwrapped their results today.

Pokie machine-making mammoths Aristocrat Leisure Limited (ASX: ALL) and Light & Wonder Inc (ASX: LNW) are garnering attention as shareholders react to the companies' latest financial figures. It's been an enormous year for these businesses, and today marks a moment of truth for shareholders to understand whether the excitement is warranted.

Heading towards midday, shares in Aristocrat are a smidgen higher at $65.49 apiece, while its rival Light & Wonder is being beaten down to the tune of 6.7%. The latter now trades hands at $148.35 per share, mostly mirroring the 7.3% plunge in after-hours trading of its Nasdaq counterpart.

What are the results?

While both ASX 200 shares reported growth, the share prices of Aristocrat and Light & Wonder are going in opposite directions. Let's inspect the numbers to try and understand why investors are embracing one and trampling on the other.

Aristocrat Leisure

For Aristocrat, we're looking at the company's full-year performance for FY2024.

The ASX 200 share behind the wildly popular Dragon Link and Lightning Link titles reported a 5% increase in revenue to A$6.60 billion. Meanwhile, operating earnings jumped a juicy 19% to A$2.47 billion, bolstered by strong gaming growth in North America and the integration of the NeoGames acquisition.

On a normalised basis, i.e. removing one-offs, earnings per share leapt 20% to A$2.269. However, when one-offs are included, the company's net profits ticked 8% lower to A$1.4 billion for the financial year.

Dividends per share were boosted by 22% to 78 cents.

Light & Wonder

Light & Wonder's figures are only for the third quarter ending in September.

Don't let the plunging share price fool you. The Las Vegas-based casino mobile business posted a 12% increase in revenue year-on-year to US$817 million, with the greatest contributor to growth also being the pokie segment, jumping 15% from the same time last year.

However, it appears the bottom line may have left investors of this ASX 200 share with more to be desired. Light & Wonder's quarterly net profit slumped 20% from US$80 million to US$60 million amid increased costs caused by legal matters.

What's next for these ASX 200 shares?

Turning our heads towards the future, Aristocrat and Light & Wonder both expect growth ahead.

Light & Wonder forecasts a net profit after tax and amortisation (NPATA) range of US$565 million to US$635 million in FY2025. The key Aristocrat competitor also anticipates that growth in North America will persist despite 'some impact' from the injunction imposed on it over its Dragon Train title.

On the Aristocrat Leisure battlefront, NPATA growth in FY25 growth is in its sights, partially driven by "continued strong market share, revenue and profit growth from Aristocrat Gaming". Furthermore, the company is still adamant about achieving US$1 billion of revenue from its Aristocrat Interactive segment by FY2029.

Aristocrat is the better-performing ASX 200 share of the two this year. Light & Wonder shares are up 22% year-to-date versus Aristocrat's 60%, as shown in the chart above.

The post 2 high-flying ASX 200 gaming shares splitting ways today appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Aristocrat Leisure. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Light & Wonder. The Motley Fool Australia has recommended Light & Wonder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.