Earnings, earnings, earnings: Joseph's articles in August
My main focus in August was sharing our analysts' thoughts in earnings season. I also uncovered what could be the world's most hated investing theme.
In August I experienced three seasons in one month: the end of my soccer season, the start of cricket pre-season, and – of course – ASX reporting season.
My main goal this month was to bring you some long-term perspectives from our analysts amid the short-term reporting season noise. As it turned out, we started the month with a lot more noise than we were expecting, from a source completely unrelated to earnings.
After the global sell-off and bounce, I wrote about how the investing criteria I’ve set for my own portfolio could help you panic less in the next market panic.
Then on the eve of reporting season, I warned against buying shares that appear to be priced for perfection.
Of the three ASX shares I used as examples, two appeared to fall victim to the curse of lofty expectations while the other one (Breville) thrived. Our analysts still think all three shares featured in the article are overvalued.
Our coverage on August’s ‘winners’ included Nathan Zaia’s thoughts on why Judo’s growth is impressive but investors might be too optimistic. We also looked at why our analysts gave Wisetech and Brambles juicy Fair Value increases. And why an ASX growth darling’s results dazzled but the shares still look too expensive.
As with every earnings season, there were also a few notable losers. Endeavour and NIB shares slumped on the very same day. In both cases, our analysts thought the sell-off was overdone. A2 Milk shares also sold-off due to a problem that Angus Hewitt views as being temporary.
Seriously hated stocks
Away from earnings, my simple ‘Wide Moat, 5-star Morningstar Rating’ screen highlighted another investing theme that markets seem to hate right now. And as I showed in a later article, a famous contrarian investor (of silver screen fame) seems to have tapped into the negative sentiment.
During the month I also used Charlie Munger's inversion method to deepen my understanding of economic moats. You can see why these household name ASX shares don't have a moat according to our analysts.
The end of an era
August was a busy month on the personal side of things too. My partner and I finally moved into a rental unit after spending most of the past year housesitting in various parts of the city. Without housesitting, it’s unlikely we’d have ended up living in Sydney – and therefore unlikely that I’d be in this role.
Not needing to pay rent for so long has also given us a solid foundation of savings, but we agreed it was time to settle down a bit and stop moving every three or four weeks. If the amount I’ve spent at Bunnings and Kmart since the move is anything to go by, Wesfarmers could be in for a bumper year. According to our analysts, though, there are already a lot of those baked into the current valuation.
While I was very focused on stocks and results during the month, my colleagues Mark and Shani continued to write more on 'bigger picture' topics related to investing and reaching your financial goals. Go here to see a roundup of Shani's articles in August and go here to see what Mark has been up to.
