Shares surge: have you missed the boat?
The stockmarket's record-breaking run last month has captured the imagination of would-be investors and existing shareholders, leaving many wondering if it's now too late to buy a slice of the action.
November's 10 per cent rise was the best monthly gain in the history of the benchmark S&P/ASX 200 index, but share analysts say opportunities remain for those who do their homework.
And there are ways to reduce risk in a share portfolio if you're worried about another nasty fall like we saw in March's COVID crash.
Bell Direct market analyst Jessica Amir says investors haven't missed the boat.
She says the market still needs to gain 8 per cent to be back at February's record high "but there's opportunities to make more than 8 per cent if you favour stocks that have been hit the hardest and have not recovered from the COVID slap".
Financials, airlines, real estate and infrastructure are among the sectors that should grow in a post-COVID world amid the positive effects of government stimulus and record low interest rates, Amir says.
"In some sectors there's still plenty of value," she says.
"There's hope that with the COVID vaccine there's going to be more people in shops and CBDs."
Investors have several ways to reduce the risk of being badly hit by a sharemarket downturn.
One is dollar-cost-averaging, where they buy stocks at regular intervals - perhaps monthly or quarterly - rather than in one big splurge.
Another is diversifying share purchases among several different companies and sectors.
"You don't want to put all your eggs in one basket - think about the sectors that are likely to do well," Amir says.
CMC Markets and Stockbroking chief market strategist Michael McCarthy says professional traders use options to protect their portfolios from future falls, while "diversification is a tool available to all of us".
"What has worked very well for a lot of investors is buying on the dips, being patient and waiting for a pullback and resisting the urge to give into the fear of missing out," he says.
A drop of 5-10 per cent could be seen as a buying opportunity, McCarthy says, but many people have FOMO right now.
"There are significant risks that I don't think are reflected in current prices," he says.
But markets can go up for a long time, McCarthy says, and it's difficult to say what could stop the current rally given there are record rates of COVID infections globally yet sharemarkets are still climbing.
Midsec Financial Advisors managing director Nick Loxton says people should not invest based on what the overall market is doing.
"It's about the individual investments," he says.
Loxton says half the sharemarket today reminds him of 1999 when many share prices were at crazy highs before the dotcom crash "and then the other half of the market reminds me of 2010 (amid the GFC) where I can see all this great value".
He says "boring" companies with sustainable profits, solid balance sheets and good dividends can deliver more gains than "growth companies that don't make any profit and are priced in la la land".
High-flying tech stocks and buy now pay later companies have surged during the pandemic and been hugely popular among new investors, Loxton says.
"Going forward, you don't want to be attracted to the shiny stuff."
"One big issue we see is when things go well in the market, everybody wants to be fully invested. But you should keep a bit of powder dry."
STOCKS AT A DISCOUNT?
These shares are still much cheaper than they were in February:
AGL Energy down 36%
Flight Centre down 56%
Insurance Australia Group down 26%
NAB down 31%
Qantas down 17%
QBE Insurance down 34%
Santos down 25%
Scentre Group down 27%
Sydney Airport down 22%
Telstra down 22%
Westpac down 20%
Woodside Petroleum down 34%
Originally published as Shares surge: have you missed the boat?