The S&P/ASX 200 (ASX: XJO) delivered a 2.2% gain over the week while US stock markets closed at record highs.
Here are my three key investor takeaways from the week.
Cash splash
With just two days remaining in ASX reporting season, there is little doubt the corporate sector is in rude health, with stunning earnings growth and a splashing of cash.
Analysis has shown that as much as 5% of GDP is set to hit shareholder and fund manager bank accounts this week with a record $51 billion in dividends already declared in addition to $15 billion in share buybacks. This comes on top of $34 billion in takeover offers currently in process.
On the one hand, it’s a boon for patient investors. On the other, questions must be asked as to why companies aren’t reinvesting in themselves given the level of disruption in the world today.
Avoiding mistakes the key
With markets high on historical valuation metrics, the week reiterated that avoiding mistakes will be as important as being exposed to the best growth opportunities.
The likes of Kogan.com Ltd (ASX: KGN), Appen Limited (ASX: APX) and A2 Milk Company Ltd (ASX: A2M) evidenced what can happen when short-term trends are extrapolated into the future and the fact that no management team is perfect.
Each company has faced significant disruption, failed to make the right decisions and ultimately communicated poorly to shareholders.
Comparables bite but do they matter?
Finally, Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) earnings reports both warned of lower comparables in 2022 after 2021 benefited from the weaker lockdown figures.
Whilst no doubt important, on a longer-term view, investing in quality companies that are well managed and investing into their own businesses remains more attractive than chasing the next hot stock.
