Simon Shares
- Market going nowhere, I take a week off and it literally goes sideways in tight range.
- Capitec* (JSE code: CPI) results saw HEPS up 17% (trading statement said 15%-18%, they always come in near top of range). Lots of wow numbers; 9.2million active clients and cost-to-income ratio at 36%. The disputed arrears coverage ratio is back at 237% after concerns about it decreasing a year ago.
- Discovery* (JSE code: DSY) results solid with lost of spending on the future. Still my favourite share I own in terms of potential and I happy to add below R156.
- Richemont* (JSE code: CFR) trading update shows they turned the corner re nasty watch sales that resulted in them having to buy back watches. Stock trading up at all time highs above R120. My buy price is R118.
- Santova* (JSE code: SNV) nice clean deal buying out a 25% silent partner from their Australian operation at decent price. Gives immediate extra AUD earnings.
- New Ashburton World ETF
- Up coming events;
Trading time frames
The first question no new trader asks is which time frame should they be trading in. Typically one starts looking at daily charts but quickly drops to shorter time frames because we want the rush that comes from each trade and we get more at shorter time frames. Yes trades happen in all time frames, but it's our ability to manage and profit from them.
But truthfully can most people manage an intra-day time frame unless this is all they do? Markets is pretty much my life and an hourly chart is still tricky for me as I miss some entries (stops are automated so that no problem).
Shorter time frames;
- Are also more noisy,
- Require quicker responses
- Means shorter trade duration, smaller profit per trade but same costs
Forget about getting a rush from trading and find a time frame that works for you and potentially use multiple time frames. Start with a weekly chart, if you get a tigger wait for it to confirm in the daily chart.
Now if you not using technicals but more about price then tie frames become less of an issue, but you're then having to watch the market consistently hence no other day job or trade at night.
We Get Mail
- I started buying ETF’s about 4 months ago. I purchase through on line trading. It appears however that prices are manipulated to keep them within a band. I have been seeing signs of this across all ETF’s – some more than others. Last traded prices are impossible to buy at due to the artificial bid volume/price. What makes it even more obvious is often the identical bid / offer volumes.
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Metrofile* (JSE code: MFL) results very modest as they reduce dividend for H2 but keep it flat for the year.
- Clover (JSE code: CLR) results were ouch, very ouch. They call it a perfect storm, I call it over priced branded milk.
- Spur (JSE code: SUR) were also very bleak and give us some insights to the Famous Brands* (JSE code: FBR) due at the end of October. Now Famous Brands has a way better business model and management, but expect very tough results from them.
- JPMorgan's Dimon said that Bitcoin 'is a fraud'. Right or wrong the price collapsed again and expect a lot more attacks from 'traditional' financial institutions, attacks that Bitcoin fans will say prices its value as it shakes up the establishment.
- No to tax, yes to fees?
- Up coming events;
Everything is at all time highs
Why does everybody hate highs? If we're an investor highs are a great thing as it means we're richer then before?
I once had a trading system that one of the rules buy new twelve month highs, and it made money.
We get mail
- Leonard
- I was a client of Saambou back in the day, and I’m concerned about possible risks of holding everything through a single financial institution. Would there be any risk associated with putting all my eggs into one basket?
- Hoosain
- Just read about Patrice Motsepe's ARC investments going public on the JSE yesterday. The headline on moneyweb says "Patrice Motsepe lists his Berkshire Hathaway". Alarms bells rang off in my head when I saw this. Your thoughts about the company and its potential to be South Africa's Berkshire Hathaway?
- Chris
- Could u please explain the implications of the STAR spinoff? I currently hold Steinhoff and Shoprite. If I want to hold on to my exposure to PEP, ACKERMANS etc., do I now need to go and buy STAR? Or does Steinhoff still own STAR and thus I can just hold on to my Steinhoff shares?
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Capitec* (JSE code: CPI) trading update is looking for HEPS to be 15%-18% higher. Modest for a 27x PE stock with consensus being 18.7%.
- The DB x-tracker ETFs will see their name change on Monday 18 September as Sygnia completes the purchase process. The new name is Sygnia Itrix and the ETF codes will see DBX replaced with SYG.Rhodes Food Group (JSE code: RFG) got hit after a trading update that saw decent local operations but declining offshore sales further hurt by the stronger Rand.
- ARC Investments (JSE code: ARC) lists today (7 September) after an over subscribed placement at 850c. They have an interesting set of assets, mostly unlisted with net asset value (NAV) also 850c and an investment holding company should trade at a 10%-20% discount to the NAV. So we should see some weakness which give an entry to those wanting stock.
- Star lists later this month and after the Shoprite* (JSE code: SHP) vote on Tuesday to buy the shares back from previous CEO they now have total control of SHP. Reading the star listing docs, they are most certainly coming for my SHP shares and I am not a keen seller.
- A Periscope viewer asked my views on the Easy Equities launch of US listed stocks. Short answer is I like but with some cautions such as cost and paper work to transfer money and what to buy.
- Up coming events;
Ignore the fear
Remember Greece? I don't mean as a holiday destination, I mean as the country who's debt levels caused years of panic that were going to crash the global economy? This peaked in 2015 with elections in January 2015 and then in July a referendum saw voters reject the European Union proposed bailout leading to new elections in September 2015. Yet two years later Greece is pretty much never spoken of? The debt had not magically disappeared, rather it is being 'managed'. The struggle remains real for ordinary Greeks and no doubt the politicians continue to do whatever politicians do.
The point is the word is full of one crisis or another and the media will always make the crisis seem way bigger then it often is. If it bleeds it leads is the old newspaper adage and a financial crisis in an EU economy is always going to lead with plenty hysteria thrown in for good measure.The truth is the Greek debt crisis never really mattered to the rest of the world and I did a JSE Power Hour on this in June 2012.
Now don't get me wrong, we will have another global financial crisis - of that I am certain. But what will trigger it and when it will happen I have no idea. So as long-term investors and short-term traders we ignore all the hype and fear mongering. We focus on what we know and can control. For investors that means buying quality at prices we like. For traders - trade the price and ignore the noise.
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Telkom (JSE code: TKG) has confirmed government wants to sell their 39% stake in the company, likely to bail out SAA. Classic rookie error, exiting good trade to keep bad trades.
- Amazingly good results from Home Choice (JSE code: HIL), but with zero liquidity in the stock the results are merely of passing interest.
- Decent results form AdaptIT (JSE code: ADI) albeit some margin pressure in the education and financial services segments albeit with the latter doing decent revenue growth. All considered around 900c price is a fair value.
- I mentioned last week I was digging more into ADvTech* (JSE code: ADH) to determine a price to buy at and have now started buying with my fair value (so price below which I am happy to buy) being 1970c.
- The Harvey storm has hit land again, this time at Louisiana and this is just next to Lake Charles where Sasol* (JSE code: SOL) is building their Ethan Cracker plant. So far Lake Charles has been spared the worst of the wind and rain but we have a few more days of rain to come. The Sasol project will almost certainly be delayed by some amount (and hence costs) but as yet management have said nothing.
- Understanding the Krugerrand Custodial Certificate.
- Up coming events;
Where's your stop loss?
The #ALSI gives us a free lesson in stop hunting pic.twitter.com/EkqvebhUkV
— Trader1137 (@Trader1137) August 30, 2017
As a trader your stop loss is your most important decision as it protects your capital from destruction. Sure it is hard emotionally cutting losing trades, but that's a lot harder then going bust - so every good trader is ruthless with their stop losses.
But where to place it is hard.
Point is - don't be obvious when placing a stop loss. Don't make it too tight or place it where everybody else would place their stops. Other traders will go stop loss hunting and will shake you out. If you find yourself being stopped out only for the trade to reverse and go in your initial direction - widen your stops. That said careful your stop loss isn't so wide that your system starts to lose money.
Yes stop losses are hard. Hard emotionally as we're losing money and even harder to know where to place them. But without a stop loss process as part of every trading system you will go bust. So spend the time working on your stop loss placement within your trading system.
We Get Mail
- Hawu
- I kindly would like to know, what is meant by a company when its raising funds on book-build?
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Shoprite* (JSE code: SHP) results were stellar, the best food retailer anywhere on this planet? Operating margin from 5.6% last year to 5.76% in the 2017 (more than double that of Pick n Pay), market share growing, rest of Africa rocking (albeit some currency pains).
- ADvTech (JSE code: ADH) results show tertiary booming but schools under a bit of pressure that they partly blame on "rise in the number of families emigrating"? I like the stock, am doing some more digging and working out my preferred pricing. Will update my portfolio page as and when, certainly cheaper and better positioned than Curro (JSE code: COH).
- Implats (JSE code: IMP) wins the award for stupidest thing in a SENS announcement "The major reason for the decline in HEPS from the comparative period is that the prior year gross profit declined to a gross loss in the current year."
- BHP Billiton* (JSE code: BIL) results show them back on track. Reducing debt, paying dividends and not going crazy on capex. I have been holding for ages but not buying, I have updated the buy price and it comes out at R168, so a long way off.
- Naspers (JSE code: NPN) hit R3,001.00 and it still valued at less than its passive stake in TenCent.
- The video from Trader Petri is online - things he does well as a trader.
- Understanding the Satrix MSCI World ETF.
- Up coming events;
Scam alert
Recently I have been getting a ton of scam phone calls around trading and investing that follow two themes.
The first is offering me some training and software that will make me a fortune, usually 40% in six months! It won't. If it was so awesome why's this person stuck in a call center cold calling me?
The second is offering to get me on the ground floor on some stock (such as Space-X, Uber or the like) or alternatively they've got a hot tip for me. If it all so hot, why are they cold calling me? Surely people would be queuing up to buy?
These are scams, disconnect the call and if you can block the number and warn your friends. Certainly do not start sending money offshore to some random voice on the phone regardless who they say they are. Nor pay top money for software and training when much is free or cheap on the internet.
We Get Mail
- Babsy
- What is the importance of having ETF in ones portfolio? why cant one just invest in shares only as this ETF also generate their income in shares. In a nutshell what is the importance of ETF in ones portfolio?
- Steven
- I invested in the DBXWD last week, me and a partner got into a discussion about what happens to my portfolio if I die?
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Curro (JSE code: COH) were mixed but mostly good. The lower priced schools struggled and the tertiary are still getting off the ground and will be unbundled in September. But for a stock on a PE of some 100x HEPS growth of just 22% is way to low.
- Anchor Group (JSE code: ACG) results were as expected from their trading update - a massive disappointment. Last March I was expecting HEPS of 100c for this financial year and they just did 22c (down 39%) and will be hard pressed to do 50c HEPS for the year. That said, 50c HEPS puts them on a forward PE of around 10x, not bad but frankly Coronation (JSE code: CML) with a dividend yield of some 6.5% looking much more attractive.
- PPC (JSE code: PPC) woes continue as the share trades at 1999 levels. Yip zero price profit this century if you've been holding the stock. This after a high of 5300c in 2007. So now everybody wants to buy, but there's no rush (if at all). Wait for a doubling of price before considering an entry.
- Famous Brands* (JSE code: FBR) update shows very modest like for like growth but this statement worries me "To date, certain of the new UK stores opened since acquisition have not met sales projections.".
- Up coming events;
Back to Bitcoin
I did a Bitcoin (code: BTC) podcast in March and nobody cared . Another in June and interest was still modest. Now it booming and everybody wants in?
- Is it too late? No idea.
- Is it going to crash? No idea.
- How high will it go? No idea.
What is Bitcoin? It is not a currency, it is if anything a commodity. It pays no dividends and can buy things but remember sea shells have been used to buy things in the past.
For those wanting to buy Bitcoin, Magda Wierzycka )CEO of Sygnia) recommends using Luno locally (albeit it internal so only market within SA and hence price not always reflective of other exchange prices). Or use an offshore exchange (using your annual R10million offshore allowance) via Kraken or Xapo.
Here's a trick, there is no central exchange for Bitcoin, so what's the price? Also no regulator and we have seen exchanges crash, be hacked and go bust. So this is fairly wild west out there.
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- New all time highs locally for the All Share Index, Indi25, Top40 and ALSI futures as latter traded one contract at 50,000 for first time ever. I love all time highs.
- Upcoming events;
We Get Mail
- Johan
- If everyone is making money from trading, who are they making the money off? The answer is of course that everyone can’t be winners and there has to be losers. The ones that lose more than they win, give up and stop trading. Therefore you need a constant flow of newbies that will fail so that the winners can keep winning. Does this not seem like some sort of great pyramid-type scheme? Or is the general justification “survival of the fittest”? Your take on this?
- Wouter
- One question from a new investor. Would you stick to your current ETFs you have in your tax-free savings account or add new ones as markets change. Regards from China.
- Eric
- I have R50 000 that I want to passively invest in Satrix for 3-5yrs and I was thinking about taking 7 Satrix products and divide the money equally.
- Tim
- Could we not just be another Japan, everyone says the market may go up but Japan is the elephant in the room? Or am I mistaken?
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- British American Tobacco (JSE code: BTI) is in trouble on two fronts. Firstly the US is looking at requiring nicotine be reduce to non-addictive levels. Then the UK is investigating the company bribing African governments to get favourable smoking legislation. I suspect many had though the legal issues for these companies were behind them.
- Bank results are showing surprisingly low dab debt levels. Barclays Africa (JSE code: BGA) at 0.96% and Nedbank (JSE code: NED) at 0.47%. Good news, but cost-to-income levels remain high with Nedbank blowing it out at 59.3% and Barclays 56.4%. These high cost bases are a problem and are not coming down.
- MTN (JSE code: MTN) update was bleak. It finally gave us real numbers and shows it is down by about two thirds compared to 2015, which is pre-Nigeria.
- Local markets toying with all-time highs but unable to break higher.
- Understanding ETF TER ratios.
- Upcoming events;
Investor or trader? Or both?
I got an email about how a long-term investor had a 15% trailing stop loss on their share and asked it this was the right stop loss level. The question was moot as the writer seems confused as to whether they were a trader or an investor.
The easiest measure is how long you plan to hold a position. If less than three years than you are a trader as SARS says holding less than three years is income and hence taxed at your marginal rate. So derivative or not short-term under three years is trading.
But there is another issue which is technical vs. fundamental. Traders generally use charts as price action trumps all else and plays out in the short term regardless of valuations. Long-term investors use fundamentals as they will play out over the long term. So a long-term investor would have a stop loss but it would be fundamental based, not price based.
Lastly, you can be both. Certainly I am both short-term trader and a long-term investor. Importantly use separate accounts, even if with the same broker.
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- PPC (JSE code: PPC) announced departure of CEO and share tanks. This company in serious board room trouble.
- Kumba (JSE code: KIO) results were decent, dividend was wild (ahead of actual HEPS) as they compensated shareholders for missed dividends! This is odd and asks the question about dividends going forward. Concern is average cash break-even price of US$43/tonne was up from US$29/tonne in the previous period.
- Long4Life (JSE code: L4L) runs to 838c then announces confirmed deal for Holdsport (JSE code: HSP) at slightly higher ratio (was 10.44 L4L for every HSP, now 12.1) and share down to 600c. Starts to get interesting another 50c lower.
- Upcoming events
The market vs. the economy
On Tuesday the Top40 was trading at the high for 2017 (and again on Wednesday) and when I tweeted the fact the replies were mostly about how the market is wrong. Look at unemployment, Guptas, recession, down grades etc. they all shouted. None of the is wrong, but is it relevant?
Firstly we've had a three year +/-30% correction in time. But as importantly the market is not the local economy with listed companies earning a lot beyond our boarders and mostly the better stocks in the index as loser are tossed out. Lastly and perhaps most importantly the market looks head 12-18 months. With rates coming down, Zuma out in the new year and his preferred choice struggling 2018 looks way better for South Africa than many a recent year.
So if we're looking to the seed half of 2018 then the future s brighter, and sure this may be relative, but brighter surely means higher for the market?
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JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Finally, 5 weeks after moving my FTTH has been installed so I am going to Periscope each recording as it happens which is typically Wednesday afternoon. https://www.pscp.tv/SimonPB/
- Retail trading updates coming in and as expected they are mostly bleak, but we are seeing the impact of the rains mostly returning.
- Netflix is a monster, over 100million customers world wide.
- Long4Life is buying; Holdsport and Sorbet.
- Steinhoff (JSE code: SNH) raises R12bn (Euro800million) in Europe with a 7.5 year bond at 1.875%.
- Upcoming events
Is the fees battle over?
Last week I spoke about the price war in ETFs. But do fees still matter?
For the passive market fees are surely at point where they almost don't matter. Sure they can go lower but we're talking most local ETFs now nicely below a 0.5% TER ratio while the offshore are slightly above 0.5%. Don't get me wrong, every 0.1% makes a difference, but on R100k that's R100. Not nothing but not the difference between retiring or not.
I still look at VOO with a TER of 0.04%, but we're never going to get that low (they're a mutual company and owned by the fund holders and have massive scale we'll never see in South Africa).
Admin fees, once a silent killer have also disappeared at some brokers where a simple ETF or tax-free account has zero admin fees.
Transaction fees are still a bug bear at some places with minimums that mean you need to trade some R18k-R30k per hit to get the effective rate.
We Get Mail
- Georges
- I would like to find out how/when do ETFs collect their TER? Is this set off against distributions quarterly or “baked” into the price?
- Helen
- What will happen to my preference shares with Basil III? Will I loose them?
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Finally, 5 weeks after moving my FTTH has been installed so I am going to Periscope each recording as it happens which is typically Wednesday afternoon.
- Calgro M3* (JSE code: CGR) update on their missing SENS. Feeling is that the impact is marginal and will hardly hurt earnings? Time will tell, I still don't like asymmetrical information.
- Oakbay (JSE code: ORL) is delisting from the JSE as they can't find a sponsor. No surprises but real bad for any shareholders.
- Sygnia (JSE code: SYG) announced the details of the rights offer and it is at 900c but only for R160million as apposed to the expected R320million. So much less dilution, albeit also much lower price.
- Pubic Protector not fighting the SARB objection of her attempt to change its mandate.
- New emerging market ETF from Satrix
- Upcoming events
ETF price wars
With the new issue of ETFs from Satrix and Sygnia taking over the DB x-trackers (to be branded Itrax) we're seeing some price wars forming. Very good news for consumers, but some buts.
- Read the small print.
- Don't rush. Much of this is targeted TERs and the incumbents may also adjust their TERs downwards.
- Switching into a same but cheaper ETF may not be economical
- Tax, costs and spread adds up.
My strategy will be where I buy an ETF that now has a cheaper alternative I will start buying the cheaper immediately. Switching will take longer.
We Get Mail
- Everybody is asking
- Are you buying the new emerging market ETF from Satrix?
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- New Satrix ETFs; S&P500, MSCI World Index and MSCI Emerging Markets Investable Markets and at low 'target' TERs. A price war in the local ETF offerings?
- Wednesday was exactly ten years since the UK had an interest rate increase from the BoE?
- Calgro M3* (JSE code: CGR) issued a press release stating that they're cutting back on 'wet work' in the Western Cape due to drought. But no SENS?
- ANC policy conference has proposed that the SA Reserve Bank be nationalised. Aside from my (so far failed) attempt to buy shares in it, so what? Shareholders have no say in the running of the bank and almost every other central bank is state owned.
- What percentage ETFs in a portfolio?
- Upcoming events
New listings in hot sectors
We've seen two small stock listing recently that were trying to attach themselves onto the hype of a hot sector. Gold Brands in the quick service restaurant (QSR) space and Pembury in education. Both have failed and both teach us an important lesson in the new stars that are worth investing in.
It is about quality, it always is. Sure a raging bull market will lift all stocks as we saw way back in 2005-8 listing boom. But in a more subdued market, a more skeptical market, quality matters. Cash matters, brands matter, management matters. It all really matters. It is not enough to just be in the right space.
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Simon Shares
- Taste (JSE code: TAS) couldn't get the public to take up all of the 120million new shares, but a new shareholder of note did and it good news for the company.
- Naspers (JSE code: NPN) results talk of core HEPS. Now sure they tell us what 'core' means but as always I very skeptical of anything that is not IFRS.
- Wescoal (JSE code: WSL) results in part really hit it out the park with production up 82% while IFRS HEPS was 11.3c vs. 27.1c (company HEPS excluding BEE deal costs).
- Lafferty Group’s 2017 Global Bank Quality Benchmarking study is out, it ranks 100 major quoted banks across 32 countries and Capitec* (JSE code: CPI) comes out tops as the only bank to get five stars.
- Upcoming eents
The problem with buy and hold is not the math, which proves it works.
The problem is with the evidence, which proves investors can't do it.— Bob Brinker (@BobBrinker) June 27, 2017
How long is long-term?
A recent question asked about some investing ideas and concluded with the comment that "I'm looking at long-term say 5 years.". Wow. For me five years is short term while long-term is decades (yes with a 's' at the end).
I am not falling into the trap of saying things are faster these days with always on smart phones with taxis at our beck an call and online derivative trading. But the tweet below highlights that while we know long-term buy and hold works excellently, especially with ETFs, the average investor finds it hard. Stats continually show that average holding periods for stocks has been rapidly reducing. On the NYSE it is now months whereas it used to be years and years.
I'm not sure if it's fear, impatience, indecision or just a greed to be rich quickly. But wealth creation takes time and sure it is no fun when over the last three years most local portfolios have returned nothing, only beating money under the bed.
What I do know is that thinking of a few years as long-term is bad.
We Get Mail
- Dale
- I understand the logic behind an equally weighted ETF, and why it *should* be a good thing, but I can’t help wonder if it’s not a case of “in theory, but not in practise". If I compare the performance of the CSEW40 to the plain Satrix 40, without exception over an almost 10 years period, the Satrix 40 outperforms the equally weighted 40 – sometimes really significantly (thanks etfSA for the data).
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Woolies* (JSE code: WHL) share price is under pressure hitting 12 month lows on Monday. Recession is hurting them as high LSM consumers shop down and even Australia is struggling economically. The winner here will be Shoprite* (JSE code: SHP) as they cater for mid/low LSM consumers and will pick up Woolies shoppers.
- Index changes effective Monday 19th. Only changes from the main four indices is Capitec* (JSE code: CPI) into the Top40 and Implats (JSE code: IMP) exits.
What do you trade? Why?
When I ask people this question I generally get a surprised look as if it is a stupid question and the answer is generally CFDs. The follow up question is always - why do you trade them? Here the answers get garbled because there is seldom a good reason.
We need to be strategic about what we trade. There are differences between; shares, indices and FX. Different funding, risks, costs, spreads and more. We need to understand what they are and trade those that best suits trading in general and our trading specifically.
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
- Simon Shares
- Finally moving so at the pointy end of going small. Move date is next Wednesday which is also my recording day, so frankly not sure what the plan is re JSE Direct for next week. Will try make a plan, maybe a rebroadcast.
- PPC (JSE code: PPC), HEPS down 93% at 7c but this is all about the rest of Africa and a possible merger with AfriSam.
- Steinhoff (JSE code: SNH) results not bad, but so many moving parts it's hard to keep up.
- Bond and pref share ETFs for income.
- Upcoming events;
Now for the recession
It was a surprise to most economists but thats moot as the economy and consumer is under severe pressure recession or not. Importantly this was for Q1 2017, so before the shuffle and downgrade. I think this is not going to be short and sharp, it's going to hurt as we have little to counter it.
- Government; cut interest rates, cut tax and increase spending.
- Personal; cut debt and spending.
- Investing; quality offshore bias, be careful of mid & small caps.
- We now really are Brazil.
We Get Mail
- Ryno
- I think Buffett is actually a income investor.
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JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Famous Brands* (JSE code: FBR) results were decent enough with the UK acquisition only adding a small bit to the bottom line. I have been buying in the low R130's.
- An article on Moneyweb that strips out the top five expensive and heavy weighted stocks in the Top40 shows a historic PE of around 12.5x. In other words offering value and adding to my bullish thesis.
- Spar (JSE code: SPP) results show an operating margin squeeze down from 3% a year ago to 2.5% in these results. In part the offshore acquisitions but not a great sign.
- Sygnia (JSE code: SYG) results were flat. I expected at least some growth in HEPS but it was spent on new staff (via an acquisition) and marketing. We are still waiting for the details of the rights issue to fund the DB x-trackers purchase. For now I like the company but still think it is expensive.
- Property ETFs for dividends and the tax on the dividends explained.
- The JSE Power Hour video on investing while junk.
- Upcoming events;
When the best time to go offshore?
All the time. We can worry about the Rand and we can worry about valuations, but we'll never get it right. I buy locally listed offshore ETFs every month (buying DBXWD) and move money into USD every six months on schedule.
We Get Mail
- Everybody
- Suddenly Bitcoin ramps higher and everybody wants to know if they should buy it? Or maybe Ethereum or heck why not Dogecoin. I covered Bitcoin in a recent episode, more importantly is we only get excited when the price runs?
- John
- Please can you explain some of the JSE specific rules on market cap indexing - i.e. how/why does AB Inbev get removed from the Top 40, will/how can it ever be included?
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Unconscious Competence
Maslow's theory of how we progress and ultimately become Unconscious Competent traders.
- Unconscious Incompetence
- Conscious Incompetence
- Conscious Competence
- Unconscious Competence
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Blitz round of result comments;
- Richemont* (JSE code: CFR)
- Calgro M3* (JSE code: CGR)
- Lonmin (JSE code: LON)
- Astral (JSE code: ARL)
- Vodacom (JSE code: VOD)
- Balwin (JSE code: BWN)
Upcoming events;
- CoreShares investment disciplines & transactional website
- JSE Power Hour: Investing while junk
- JSE Power Hour: Ways that management can mislead investors
CoreShares transactional website and some investing core principles
We're running a promo with CoreShares this month including an event in Durban next Wednesday 24 May at the Riverside hotel (email info@coreshares.co.za for info or to book).
This week Simon chats to Gareth Stobie about their new website that enables transacting in their ETFs and their three investment disciplines when saving for or already in retirement.
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Shoprite* (JSE code: SHP) announced that former CEO Basson would be exercising a put option to company forcing it to buy back some R1.8billion of Shoprite shares. No problem, except did we know about this put structure? They say it was part of his December 2003 employment contract, but the annual reports of 2003/4/5 make no mention of it?
- Adcorp (JSE code: ADR), horror update. They are really struggling.
- Metrofile* (JSE code: MFL). Everybody wants to know if I am selling, why would I be selling? Just because the price is down?
- Rational Intuitive, what type of investor are you?
Upcoming events;
How to trust your trading system
Time and discipline is the best way to trust. My lazy system is now some 12 years old, so I know to trust it. But how do you get to trust a new system?
I like the approach suggested by Mark Douglas in his book, Trading in the Zone.
- Back test (eye ball) at least twenty past trades.
- Paper trade twenty at least trades.
- Do twenty live trades with small capital amount.
Now you have a system with sixty 'trades' and you know if it works and can trust it.
We Get Mail
Andy
- NFEMOM*, I know you hold it, was just interested in your thoughts on the costs. Expensive, no? Annualised TER 0.37% Transaction Cost 1.20% Effective Annual Cost (EAC) 1.57%.
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- You know Apple results were truly average when even the fan boys say it was just okay. But that pile of cash, over a quarter trillion US$!
- MTN update looks decent for South Africa and Nigeria. Still tough in both but at least revenue is improving.
- Locally April vehicle sales and PMI data both fell off a cliff. But with Easter in March last year we're not comparing apples with apples, so May will give us a clearer picture.
- Upcoming events;
How much cash do we need to start?
Trading or investing requires capital. As an investor one can start very small with just a couple hundred rand, but a trader requires a lot more in order to properly manage risk. So we look at the different options (CFDs, FX, ALSI and ALMI) and how much is required to start.
We Get Mail
- Jing-Woei
- In a recent Finweek (30th March) magazine issue, I read about your view on the NFEMOM fund. I was wondering if you have also had a look at the SATRIX Momentum Index Fund?
- Terence
- 2% difference between ASHT40 and SATRIX40 closing prices, how come?
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Purple (JSE code: PPE) who own Easy Equities had a very rough set results and as they comment in the commentary they need a capital injection. What does tihs mean for the business and clients?
@csavagegt247 @Richards_Karin @Caro1Graham @gary_dyk @EasyEquities Some more comforting news regarding EE's nominee First World Trader Nominees (FTW). Taken from their T&C's. pic.twitter.com/oXSELq2QDZ
— Johann Biermann (@JohannBiermann1) April 25, 2017
- Listed property or buy-to-let Power Hour was great, packed wth tons of details and the spreadsheet so you can crunch your own numbers.
- Kering results showed very strong growth for their luxury brands in Asia Pacific and this has spurred Richemont* (JSE code: CFR) higher. Details; Gucci +48% vs consensus +21%, Bottega Veneta +2% vs consensus -4%, Saint Laurent +33% vs consensus +19%.
- Steinhoff (JSE code: SNH) is loving the French election first round results.
- Upcoming events
Trading multiple systems
How to manage trading different systems? I trade three system with ALSI futures and I manage it by having a primary system that takes precedence over the other two, otherwise I could end up short and long at the same time. Alternatively trade different products (add FX to the mix and trade different crosses). Another option is one trading system but different products or markets.
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- UK snap election for 8 June and French first round presidential elections this Sunday.
- Pick n Pay (JSE code: PIK) results looking decent but stock remains expensive.
- Combined Motor Holdings (JSE code: CMH), amazing results in a tough space. Top management and solid balance sheet.
- World Bank cuts our 2017 growth target from their original 1.1% to 0.6%, after cabinet reshuffle and subsequent downgrades.
How we hurt our trading
Message from a trading friend;
"I think the true art of trading is learning to be completely satisfied with your own objectives. Rather than constantly worrying about what could have been if ..."
Trading is simple. Buy when the chart says buy, sell when it says sell and sit on your hands in-between. But we over think it, we believe in complexity and this hurts us.
I did not go short over the long weekend because, well politicians. I decide that I needed a new rule about 4 day weekends, do not hold over them? In truth I have been trading my ALSI systems all through recent recalls and shuffles and it had one of it's best runs on recent years for March with a very good April thus far. So why the sudden decision to change rules re long weekends? And what about three day weekends, will they in time also be bad? Normal two day weekends and eventually overnight holding?
We Get Mail
- Jan-Albert
- I would like to pick your brain about the big "nationalising" of banks and mines. If nationalisation is on the cards we all lose? Or do we? Or is it hot air? You would also be out of a job? Or would you? Questions everywhere and I have no answers.
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JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Our banks are now being downgraded by S&P and Fitch, this is to be expected.
- Tongaat*, I have been buying and now have full allocation. Still my preferred second tier portfolio pick.
- Taste selling jewelry and doubling down on international food brands with another rights issue coming.
- Japan, worth investing in?
- Upcoming events
Capitec* - should we worry?
Lots of concern abut rising bad debts and how this will impact Capitec.
They identify three risks; market, credit & business. Rescheduling is a risk that concerns many but Capitec defends it in being better business and they have over 200% provisions on arrears and they are well ahead of Basel 3 2019 requirements. Further when they reschedule a loan they increase provisions against non payment. They have been declining more loans and have been tightening credit granting criteria since April 2015 and now 92% of the value of a loan is provided for when three instalments are missed. In short they are obsessive about managing risk. That said tougher economic conditions, credit card and longer term loans do add to risk and they will likely see bad debts increasing. But they are not going to do an African Bank.
Longer term they're earning more from non interest but this will take a long time to become significant against loan profits.
The annual report is due later this month and will be online here.
I had an aggressive R720 buy price, but that was before shuffles and downgrades and with growth likely to be hit post all the noise R620 is my safer buy price.
We Get Mail
- Mkululi
- The question is in February the end/beginning of government year. The money I contributed which was pulled on the night of 28Feb2017, which financial year does it belong to? last year/this year.
- Jonathon
- I just watched the "lazy trading system explained" video and I had one question. In the risk management section you, Simon, talk about initial and secondary entry points to invest your 25% in 12.5% blocks however I was unclear as what qualifies as a secondary entry. Is the secondary entry point the next time both the primary and secondary triggers occur following the first investment?
- Alexander
- I am giving my nephew an investment account with a lump sum of R1000 for his 16th. I am leaning towards an ETF. Could you possibly suggest one that would be a good long term investment?
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JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Down we go
Standard and Poors downgraded our offshore foreign debt, not ZAR debt. This is about 10% of total SA debt. Technically we're not junk as that requires two agencies to rate us junk. But all said this is bad and expected and our portfolios should have been ready and waiting.
It took countries like Uruguay, Croatia, Ireland etc. on average 7 years to regain their investment grade status after falling to junk! Columbia took 12 years and over the last 19 years, S&P has downgraded 23 countries to junk status, of those only 6 recovered, shortest recovery time was 5 years.
How does it hurt? Debt costs for the country go up, so higher taxes and less government spending. Interest rates higher and rand weaker putting pressure on the middle class. Poor will be hurt with real damage is done to the middle class.
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JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Simon Shares
- Capitec* (JSE code: CPI) through results got everybody talking about the "arrears coverage ratio" dropping to 208% vs. 223% previously and vs. 196% in 2015. This got all the attention last time as well, I not concerned and my 'aggressive' buy price is now around R719.
- I have some USD expenses due in the next week or so and have taken a hedge using NEWUSD* just in case.
- Anchor Capital results showed a serious slowing of growth but still a stock with a great looking future and at around 600c very attractive.
- I have bene trying to add to my very very small Sea Harvest* holding but I don't want to chase the stock as I think we may see some weakness in the weeks ahead. 1275c would be my ideal entry. It traded 1270c last week, but I wasn't paying attention and missed them.
- UK has triggered Brexit and now Scotland wants out of the UK.
- A really excellent post by Kristia on bond ETFs.
- Upcoming events
Protecting yourself from the Rand
With the Rand getting all hot and bothered again after a protracted run stronger I thought a quick look at how we can manage our portfolio against a weaker currency. We have the easy things like offshore stocks that are locally listed, offshore earning stocks, locally listed offshore ETFs and the NEWUSD mentioned above. There is also a pure offshore bank or brokerage account or heavily invested into commodity stocks. But the bigger issue is that political squabbles are part and parcel of being a South African investor and Rand weakness is also our future, even if at times we have strength. So we need to build a resilient portfolio that survives these events.
JSE – The JSE is a registered trademark of the JSE Limited.
JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.