Podcast: Are you buying?

In JSE Direct, Latest by Simon Brown

Simon Shares

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider.’

  • Alexander Forbes (JSE code: AFH) fires their CEO with zero f***s given.
  • Nigeria making nice to MTN (JSE code: MTN) and Standard Bank (JSE code: SBK).
  • Choppies (JSE code: CHP) snuck a late Friday SENS into the market stating that results would be late (again) and profits at least 20% lower (but no hard details as how much). No surprises that the market did not like and the stock got punished when we opened on Tuesday trading down at 25c. I never liked the stock and have repeatedly suggested investors stay away.
  • Capitec* (JSE code: CPI) results were once again stellar with HEPS +20% and cost-to-income at 38%. The cost-to-income is edging higher, as expected, and was 36% last year. Likely will settle in the mid 40s. Active clients is now 10.5million.
  • Top Broker awards were held on Tuesday evening. In the main category the winner was Standard Bank followed by Rand Swiss and ABSA. All the results will be in this weeks Financial Mail supplement, Investors Monthly.
  • Friday is month and quarter end, so we may see some stock price ramping to make returns look prettier. But it has been a tough quarter for local investors.
  • Wealthy Maths: Calculating cost per use
  • OUTStanding money with Outvest: Long-term saving goals.
  • Upcoming events

* I hold ungeared positions.

Are you buying?

I post a lot on Twitter, probably too much. Much of it is not opinion, they’re just interesting charts or stats, especially of collapsing stocks (not many flying to the moon these days).

Almost every time I Tweet about a collapsing stock somebody asks “are you buying?”. And the answer is pretty much always no.

The one theory is that at the right price any stock is attractive – so a collapsing price may well make an unloved stock worth buying. But I do not agree with that sentiment at all. I only want to own quality, no dogs in my portfolio. So for me it doesn’t matter what the price is – I want nothing to do with the stock, in fact I want nothing to do with the vast majority of stocks on the JSE for one reason or another.

There are of course exceptions. The few stocks that I do love and will buy more of if the price were to collapse, but that list is small – around twelve at most.

There is another point here, FOMO, I have covered this before. The belief is often that a ‘great’ collapsing stock will rebound with vigour and those ‘lucky’ enough to have bough at the bottom will find themselves instantly rich. But this seldom happens. Most collapsed stocks remain collapsed for a long time – if not forever.

So follow me on Twitter, enjoy the charts and other stuff I post. But don’t ask me if I am buying. Likely if I am, I will mention it in the Tweet or you can check my portfolio here.

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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.

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