The problem which every private investor faces is that there are more than 400 different companies listed on the JSE. How can you choose those shares which are likely to be winners?
The old Wall Street adage goes, “Pick shares which are rising, in sectors which are rising and in markets which are rising”.
Of course, the problem with this idea is that it is likely to cause you to buy shares which already appear to be very fully-priced. The point that you need to get hold of is that shares which are very fully-priced often become even more fully-priced because they are extremely well-managed or have some kind of powerful business edge. A good example of this would be Capitec Bank – which is trading on a P:E which is nearly double that of the other banking shares, but which nonetheless continues to rise – excellent management and a powerful business edge. Read More