Category Archives: Investment Strategies

Relative Strength


Analysing the market is mostly about trying to determine where the best opportunities lie. There are about 400 shares listed on the JSE, but which of these offer the best opportunity for profit? So finding the best share invariably means comparing one opportunity with another.

There are very few indicators which do this better than the comparative relative strength.

This indicator (found at the bottom of a chart in ShareFriend as “CRSI”) is simply a formula which divides one datastream by another and then draws a graph of the result. For example, the price of Dischem was 2694c at the close of trade on 14th February 2019. On that day, Clicks closed at 17700c. So if you divide 2694 by 17700 you would get 0,1522 – that is a relative strength point. Read More

Gambling Vs. Investing


GAMBLING

Gambling is associated with casinos and is epitomised on the roulette table. In roulette members of the public essentially bet against each other with the casino taking a small percentage for the cost of setting up and running the table. There are 37 numbers on a roulette table – three rows of twelve numbers plus the zero. If you place a R10 bet on every number you will have to outlay R370 – and then you can be certain to win because one of those 37 numbers must come up. Except that when you win you will only be paid out R350, plus the R10 that you bet on the winning number. In other words you will get back R360 for your R370 bet – the other R10 (approximately 2,7%) is kept by the casino to meet its costs and make a profit. That is gambling. And the simple fact of the matter is that the longer you play roulette, the more you will eventually lose – but that does not mean that you will lose on every spin. It just means that the odds are stacked against you so in the end you will always lose. Read More

Santam


Suid-Afrikaanse Nasionale Trust en Assuransie Maatskappy Beperk (Santam) is the largest short-term insurer in Southern Africa. The company has been in existence for 100 years and has developed and grown with the South African economy. Santam does not get involved in any kind of investment insurance. Basically, it insures you against risks which you cannot afford to (or do not want to) take yourself. So you cannot get an annuity endowment policy from Santam – but you can insure anything else.  It is instructive to look at a long-term logarithmic chart of the Santam share (SNT) price going back to 1985:

Santam (SNT) Semi-Log Chart August 1985 to September 2018 – Chart by ShareFriend Pro (Click to Enlarge Image)

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Mental Posture


What separates an effective private investor from one who loses money continuously? The difference is what we call “mental posture”. To be a successful private investor you need to have a good mental posture. But what is mental posture? It is your emotional response to the share market in general – and to your shares in particular.

What are you feeling? Because how you are feeling will determine what decisions you make.

You may think that you are well in control of your emotions. You may consider yourself to be rational and objective in your investment decision-making. You may think that your emotions have no influence over your decisions – but they do. Read More

The Confidential Report – June 2018


Political

President Ramaphosa has been fortunate that his two main opposition parties for the 2019 election have been busy shooting themselves in the political foot. The DA’s extraordinary handling of Patricia De Lille now threatens to lose them their anchor support among the coloured people of the Cape Province. At the same time, Ramaphosa’s shrewd move to annex the EFF’s primary populist appeal in the area of land expropriation has forced that party to the extreme left where it has become blatantly and overtly racist in its message and at the same time made absurd suggestions about all land in South Africa reverting to the government on some basis. In the meantime, under Ramaphosa’s leadership, the ANC has been looking more and more like the balanced party of reason and common sense. An increased majority in 2019 will entrench Ramaphosa for the next ten years. Read More