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Bleak Midwinter

Despite the waffling, let us look at how our stocks have fared and update our numbers.

Table 2 Stock Trading

Investment Price at 29-2-2016 Price at 11-7-2016 Change
AdvTech 1357c 1441c +6.2%

Calgro M3 1820c 20000c +9.9%
Jasco 77c 95c +23.4%
Schroder REIT 2201c 2310c +4.7%

Woolworths 8079c 8200c +1.5%

Source: Sharenet

Despite the gloomy macroeconomic outlook, all stocks are up. This may mean that
our companies are far more trade resilient even in difficult operating conditions, and –
more importantly – are perceived as such by their investors.

Perhaps it could also mean that despite our weakening currency, low growth rate and
even difficult foreign operating environments for our more geographically-diversified
Top40 stocks, the JSE is still viewed as a viable investment vehicle by companies listed
there – and investors with their money placed there – not only for return on capital, but
also for return of capital.

The Russian House

When your portfolio is being bashed about by conflicting opinions; which portfolio
management behaviours could you hold on to, in order to try and make sense of where
your portfolio is heading?

1. Beat the market on the day. Very myopic perhaps, but sometimes you cannot
ingest all the news across all your channels and still make sense out of it – much less
execute a trade. This is especially true if your portfolio incurs losses over a few days.
If you lost less than the ALSI on the day, your portfolio is more resilient to bad news
than the index.
2. Watch the exchanges ahead of your time zone. Sometimes the Hang Seng and the
Nikkei will give you a good preview as to how your market will open. Depending on
how deeply diversified you are – and your foreign to domestic equity ratio – it could
tell you whether your portfolio reaction to market-open is normal or abnormal.
3. Buy when your trading signal is Buy. You decided on an approach in calmer waters.
When stormy seas are raging all around, you must test your approach, and with
every wave you ride out, you become more aware of the ebb and flow of investor
behaviour. Remember, trade-time and research-time seldom coincide, and this is
how it should be.

46 QUARTERLY ECONOMIC BULLETIN 2016