WorldWide Markets with Simon Brown

Simon Shares An economic proposal out of National Treasury. Good looking document, but as always implementation is what matters. Adrian Gore, CEO of Discovery* writes a great piece for the World Economic Forum "Things are bad and getting worse for South Africa. Or are they?". Full of actual facts rather than emotions that typically cloud the debate. Naspers (JSE code: NPN) shareholders have agreed to the Prosus unbundling and it will be effective at the open on 11 September. I expect Prosus to trade around R950 and it we do see some value unlock, and I expect that we will, this could add some 4% to the Top40. Not on the day but over the week or so of the unbundling. Exxero (JSE code: EXX) results had a special dividend and growing profits. But what strikes me is a PE of 4x? The market is pricing it as if coal as an energy source will be dead within 4 years? Wealthy Maths: How to calculate future value Managed volatility ETFs explained Upcoming events; 05 September ~JSE Power Hour: Benefits of offshore investing * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Prescribed asses A lot of people are worryingly asking me about the ANC governments idea for prescribed assets. In other words a law requiring asset managers to invest in a certain way, expected that this would require buying of SOE debt or maybe even equity, albeit I think equity is almost certainly not on the table, just debt and frankly Eskom debt. Now first off, personally I am in two minds about prescribed assets. The capitalist in me thinks they are a terrible idea. Investor should be able to invest where they want, even in 6% fee offshore funds if that rocks their returns. But we live in a developmental state with extreme inequality and as such I certainly think that prescribed assets do have a place in our economy, and we already have them in the form of reg 28 and nobody died from that. So I think the issue is balance and reg 28 strikes the right line of balance. Let's quickly touch on regulation 28 of the Pension Fund Act. Before 1994 the NP government had prescribed assets and when the ANC came to power they scrapped that, but did put in place limits on how pension fund managers had to invest in terms of assets classes and offshore vs. local. The 2018 budget increased reg 28 rules to allow 30% offshore with a further 5% invested into the rest of Africa. A maximum of 75% into equities (with a cap of 15% in a +R20billion share and 5% cap on shares under R2billion). Property is capped at 25%, commodities at 10% and alternative investments capped at 15%. So we have prescribed assets and yes people grumble about the reg 28 limits, but in no way has it been the end of the world. Any change too prescribed assets would likely happen within the reg 28 environment but when asked in parliament last week President Ramaphosa was very vague on exactly what the government means. But I have some thoughts. Magda Wierzycka, CEO of Sygnia (JSE code: SYG) had an excellent idea she put forward on Bruce Whitfields show. The PIC issues a zero coupon R200billion ten year bond to Eskom. This removes half their interest payments and gives them ten years to fix their balance sheet. If they succeed, boom. If not then we are right were we are now. Nothing ventured nothign gained. The risk of course is to the PIC returns, but as a defined benefit pension fund tax payers would be on the hook for any shortfalls to the Government Employees Pension Fund (GEPF), and right now tax payers are anyway on the hook for Eskom. Further the GEPF is currently funded at 108%, so not anywhere close to falling over. So maybe prescribed assets is actually just for Government Employees Pension Fund (GEPF) assets? And I like this idea very much, gives Eskom wiggle room and a decade while not killing our treasury in the mean time. Now many of you are spitting into your coffee at the thought of this. But let's be realistic. Eskom is way over debted and sure it is the result of state capture. But we can't roll back the clock, all we can do now s try and fix it. Another fun fact is that SOE debt has not been defaulted on, and this is unlikely to change. So actually the great yields offered by, for example, Eskom bonds, is actually a great return. As long as they don't default and frankly they are either directly or implicitly under written by government so default is not going to happen. As evidence of this is Future Growth invests into SOE debt and has great returns to boot. But at he end of the day - we await full details from government which will probably arrive with a plan to save Eskom as they're the reason we're even talking about this and Minister Gordhan has promised details in early September. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 th

Simon Shares Shoprite* (JSE code: SHP) results a show of many parts. Locally second half much better after the disaster of the first half. Rest of Africa swings into a R265million loss after making R1.6billion in 2016 FY. Dischem (JSE code: DCP) below 2000c. Was always way over valued but still on a PE of over 20x so not yet cheap. AdvTech* (JSE code: ADH) decent trading update. Lots of moving parts, but stripping that all out leaves HEPS +5% - +9% up and on a PE of under 15x much cheaper than Curro (JSE code: COH) and Curro no longer has the tertiary segment which is doing better than schools right now. Trump has delayed the new China tariffs because this could hurt the US consumer in the yearend shopping season. But in the same breath he says China is paying the tariffs? The man is a nut job. Local CPI came in at 4%, below previous of 4.5% and expected at 4.3%. Simply there is no inflation in the system right now and another rate cut from the MPC is surely assured as we move even lower below the 4.5% mid point of the range? Top40 is still green for the year. Off the +11% from earlier, but it's still +5.1% excluding dividends. But it fells like we're down 100%. That all said, over the last year Top40 is 8.8% excluding dividends. ETFs for investing and retirement. Dividend ETFs. * I hold ungeared positions. Subscriber to our feed here Sign up for email alerts as a new show goes live Is an IMF bailout really imminent? "The IMF's primary mission is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to transact with each other." (source) Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid the balance of payments. (source) Lots of hype (hysteria?) about an IMF bailout for South Africa with all sorts of talking heads weighting in suggesting it is a certainty. But an IMF bailout is not happening any time soon, the facts are simple and we're a long way off even entering talks about a bailout. Now sure our economy and stock market are both under pressure but the IMF cares nothing about the latter and the former is struggling but it is a long way from a death spiral. Our government debt is +/-90% in Rands, so currency weakness does not kill our debt burden, whereas foreign currency debt kills when the currency weakens. Tis is a big reason for most bailouts and it is simple not a risk for us. Our Balance of Payments (BoP) is fine at some 4-5 months. Now sure more would be better, but that is not anywhere near a crisis. When Pakistan got their recent bailout BoP was down to a few days. Our currency is fairly stable, certainly it is not crashing Bottom line, we're not seeing capital flight so no IMF bailout waiting in the wings. So why are we seeing all sorts of hysteria headlines saying an IMF bailout is practically a certainty when it patently is not? Also, why the fear from market friendly economists and the like? All these economists who criticise government for not being market friendly enough would surely love the IMF market friendly conditions for a bailout? Or are they practising double speak? Both the in country IMF head (Montfort Mlachila) and our own SARB governor (Lesetja Kganyago) state that it is not currently on the table. Now sure, 'currently not on the table' can change. But which of the above will trigger the change? What else could trigger the change? Short answer is Eskom, but there are plenty of balance sheet / debt options for Eskom and minister Mboweni says we'll have details soon. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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.

Brought Index and Structured Solutions, Absa CIB Simon Shares US yield curves have inverted across the range. Shorter term rates are higher then longer-term rates. Now every recession has been proceeded by a yield curve inversion. But not every yield curve inversion has been followed by a recession. So maybe it's warning us or maybe it's not. In short, we'll see lots of hysteria and end of world doom sayers out in force, but as always just carry on carrying on. Upcoming events; 15 August ~ JSE Power Hour: ETFs for investing and retirement Subscriber to our feed here Subscribe or review us in iTunes Managed volatility ETFs with Len Jordaan Index and Structured Solutions, Absa CIB Three Exchange Traded Funds (ETFs) issued by Absa earlier in the year. NFEHGE NFEMOD NFEDEF Download the managed volatility product brochure Absa Volatility Managed SA Equity Indices. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 Trade wars are back, but this time 'only' 10% on US$300billion of goods. No surprises? China is responding by allowing their currency to weaken to decade lows. Fed cuts 0.25%. Trump says that's not enough, but he is priming an excuse. He has an election next year and if the market / economy is weak - he'll blame the Federal reserve. Iron ore futures lost 10% last week and are currently around US$92, I been warning of this and Vale is producing again so the shortage is disappearing. Now sure Kumba Iron Ore (JSE code: KIO) has high quality lumpy iron ore which attracts a higher price. But the US$108 / tonne they got in the last results will not be repeated. Delta (JSE code: DLT) and Rebosis (JSE code: REB) talking about a possible merger? In many ways it makes sense, but the issue is debt on the Rebosis CEO is quoted as saying they need to fix their debt levels, not sure that does this. Nedbank (JSE code: NED) results show the quality of our banks. They're growing (yes very modestly at low single digits) but in an economy that is not growing. That takes skill. Curro (JSE code: COH) trading update was bleak. HEPS growth of 3% - 9% after one offs are stripped out on a stock on a PE of around 35x (after 13% sell off on Tuesday). Stock back at 2013 levels and some c70% off the highs of late 2015. The lesson here is simple, all business models mature in time, growth slows and one needs to be very careful about what price we pay. On a PE of over 100x with slowing growth was madness. Upcoming events; 15 August ~ JSE Power Hour: ETFs for investing and retirement * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes How lucky are your investments? Delphine Govender tweeted a great comment from Daniel Crosby about the role of luck in investing, or trading. Never a truer word by @danielcrosby. The role of luck; market sentiment leads us as investors & our clients to think we were right because of the outcome; when being right in investing is about basis for the investment decision turning out correct (more than less). pic.twitter.com/qESB66vBqL — Delphine Govender (@Delphine_DG) August 4, 2019 Truth is when luck strikes we claim it as skill, when it really was just pure good luck. Now don't get me wrong, when luck strikes - grab it with both hands. But the problem is that by claiming luck as skill we skew out actual ability claiming credit where it's not due and as such we think we're better than we actually are and the problem here is glaring. So in short when we're dissecting an investment we need to ask the question about how much of the return was luck vs. how much was skill. Now sure this isn't easy, but if we're honest with ourselves we certainly can spot luck and we need to admit as such. Personally I know I had two very lucky trades. My first purchase in October 1987 (DiData) and Capitec* (JSE code: CPI). The former I was actually trying to buy another stock and the latter was more a purchase in anger as I had missed my preferred entry price and it just kept on moving higher. These two transform my portfolio returns, without them I still beat the market - but by a lot less. So how did we spot that luck? Did something significant happen you never expected? Major competitor going bust? New market proving way more profitable? Serious shift in the landscape they operate in? Legislation changes that favour their products? Finding what they weren't looking for (gold miner finding PGMs)? A serious expected risk suddenly disappears? Did the stock valuation far and away exceed any realistic expected valuation? None of this is rocket science to spot, you had reasons for buying. You list them (you do write down your research?) and then something comes out of left field to boost profits? The flip side of course is bad luck, and sure that happens as well. So we also need to dissect bad luck. How much did it hurt but also do we keep on experiencing bad luck? If yes, maybe it's less about bad luck and more about lack of skill which we're blaming on bad luck because that's easier? Maybe we're just not very good at figuring out the risks? I have long stated that the only book by Nassim Nicholas Taleb worth reading is Fooled by Randomness as it goes deep into the role of luck in investing, trading and life. Read it. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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) trading update sees full year profits down. But the real point is that the second half of the year was way better than the first half as they fixed DC and IT issues and had no further strike action. But it is still tough with lots of products in deflation which is squeezing margins. Massmart (JSE code: MSM) update was a shocker with Game bleeding like crazy. Not a surprise, but as Nic Norma-Smith said on Twitter "Wal-Mart paid $2.3bn for 52% of Massmart in 2010. Today the stake is worth $370m.". Ouch. NFEMOM*, the ABSA momentum ETF has been flying and is almost +20% year-to-date and just behind the S&P500 and best over last year (of indices, local and sub, that I track). I always like momentum and when ABSA changed the methodology of this ETF I switched my personal momentum portfolio into the ETF. Just as I did this everybody claimed momentum was dead, and the ETF struggled. But momentum never dies, even when (if?) value ever comes back, those value stocks will gain momentum and so momentum traders will profit. Loser indices so far year-to-date are the banks and mid caps, both slightly negative (excluding dividends). The resource index is doing well enough, but the industrial has actually beaten it - likely driven by Richemont* (JSE code: CFR) and Naspers (JSE code: NPN). ASX finally breaches the pre crisis levels and makes a new all-time-high, 12 years later. Nicky Newton-King is resigning as CEO of the JSE. She's been a great CEO transforming the technical side of the JSE during a period when values traded have been falling off a cliff. On that note, September sees the Naspers (JSE code: NPN) listing their non-SA assets in Amsterdam and while that could in itself see a bump of some 4% to the Top40 - it's going to hurt value traded even further with maybe as much as R1-R2billion of daily trade leaving to trade on Amsterdam instead. We think our local property space is having a tough time. But check the Intu (JSE code: ITU) results. A horror show with like-for-like net rental income down 7.7% and guidance for rental growth of -4% to -6%. Capco (JSE code: CCO) a little better and they're splitting out Covent Gardens (their prize asset) but it still tough and the share price remains under pressure while Intu share seems to be racing to the bottom. Fall out from Boris Johnson win and insists on a hard Brexit is not so much in the markets, but the currency as Sterling continues to slide to the lowest levels since 2017. This helps much of the FTSE100 as foreign earnings dominate. If you get the pamphlet about investing in 72 tonnes or either; iron ore, coal or magnesium. Throw it away, it's a scam, especially the part about holding for 18 months. That will be one massive warehouse bill. Another week and platinum continues to edge higher now around US$880. The final report of the presidential advisory panel on land reform and agriculture (aka #EWC) was released over the weekend and frankly it is exactly as expected. Sober and sensible. Yes lots of hysteria, there will always be, ignore it, it's mostly ill informed or just based on fear or hate. Understanding the SYGEU. Money Hacks: Bring down insurance premiums. Upcoming events; 14 August ~ JSE Power Hour: ETFs for investing and retirement * I hold ungeared positions. Subscriber to our feed here Sign up for email alerts as a new show goes live JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 Kumba (JSE code: KIO) results saw production down, but with the average selling price up 57% at US$108 / tonne - they shot the lights out. But this is surely the top here? Rumours are that Vale has iron ore on the water heading for China and slower Chinese GDP may hit demand, sending iron ore back to a more sensible price around US$70 / tonne? Platinum continues to edge higher. Remember S12J? You could invest in a funds that invested into startups (within certain rules). Then whatever you invested would be deducted from your taxable income (on condition you held for 5 years) and tax would only be CGT, albeit on a zero cost basis. Government is now proposing a limit of R2.5million per person per year. Frankly for the vast majority, this is a non event as that's serious money. Alexander Boris de Pfeffel Johnson is the new Prime Minister of England. What one may think of him, markets don't care and for traders / investors that's what matters. That said, hard Brexit remains a stupid idea. IMF cutting global GDP growth, including our own. Now they're not always right, in terms of exact numbers they are seldom spot on. But the trend from the IMF has been edging lower for a while now, and on the trend they usually are right. I have a new show on BusinessDay TV - The Small Cap Portfolio. Monday live at 6.30pm and repeated during the week or on YouTube. I get one guest and we talk about two stocks of their choosing. We're not talking results, we're talking the profit drivers, risks and so on. Theo Botha points out on Twitter that; Pick 'n Pay Lead independent non-executive director Hugh Herman (75). Appointed to the board in 1976. How can this director still maintain his independence after 43 years on the board? Pick n Pay Lead independent non-executive director Hugh Herman (75) Appointed to the board in 1976 How can this director still maintain his independence after 43 years on the board? — Theo Botha (@tjbbotha) July 24, 2019 From an intra-day high of 42% in 2012, Greek 10-Year yields have moved all the way down to 1.99%, their lowest level ever. US 10 Year Bond Yield: 2.07%. Never say never. Tax-free as you age Understanding the MAPPS Protect ETF Invest offshore with the JSE How many shares to buy? Two emails in the last week asked about how many shares to buy in any given stock. The problem is that this does not account for the cost of the shares. For example 10k shares in a R10 stock is very different from 10k shares in a R125 stock. As an aside when I started trading warrants in the late 90's this was exactly how I traded. I bought 50k warrants regardless the price. So some times was R10k other times closers to R50k and my risk was all over the place. The answer of course is simple, invest based on ZAR amount, not quantity. I structure my portfolio with the core satellite approach; The core is around 55% in ETFs (tax-free maxed out every year) 30% in 'til death do us part' top quality stocks 8% in second tier small and mid caps 7% for trading ALSI futures and ETFs. The til death do us part is some 10 stocks so when I am buying, I buy at around 3% of total portfolio. Of course as they moves the weightings get our of sync, I manage that by adding new money to other stocks or in some cases selling down when the weighting gets wildly out of sync. But quantity of shares is not important. A last point because I get this question all the time. People want a 'penny' stock below 100c because then it can double in price. Any stock, regardless of price can double in price and cheap does not make it easier. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 S&P500 above 3,000 and Dow Jones above 27,000. EOH (JSE code: EOH) have found R1.2billion of bad deals over 4 years, 2013-2017. A new dawn, I think so, but I would add a very slow dawn. Platinum starting to look decent? We have higher lows and two higher highs. A close above US$910 (still a way off) and things looking real strong. If you're long PGM miners. If not an entry on pull backs looks smart. Woolworths* (JSE code: WHL) trading update excited the market and shows a much improved second half, especially in food (expected) and clothing (not expected). Australia remains under pressure but overall good and the real question is if it's a new trend or a one off? Anheuser-Busch InBev (JSE code: ANH) has suspended the listing of their Asia-Pacific business that would have seen almost US$10billion being raised. The reason given is tough market conditions but the bigger issue is they wanted the cash to pay off part of the massive debt bill from buying SABMiller - so for now they remain with too much debt. FIRE at any age Property investment is better together Upcoming events; 18 July ~ JSE Power Hour: How to invest offshore with the JSE 14 August ~ JSE Power Hour: Live Fat Wallet Show Subscriber to our feed here Subscribe or review us in iTunes Where are the sellers? There seems to be bad news every which way you turn, or is there? Trade wars, Iranian war, US tax receipts collapsing and so the list goes on. Yet markets remain in full bull mode albeit with two wobbles recently. Late 2018 and May this year. The question is why, this is an old bull. In fact this is the longest bull ever and second best in terms of returns, one would think it would be frail and fragile - but no it remains strong. I suspect part of the reason is that low interest rates and QE in Europe continue to drive buyers who are flush with cash and keen to park it somewhere, anywhere for a return that is positive. We also have record low bond rates (even negative in many parts of the world worth some US$12trillion) so if you're looking for returns then you have to be invested in stocks to make any real returns. German bonds issued at -0.75% and over subscribed but likely the ECB bought most of them? But this closes many investors out of the bond market if you want/need positive returns. A last reason is likely FOMO. Those holding stocks are terrified of missing out so they're simple not selling and any weakness sees them buying and buying. This will change eventually. Markets will fall and those buyers will turn into sellers. But for now don't stand in front of a raging bull and tell him to stop. He'll just run you over on route to new highs. The trigger is more likely to be higher rates and we seem to be a million miles from that. This does of course feed into a bigger issue, all the new debt. Now sure central banks are buying much of the debt, but low rates mean more debt generally and how does it all get paid off? Long-term does the planet need a debt forgiveness plan to survive? How does that work and how does it not crash the entire system we have? JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 CSEW40* change confirmed for next Wednesday, it'll now be SMART. Trade peace, kinda ~ for now. In classic Trump style, lots of huffing, puffing and threatening the blow the house down. Until a 'deal' is reached. Afrimat (JSE code: AFT) walks away from the Universal Coal deal. No details, but likely they didn't like what they saw? Respect, far too many deals get deal mania and concluded no matter what. PricewaterhouseCoopers has resigned as auditors of Group5 (JSE code: GRF). Now this is moot as Group5 is in business rescue with no chance of surviving and PWC cites heightened risks due to resignations of many senior execs. But one wonders if they'd had quit in the older auditing days? Upcoming events; 18 July ~ JSE Power Hour: How to invest offshore with the JSE * I hold ungeared positions. fff Download the audio file here Subscriber to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes Longest economic expansion ever The current US economic expansion is now officially the longest ever at 121 months edging out the 1991-2001 120 month economic expansion and also the longest bull market at 122 months with the return still behind the 1990-2001 dotcom rally. But this raises two issues. Where's our rally? Nov17-Oct18 saw out market off more than 20% meaning the end of any bull and we're only up some 10% since the highs of Jun14, five years for 10% and we're +12% so far in 2019. Horror stats albeit we're up almost 400% from the 2009 lows while the S&P500 is up just over 400%. Both great returns (one naturally better than the other), and this does remind us to always think long-term and worry less about the immediate when investing because 400% is a great return over a decade. Second issue is when does the US collapse? Short answer is no idea. But records are made for being broken and while the US economy doesn't look as strong as it has over many of the past 121 months, there's not yet any wildly flashing signs of concern. Naturally a black swan is a potential risk, but then it always is. But here's my question. The Fed looks like it may start reducing rates, all good. But then what happens when things go pear shaped and they have no space for further rate reductions? Negative rates in the Europe or US? Currently there is some US$12trillion of corporate and government debt with negative rates which is just insane and shows that while markets have run (some markets), we're still feeling the impact of the 2008/9 crisis. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 The Top40 is up almost 20% since the lows of November and over 12% year-to-date. But instead it feels all gloom and doom. Wescoal (JSE code: WSL) results look horrid, but they had strike issues when they employed a new contractor and that hit production and the leverage impact seriously hit HEPS. But they remain a high quality junior coal miner. Omnia (JSE code: OMN) results were ugly, but not as ugly as the market expected. Apparently during the results presentation they blamed the media for their 23 April SENS stating no rights issue, which they then changed their mind on earlier this month? Gold is running and the perma gold bulls are thrilled - albeit surprisingly quiet? However, a number of people are asking if they should buy gold and the answer is usually no, buy a gold miner and benefit from the leverage impact. Bitcoin* is also going wild, now above $12,000. Here the perma BTC bulls are all over my time line. Question is how high will it go? Answer is no idea, in a perfect world it needs to make a new all time high above $20,000. But as with gold, don't sell too quickly, but do have an exit strategy that gets you out in time. Unless of course you're a hodler. Surviving the trade wars, G20 meeting is Friday / Saturday. My first investment Upcoming events; 20 June ~ JSE Power Hour: Trade the trade wars 18 July ~ JSE Power Hour: How to invest offshore with the JSE * I hold geared and ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Naspers or Prosus? This deal has been delayed due to a bungling of documents and the Annual General Meeting (AGM) will now be in late August with the unbundling happening in September. Holders of Naspers have two options; Keep you Naspers shares and get an extra 0.36986 Naspers shares at zero cost. This will reduce your overall cost per share as the new ones are 'free' and will have a tax impact when you sell. The default is to receive new Prosus shares in exchange for each Naspers share you have. This will trigger an immediate tax as your Naspers will be deemed to have been sold. Remember that Naspers will hold some 73% of Prosus with the latter holding all non SA assets and being inward listed on the JSE. The idea is that this will unlock value as local asset managers are unable to hold Naspers at full weighting, or even close to full weighting. So with Prosus being listed in Amsterdam we'll see more buying and hence the price will move higher and Naspers should also track higher but Prosus may move more and we may see a discount open between Prosus and Naspers, much as we see with TenCent and Naspers. Which will do better? In a perfect market they'll largely track each other, but the current +20% weighting of Naspers has limited asset managers to how much they can buy. So Naspers may close that discount gap. But the flip side is being listed on Amsterdam would see the gap stay wide with Porsus doing better. Net-net the value of the two should increase. As a side note, if the net increase of the two is say 20% that could add as much as 4% to the Top40. Prosus will immediately go into the same indices as Naspers and if the market cap is enough, will stay in the indices. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct 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 Old Mutual (JSE code: OMU) has fired suspended CEO Peter Moyo and detailed what went wrong. The short version is that the company Moyo founded (NMT group), was CEO of and chair since taking up CEO at Old Mutual paid two dividends when they should in the first instance paid Old Mutual as a preference shareholder a dividend and in the second instance they paid when they should have first paid off the preference shareholder - Old Mutual. Moyo has fired back with a lawyers letter stating that Old Mutual is wrong and in fact their representative on the board voted in favour of both dividends. Who's right? I have no idea and ultimately the courts will decide, or more likely the parties will settle. So for now it is about money and how much Moyo gets. The good news for Old Mutual shareholders is that this is not an operational issue, but they do now need a new CEO. Metrofile* (JSE code: MFL) have restructured their debt that cost two CFOs their jobs. The new debt will see the tax rate revert back to the normal 28% instead of the crazy 40% in the last results. The new debt is at about the same rate, but this will decrease in time as the debt reduces. The impact won't be felt much in the current results due for end June, but the full impact for FY 2020 could boost HEPS by as much as 15%. Facebook launches their stablecoin ~ Libra. Lots of excitement as the theory is that it'll remove fees for money transactions. But it won't, sure it may reduce them but Facebook is doing this because they want a slice of the global multi-billion dollar movement of money, especially remittances home. San Francisco has become the first city to ban e-cigarettes, and nobody should be surprised. The tobacco industry was losing ground in the major developed markets, regulators were happy and the industry was content as they upped prices (and hence margins) and moved demand eastwards to less regulated markets. But then e-cigarettes arrived and the industry thought they have their savior and jumped on the bus and right into the regulators hands. Smoking started to increase, especially amongst teens and now the regulators are coming for big tobacco again. Banning e-cigarettes, likely banning flavoured cigarettes (such as the biggest seller, menthol). In short the tobacco industry has shot themselves in the foot and should have kept their head down instead they now in trouble again. A last point here is not about whether e-cigarettes are safer or not. They are a tobacco delivery system and a potential gateway to normal cigarettes and regulators want neither of these. USA ETFs Upcoming events; 20 June ~ JSE Power Hour: Trade the trade wars 18 July ~ JSE Power Hour: How to invest offshore with the JSE * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes The Rand blame game I have a watch list of EM currencies, and they move. They move a lot. Some times in sync with each other, at other times just crazy all over the place. But you will notice every time the Rand weakens the local politicians get blamed. Well what about when it strengthens? Tuesday saw it as the best preforming EM currency as it gained some 2% to 1450c. The truth is politicians have a lot less influence on the currency than they like to believe and then we give them credit for. The Rand moves and is also the preferred EM currency to trade due to its liquidity. Sure when Ace Magashule talks about 'quantity easing' that's easy to pin the sudden Rand weakness on him. But for the vast majority of the time nobody actually has a clue and blaming the general grouping of politicians is easy - but lazy. Especially if we're not offering credit to them when it strengthens. I also wonder about our countries obsession with the currency. I do think it's fair enough as it is, over the longer-term, a kind of vote on the country in that it tells us if money is flowing in or out. It also directly hits our pocket in the form of the petrol price. But do other EM countries have the same level of obsession? Anybody have any experience from traveling abroad? But most often when the Rand moves nobody really has any idea as to why. So I asked Twitter and the range of responses shows that really nobody knows. ZAR had a stormer of a day, gaining almost 2% at 14.51. Who do we credit for this strength?#JSE — Simon Brown (@SimonPB) June 18, 2019 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 Solid Stor-Age (JSE code: SSS) results from a stock I have largely ignored and been wrong about. Interesting TymeBank presentation from African Rainbow Capital (JSE code: AIL). Lonmin (JSE code: LON) is gone, taken over by Sibanye Gold (JSE code: SGL). Lonmin has a consolidation adjusted all time high of over R33,000, exiting at 1480c. They also had a US$10billion offer in August 2008 that they rejected. Market cap now, R4billion or about US$265million. Unpacking the Satrix property ETF ~ STXPRO Retire: Playing catch-up Upcoming events; 20 June ~ JSE Power Hour: Trade the trade wars 18 July ~ JSE Power Hour: How to invest offshore with the JSE Suspended Tongaat (JSE code: TON) suspended. Choppies (JSE code: CHP) suspended. Group5 (JSE code: GRF) suspended. Rockwell Diamonds (JSE code: RDI) suspended. Basil Read (JSE code: BSR) suspended. Esor (JSE code: ESR) suspended. Firestone Energy (JSE code: FSE) suspended. Freedom Property Fund (JSE code: FDP) suspended. I'll stop there because you get the picture, I want to talk of the warnings signs, why they get suspended and what hope is there for the future. The why? Business rescue Breach f JSE listing rules, such as late results Request from the company Sensitive information leaked into the market Now what? Depends on the why, many do eventually come back but battered and bruised. For now you're unable to sell (or buy) any shares and will have to wait for the listing to resume. How long? Usually way longer than management promise. If it's business rescue then it's probably forever. late results eventually they get it together, but it takes time, lots of it. Sensitive information is usually fairly quick to return to the market. How to avoid holding a suspended share? Watch for those late results. The JSE gives three months but then always gives an extra month, so effectively four. If a stock can't publish results within four months then why do you own it? What about derivative traders with open positions? You're in a heap of pain. Either long or short you now can't get out and the best advice is to avoid trading stocks due to single event risk such as a share being suspended. Steinhoff? Why isn't Steinhoff (JSE code: SNH) suspended? Because they also trade on the German exchange and they have seriously lax rules, so they don't suspend. Suspending Steinhoff locally when it still trades in Europe would prejudice local shareholders. Subscriber to our feed here Subscribe or review us in iTunes 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 US Fed has now promised a rate cut. This boomed markets but under lying the statement is the acceptance that trade wars are hurting the US economy. Horror Q1 GDP number at -3.2%. We knew it would be bad, thanks to aggressive load shedding during the period. But nobody expected this bad. The good news (sorta) is that no load shedding in Q2 should help boost that number. Also Agriculture was down 13.2% and is lumpy and should bounce back helping. But GDP for the year is going to struggle to get above 1%, and we're now almost certain to get a rate cut next month when the MPC meets. ANC / Ace wants "quantity easing". Assuming he means quantitive easing, I still don't understand what the plan is? So we print extra money to boost inflation (not that our inflation is low enough to be a problem) and then I suppose we use that money to buy local government debt, maybe Eskom debt. Then what? Do the lights now magically stay on? Also if we look at QE in the US, who benefitted the most? The rich, not the poor, not the students and it did not reduce inequality. As for the statements around the SARB and their mandate. Currently it is price stability, but adding growth is not a bad thing. Tongaat (JSE code: TON). It just keeps on getting uglier and that's not going to change any time soon. Best advice, stay away. Shoprite* (JSE code: SHP) says 15% of shareholders wrote to them apposing the Wiese deal, so it's not happening and that's a good thing. As a shareholder, why should I be bailing him out? Remember if his normal equity stake drops below 10% the special voting shares lapse, so his problem is he can't sell many more shares to raise cash. Again I ask, how's that my problem? Hard Questions. Better Answers. Upcoming events; 20 June ~ JSE Power Hour: Trade the trade wars 18 July ~ JSE Power Hour: How to invest offshore with the JSE * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes 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 Rough month. We're ending May (well Wednesday mid morning, so 2.5 trading days still to go) up 3.5% for the year, but we started May up 11.8%. No don't quote me rhymes. Astral Foods (JSE code: ARL) issued a SENS detailing issues with municipal water and the cost to the group. They've also spoken about issues with electricity supply. The question is, are they the only ones being impacted? The answer must be no, but they are the only ones being very vocal about the issues. I wonder who else is experiencing same? Famous Bands* (JSE code: FBR) results are decent if you remove the UK indigestion. The second half was tougher than the first but really that UK deal is busy undoing a lot of otherwise great effort by the company, that said the second half was better (and still better post yearend) for GBK but it still losses money. Signature brands are struggling and this isn't a huge surprise as they're more expensive sit down experiences. They're also exiting the Coega Concentrate tomato paste plant, I remember all the excitement when they bought the business, saving jobs etc. Except maybe not. But we did get a dividend, only 100c, but the first since mid 2017 when they went offshore. Naspers (JSE code: NPN) has confirmed their intention to list their non SA assets in Amsterdam and are now seeking shareholder approval. The theory is this will unlock value opening the group to more shareholders in Europe who will only get exposure to their global tech brands. Aspen (JSE code: APN) has confirmed the sale of the Nutritionals Business is happening this Friday and they'll get the Eur740million ASAP and be able to pay down debt. The Rand has been getting killed, out at 14.88 as I speak. Many are saying it's because DD is going to be deputy president. But that's lazy, real lazy, thinking. Nobody actually expected otherwise, he is ANC deputy president and except for a short period when Mbeki fired Zuma the AND DP is always the government DP. Sure there was a Twitter storm of hope when he postponed his swearing in as an MP, but current ZAR weakness is in line with most emerging market currency weakness. Latest maize crop forecast from the Crop Estimate Committee was again revised upwards. Good news for food producers and more supply should equal lower prices, but it could still go wrong; early frost, storm damage etc. Understanding the DCCUSD Upcoming events; 30 May ~ JSE Power hour: Hard question. Better Answers 20 June ~ JSE Power Hour: Trade the trade wars 18 July ~ JSE Power Hour: How to invest offshore with the JSE * I hold ungeared positions. Boiler room scams I'm getting the calls again, two different scams but same as they're trying to rob you of your hard earned money. The first is local offering you super smart trading software for a crazy high price that'll generate amazing returns (usually 30%-50% every six months). The software also comes with great training, but if it's so great why isn't the call center agent trading up a storm instead of cold calling me? Importantly, software is often free or very cheap from your online stock broker. Or buy AmiBroker.com and get your data from InvestorData.co.za Education is no longer something we should be paying for, there is a ton of high quality for free on the Internet, starting with Just One Lap, your stock broker, YouTube and so the list goes on. The second is a call from offshore - you can tell immediately because of the lag when they speak. Here they have a great stock for you to buy, an opportunity to get in early and reap huge returns. Sometimes the scam here is to get you to open an account with some fly-by-night bucket shop that will disappear over night, taking your cash with them. Mostly this scam is that have excess stock they need to off load. Maybe they under wrote a rights issue and ended up having to take a bunch. Or the stock is so illiquid they can't sell it in the market so they need to boiler room sell it. Either way the question to ask is simple. If this is such a great deal why do they need to cold call half way across the world to sell it? Surely such a great opportunity should have people queuing up outside their boiler room keen to buy? In both cases, just put the phone down and move on. There is no money to be made here. Subscriber to our feed here Subscribe or review us in iTunes 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 Says Upcoming events; 23 May ~ JSE Power Hour: Mastering stop losses with Trader Petri 30 May ~ JSE Power hour: Hard question. Better Answers 20 June ~ JSE Power Hour: Trade the trade wars Coronation* (JSE code; CML) results about as expected and it looks like they're already moving up off the bottom of the down trend. I hold and like. People asking if passive doesn't kill Coronation and the answer is no. We're a very long way from passive being larger than active in South Africa, and even when that happens the real threat is initially the smaller asset managers. In time small active will be the winner, but we're talking a long time into the future. A few people asked me why I don't like Balwin (JSE code: BWN) and Calgro M3 (JSE code: CGR). They great operations but they sell houses and right now the housing market is depressed (or distressed, your pick). Costs are not going down but prices are also not holding so a squeeze. Calgro M3 has an advantage in that they can build at vastly different price points, but then they have other issues. Both will be great investments in time, just not right now. Barloworld* (JSE code: BAW) results were solid, very solid and I continue to like and hold this stock. Here's the value video I did earlier in the year that offered Barloworld as the best buy on the JSE. Khula Sizwe: innovative and promising. Choppies (JSE code: CHP) was always an opportunistic listing that frankly never impressed me. Their results for June 2018 are still outstanding and the share has been suspended since November 2018 and now they've suspended their CEO. Richemont* (JSE code: CFR) results were boosted by their new online retail which operates at lower margins but is now a significant profit center. The risk for them is trade wars and a slower GDP growth out of China. The issue is how many of the new rich in China get hurt by GDP slowing? Short answer is not sure, but I certainly suspect many will, you're suddenly rich so you buy a fancy watch then a bump comes along and you're no longer rich so no more fancy watches. Pioneer Food Group (JSE code: JSE) results show the pressure on branded food products. We've seen this trend with TigerBrands and AVI and it is likely to continue. The question is for how long? Consumers are shopping down to store brands and while they're often made by these same companies, the margins are much lower. Buffett (at the Berkshire Hathaway AGM) was commenting that this tension between retailer and producer is always in force and right now the retailer is winning. He says that the trend will reverse in time. But when and will it fully reverse or do some customers stay in the cheaper store brand product? I think they do and as such companies like Pioneer and co. will have a lower rating. Sasol* (JSE code: SOL), more cost over runs on their Lake Charles project. CoreShares changing their two property ETFs, PTXTEN* and PTXSPY. An again the 'market' (or at least some Twitterers) are moaning. Both ETFs are from 2010 when the SAPY index couldn't even get 20 stocks and was dominated by the two large stocks being over 50%. The equal weight then made perfect sense for an investor. But the SAPY index is messy with Nepi Rockcastle (JSE code: NRP) included while Capco (JSE code: CCO) and Intu (JSE code: ITU) are not. The JSE did an index review recently but rather than change the index they added new indices. CoreShares are hence merging their two property ETFs and changing the methodology. New methodology will be 75% focused on three years of yield history and 25% on market cap with an initial liquidity filter to determine potential stocks for inclusion. Result is more stocks in the ETF (26) with 24 of them driving returns, so great balance. Also a better yield as this is one of the key reasons for buying property. There will be a ballot for existing holders. 25% need to vote and majority wins, if vote is below 25% a second vote is held with no minimum turnout required. I will vote in favour. * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes 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 Long4Life* (JSE code: L4L) results. Good and lots of cash to spend. Calgro M3 (JSE code: CGR) results. Horror show. Upcoming events; 23 May ~ JSE Power Hour: Mastering stop losses with Trader Petri 30 May ~ JSE Power hour: Hard question. Better Answers * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Trade wars Can we call it? Trades wars are here and nobody wins. 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 Steinhoff (JSE code: SNH) results for September 2017 are out and they're a mess. All they really have is a c70% stake in Pepkor. Trade wars have again spooked the market with the orange trumpet going on a Twitter rampage on Sunday, but as I record US markets are green again. Upcoming events; 23 May ~ JSE Power Hour: Mastering stop losses with Trader Petri Subscriber to our feed here Subscribe or review us in iTunes Elections and markets Recording this on Wednesday afternoon, so voting is still on-going and I have no idea what the results will be. But some thoughts. As a country fairly new to democracy we're really good at it and this is something to be very proud of, many countries (including supposed developed ones) are not nearly as good at democracy as we are. The IEC is world class and we accept the results. The majority party loses provinces, metros and the world doesn't end, we all just carry on. Sure there will be some messes in some places, but pretty much our voting is reflective of the will of the people. On this point, if your party loses you don't get to call the winner voters idiots. People vote how they do for their own reasons. We don't all vote the same. That's democracy, if you don't like it there are plenty countries without democracy. I am already seeing some Tweets calling out voters of one or another party idiots. This smacks of immaturity and doesn't sit within democracy. Polls leading up the election have mostly been in the same theme with the exception being the recent IRR polling data which has the ANC definitely losing Gauteng and likely losing nationally. But we fail to understand polling. Voter turn out is very important in polling for an election as is the methodology of the sample you're polling. Pollsters do a lot of post polling 'tweaking' so the potential for bias becomes very real. But being wrong doesn't make the pollster and idiot or a fraud. Polling is not an exact science and in a two horse race the margin of error is usually at least 3.5% and the victory margin is generally less. So even the polls for Brexit and Trump were within that margin of error. Markets have already run hard locally since the late 2018 lows but will likely like the results. Not as to who wins, more that we're good at democracy. The argument that a strong victory for the ANC will be good for markets is bogus and cooked up by people who simple do not understand the ANC process or constitution. Removing Ramaphosa before the next ANC elective conference in 2022 certainly is possible but it is exceedingly difficult and not likely to happen. Importantly the losers in an election always work against the winners, always. Nothing special there. So markets will like the result, pretty much regardless how much the ANC wins by. But will they go much higher? We're already up almost 11% year-to-date and sure we can end the year higher. Heck much higher. But turning around South Africa, jailing corruption, getting GDP going again. This will all take time, it can happen. It is already happening and has been since 14 February 2018. The best place to be will be SA Inc. stocks, they'll benefit most from an improving economy locally. Offshore and US$ stocks will find it tougher as Rand strength is likely over the next few years. My election stocks would be the likes of City Lodge* (JSE code: CLH), Coronation* (JSE code: CML), retailers (my pick is Shoprite* (JSE code: SHP)). Heck about half the JSE is local and been killed over the last five years. Be careful with the truly beaten down, they will take longer to recover. They will eventually, but the market likes easy money so will initially move into those already responding. As always, buy the quality at good prices - nothing clever here. The Exchange Traded Fund (ETF) is probably the MidCap ETF from Ashburton, ASHMID. The index is only +4.7% year-to-date and full of SA Inc. The chart looks ugly, but it will start to recover in time. Of course the wheels fall off if the wheels fall off globally. * I hold ungeared positions. 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 By this time net week we'll know the results of the 2019 elections. It's been a quieter election season than I'd expected - which is great. Coronation* (JSE code: CML) update. Assets under management (AUM) flat and spot on what I expected but average AUM was 8% lower for the period. HEPS 20%-30% lower worse than the 15%-20% down I expected on the back of average AUM being 8% lower even though it was flat start to finish. I hold and am happy with some cheeky bids in lower if anybody wants to sell to me at discount? I have been buying some Barloworld* (JSE code: BAW) in this pull back as per my Graham value webcast from a few weeks ago after missing my initial entry when it ran to +R130. Still have some bids in lower down. Up coming events; * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Shares or cash for dividends? A great question in my inbox, why do some companies issues shares instead of cash for dividends and which should we take? The why is simple enough, the company wants to pay the dividend but also wants to hang onto cash, usually because they have debt to pay off or a large deal pending. Pay the dividend with shares keeps some cash while still 'paying' a dividend. This is a potential warning sign worth digging into. Why the shares rather than cash? Is liquidity dying, do they have debt problems? Maybe not, but dig around anyway just in case. The trick is that these shares now have a perpetual right on all future profits, so they are more 'expensive' than cash which is why they're firstly not a great idea for the company and why I will usually take them as it's not just this dividend I get, but all future dividends as well. Further if not every share holder takes the shares, then your economic interest in the company increases. Example, you own 20 of 100 shares = 20%. They issue a 5% dividend, that's 5 shares dividend in total, 1 goes to you, 3 to others and 1 shareholder takes cash, only 4 new shares issued. Now you have 21 of 104 shares = 20.2%. We also save on brokerage if we take shares and typically they'll be issued at a slight discount (around 5%) to the share price. As a rule I will take the shares unless I think the share price is way over priced, but the important consideration is the future dividends so I pretty much always take the shares. 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 So Christo Wiese wants to sell his non economic but voting Shoprite* (JSE code: SHP) shares back to the company for some R3.6billion? I thinks not, albeit seems I am in a minority here. Afrimat (JSE code: AFT) has made a non-binding offer to buy a Universal Coal (an Australian company mining in SA). The deal is about half their market cap and at a price some 10% better than the next best offer that I knew about. They really are the masters of deals, paying a good price and making them work. But this one is a biggie and risks are much higher than the other smaller deals the've done. The latest SPIVA for South Africa is out and always it makes for bleak reading. * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Unlisted shares Unlisted shares, those not listed and trading on a recognised exchange such as the JSE. There two ways we get unlisted shares; We buy them hoping they will eventually list and become the next Uber (albeit Uber may be a bad example longer-term). We hold a listed share that delists and we keep ownership. Now if you're buying ahead of a possible listing you're most likely some form of venture or angel funding - fun, but the majority end in tears and even fewer actually ever get to list. If you've held onto a delisted share it's likely because you think it's a great stock with great potential and this may well be true. Most stocks that are delisted are because they offer such great value that somebody ants to own the entire company not just a slice if it. However unlisted bings its own problems; You have no JSE over sight. All are covered by the companies act but the JSE adds an extra layer of protection. For example director dealings, results within three months etc. Without this you're on your own, and sure you have rights as a shareholder and these rights are enshrined in the Companies Act, Act no. 71 of 2008 (well worth a read). But you'll have to enforce those rights yourself if required and lawyers will likely have to get involved. Often times communications is scant, late or frankly in some cases - never. Again you have rights, but now you need to enforce your rights at a cost. Serious lack of liquidity and price discovery. A lack of an exchange means how do you value the shares and how do you find a buyer when you want to sell them? This lack of liquidity generally means lower valuations as well. Very little or no media exposure and expert opinions on the stock and its prospects. Personally I have never owned an unlisted company (except my own) and I never would. Sure there is potential for great profits, but the truth is most often what you end up with is hassles, legal fees and ultimately losses. 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 The Power Hour from last week by Nerina Visser on ETF fees is awesome and online. What's the net asset value? Net asset value (NAV) is from the balance sheet and is asset less liabilities. The break up value of the company. A share will typically trade above this value as we're buying future profits, not break up value. Tangible NAV (TNAV) is better as this excludes things such as goodwill, so is a real number of actual assets. Goodwill is when you buy a business and pay more than the NAV for the business, rest is goodwill. When things are going well and booming goodwill is not an issue. But when things turn, well it is messy and we've seen lots of goodwill write downs in years past. EOH (JSE code: EOH) states NAV of some R4.5billion. But R3.3billion is goodwill and so not really an asset and with EOH struggling for goodwill right now not really anything to write home about. So TNAV of some R1.1billion meaning EOH trading at more than double NAV while AdaptIT (JSE code: ADI) is trading below TNAV. So all the talk of EOH being below NAV and hence a great value is bogus. Most recently Woolies* (JSE code: WHL) wrote off a third of the cost of the David Jones acquisition. Now when goodwill is written down it hurts profits but the company will tell you this is not an issue as it is a non-cash charge. Correct, but of course it was cash (or script) when you paid for it. As a rule, buying at or even below NAV (or even better TNAV) is a great strategy - except it is fraught with issues. I was all over The Don Group as they traded below TNAV and that TNAV was buildings they owned in places like Sandton and Rosebank. But by the time they were done the TNAV had collapsed. This is a critical point of any for of NAV. How real is it? Who and when was it last valued and can the value be realised? What is the market saying about this TNAV? A stock below TNAV is often the market saying TNAV is under threat, especially if it is cash. ELB Group saw their TNAV collapse even as it was mostly cash, but a disaster of a contract saw them burn cash and now cash has gone and TNAV has collapsed as has the share price. NAV, and especially TNAV is important, but it is not written in stone. So as with all numbers, we need to be careful of it. Discount to NAV/TNAV is not a buying reason. In fact no single metric is ever a reason for buying. We need a preponderance of evidence. https://justonelap.com/finding-long-term-investment-winners/ * I hold ungeared positions. dd Download the audio file here Subscriber to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes 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 A strong start to the year and so far it seems to be continuing (even as the Rand trdes belw R14) - long may it last. Important to remember that Rand strength is not always the end of the world for our market as it signals foreign buying. S&P500 ETFs. Up coming events; 11 April ~ JSE Power Hour: Know your fees with Nerina Visser Fear and loathing on the JSE We're seeing a new trend on the JSE whereby stock prices are slaughtered after poor (or even just modest) results. Sure bad results have always hurt a share price, but it used to be that a 10% down day was a wildly bad day. Now however 10% is hardly even warming up with many stocks being hit way harder (think 30% down on Aspen results). I think there are a bunch reasons for this new trend. Firstly; the Steinhoff (JSE code: SNH) fear. After Steinhoff there is real fear in the market. Fear that a 'great' company may actually be smoke and mirrors and investors have no idea which is the next Steinhoff. So rather then be caught out they just sell, and sell. This fear is real. Steinhoff was generally considered to be a top quality company that we now know to be built on fraud and if an investor missed this - then what else could they miss. Of course many where not convinced by Steinhoff, but the majority who where are truthfully not doubting their own ability so selling is the easy option. This will in time fade. The next bull market will help make investors gunho again believing they can spot the fakes (which history assured us is harder than they think). The second issue is the US effect. For a long time in the US a small miss on results, and I stress the small miss. Not an epic miss, sees stocks getting sold off aggressively and we're now seeing this locally. This is in large part to speed of news distribution coupled with the ease and cheapness of transacting. This trend is likely to remain into the future. A third issue is the understand that few stocks are truly legendary and investor are less forgiving when the business model starts to unravel or dirt starts to show. Here fo example is EOH. It started with some rumours that the company quickly managed but investor where not convinced and just kept on selling. The news got worse and investors carried on selling and the stock is now off almost 90% from its highs of over R180. As investors we need to get used to this trend. Be good sellers (see last weeks podcast) and expect that even quality will disappoint the market at times and that disappointment will hurt. We need to be smart about when the issue is real or when it is just a knee jerk and short-term reaction. But the bottom line is, expect the ride to be bumpier than usual. We need to remember that investing is for the long-term and that long-term is never in a straight line. We also need to remember that any stock can turn out to be trash and if it does we need to sell it regardless of how we feel about it, the loss or the potential. Trash is best trashed. Subscriber to our feed here Subscribe or review us in iTunes 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 Up coming events; 11 April ~ JSE Power Hour: Know your fees with Nerina Visser Selling like a pro We tend to focus on the buying, enteries and selling at profit. But what of selling at a loss? Far to often i hear people state it has fallen too much and so there's no point in selling - this is false. Ignore the loss you already have and focus on the loss ahead of you. A stock that has fallen 90 can fall another 90% and when people ask where's the bottom? The answer is zero, until then it can always fall more. A good sell is as good as a good entry. I exited most of my Calgro M3 (JSE code: CGR) at around 2100c but kept some only to watch it fall to under 1000c. I then finally sold the balance and now it's under 600c. It is never too late to sell and we need to become as good at selling as we are at buying. Sell the dogs (sorry dogs) Know when to panic Subscriber to our feed here Subscribe or review us in iTunes 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 No Brexit deal with 8 days to go. A mess of epic proportions. Load shedding is in full force (well only force 4 with more stages to go) and it's bad. Seems we can expect a 'stable' electrical grid sometime towards the end of the year, albeit stable may still include stage 1 load shedding according to experts I have spoken to. The reasons we know and frankly don't matter. It also doesn't matter who wins on 8 May, this is not a problem that goes away over night. For us individually it s a hassle, a real hassle. For business it is a major issue. Our expected modest GDP growth for 2019 is going to be even more modest while Moodys eyes us for junk status. Most exposed will be retail (extra costs) and property(lost sales and extra costs) while mining has largely managed to get off grid. Metrofile* (JSE code: MFL) results were a horror show with the tax rate hitting 40%, up from 24%. Seems the two now fired CFOs messed up the Kenyan deal so that interest was not deductible as an expense. They out, new CFO will be able to fix and get the tax rate back to normal. Debt should be easy enough to pay off in 5-7 years. That all said it is currently my worst performing share in my portfolio and I continue to hold. Sure the pain has been plentiful, but the business model still stands, some issues (re tax rate) should be easy to fix and I wonder if a take over may not be on the cards? Up coming events; 11 April ~ JSE Power Hour: Know your fees with Nerina Visser * I hold ungeared positions. Avoiding the next Steinhoff Up front let me state you're unlikely to be an investor in individual stocks and over a life time of investing never invest in what turns out to be a fraud. So far I have been lucky in that my only fraud was way back in the mid 90's (I can't even remember the name of the company) when the CEO suddenly rushed off to Australia and my loss was fairly modest (as I was poor), albeit I did make the horrid mistake of doubling up when the price had halved. Back to Steinhoff, the PWC report is finally out. Three thousand pages and four thousand attachments, albeit we only got a ten page summary that detailed over R100billion in fraud over the 2009-2017 period. Profits for this period were only some R60billion and while the fraud number may include some double counting, it basically means Steinhoff (JSE code: SNH) was a ponzi from day one. So how do we avoid being suckered into a ponzi scheme? Avoid the cult of the personality. Far too many people said that they didn't fully understand the business, but were happy to follow (and trust) Markus Jooste. Big mistake. I remember somebody on twitter saying if accounting was an olympic sport Markus Jooste would be a gold medal winner every time. To which I responded that hopefully he wasn't a drug cheat - turns out he was. I am not saying that every great person is a crook, but being great is not an investment case. Sure management is important, but we need more. Other red flags on the cult of personality is when they attack critics. Sell reports on Steinhoff were meet with rage from Markus Jooste and demands that they be retracted and the person involved be fired. Remember the recent Investec report on the Tongaat (JSE code: TON) CEO that got the company all upset and complaining to the Investec bosses? That was in June 2018, the share was over 8000c, now under 2000c. Avoid complexity. As humans we believe in complexity. We think complex is great, complex is best. It's not. In large part we believe in complexity because it is easier to do so. It helps explain why our portfolio growth is modest, why we're not hitting it out of the park with our trading. Truth is luck plays more of a role than complexity (read Fooled by Randomness by Nassim Taleb). The other issue with complexity is that it is easy to hide the fraud and diss naysayers. The reason I avoided Steinhoff is because I couldn't get the balance sheet to balance nor the debt to reconcile to the balance sheet. I am no CA nor a rocket scientist, so I go for the easy and these two should be easy. But I couldn't get them working so I just walked away. (Disclaimer, I did trade Steinhoff a few times, mostly in my momentum portfolio and can't remember if I made money or not). As an aside, I hold a complex stock ~ Discovery (JSE code: DSY) and when Viceroy was threatening to come after a second JSE stock last year, I ran my eye down my list of stocks and figured Discovery was a potential candidate. Point is I hold the stock knowing it is complex. Knowing its accounts are beyond my ability. Knowing that maybe it'll all collapse one day. I have built this understanding into my risk tolerance in that to is the only complex stock I hold and I cap the percentage weighting. Debt, always watch debt especially when paying top dollar for assets, such as the 100% premium offered for Mattress Firm. As Buffett said, debt is like Russian roulette. It's fine until it's not and then it is fatal. Know the debt ratios, watch them a

Simon Shares Group5 (JSE code: GRF) goes into business rescue with "a slim chance for any realisation of value.". It seems the construction of a power station in Ghana was the final nail. Remember the +R1billion they were offered to their Eastern European toll operations? But in the end a lack of liquidity killed them. Be very careful of holding Aveng (JSE code: AEG), if nothing else check the bid/offer, price is heading to 1c. No Brexit deal with 15 days to go. A mess of epic proportions. Back in November 2017 I wrote in FinWeek that we'd get zero fee ETFs and eventually negative fee ETFs (they'll pay you to hold them). It has happened. MoneyWeb is reporting on a US ETF offering to pay investors to buy their ETF. Locally our much smaller market and hence much smaller ETFs means we're a long way from free, but I do think in time it'll happen locally and Satrix40* (JSE CODE: STX40) would probably the one able to do it. Aspen (JSE code: APN) taught us some important important lessons. Debt is fine until it's not and then it can be fatal. Buffett talks about this in his latest shareholders letter. Secondly the market has become a lot more skittish and punishing since Steinhoff (JSE code: SNH). This is not likely to go away any time soon. The answer is simple, watch a companies debt and hold quality, real quality, only. Lastly, all growth stocks mature and that process of maturing is often painful. 5 ways minimalism helps your finances Searching for value the Benjamin Graham Way * I hold ungeared positions. Investment lessons from Boeing We live in wild times made possible by the internet and powerful computers in our pockets. Much of it is good with a fair amount of bad as well (think Twitter trolls), but for large old school companies it can be especially bad. Think Momentum refusing to pay out the life policy. They were correct as per the law and policy wording, but they showed a complete lack of compassion and eventually backed down. Think Vodacom trying to scam us on the ICASA rules for rolling over data with crazy fees. They backed down and from a business profit motive they may have been right but they were a million miles away from the spirit of the law and ICASA may have blocked their fees anyways. Think TigerBrands and their total lack of empathy as they responded with legal speak while South Africans were dying from listeriosis originating at their production facilities. Think Boeing, standing firm after another of their new Boeing 737 Max8 crashed shortly after take off. In the olden pre Internet days Boeing would have been able to control the message with ease and insisted everything was fine, hoping like hell another plane didn't crash and quickly rolling out a software 'update' that may or may not fix the issue (from what I have read the issue is training, not software, here's a long NYT read on it). Boeing have failed to understand the new rules in which businesses operate. Firstly those rules are a lot more ethical. Consumers want to be treated fairly. Hey we always did, but we never really had any power. And that's the second and very important point, consumers now have power. That power comes via the Internet and very quickly a raging anger can over whelm any attempt to manage the message. Now sure often the raging anger is actually just a lynch mob and this is very much the dark downside of the Internet. But the upside is that consumers have power and they'll exercise that power. Sometimes for good and sometimes for bad. A business needs to understand this. I remember attending a presentation on generational theory a decade back where the message was that millennials wanted ethical companies and would pay more to these companies. The flip is that they'll boycott a business they consider to be unethical. Now this is way more than just millennials, the issue is that millennials were given the power to firstly know a companies ethics and secondly do something about it. Companies that are going to survive and thrive in this new world will have fairness and ethics at their core, and that's hard. It's easy to put that into a mission statement, but living it is something else entirely and often a company messes up. For example the news that a company will phase out plastic straws by 2022. Nice, but why so long? Simple because they're trying to protect profits. Fair enough but the ethical demanding consumer doesn't care about your corporate greed, they care about the planet. The even harder issue is how do we manage this as an investor? Truth is we need a crisis to see how a business manages it and that is late in the process. But we can see glimmers of it via other means, such as the plastic straw example mentioned earlier. If a company is not putting the customer and ethics front and center they will eventually be in trouble. Lastly as investor we need to not chase profits at any cost. We need to invest ethically as well, this means fair fees we're charged by providers. It also means exiting dodge

Simon Shares Greenest start to a year since the 1960's, Top40 is 6.9% up year-to-date. MultiChoice (JSE code: MCG) has unbundled out of Naspers (JSE code: NPN) with MultiChoice closing at R106 and Naspers off R125 on the back of Tencent weakness over night in Hong Kong. So no value unlock and with fair values for MutliChoice being between 8500c - R150. Most people I speak to say at current prices if you received MultiChoice shares you should hold them at this price. Also MultiChoice will remain in the Top40 index with Truworths (JSE code: TRU) exits Top40 Friday morning. Those saying MultiChoice is dead, well maybe in time. But nothing is that linear and be careful of taking a dislike for DStv pricing out on the share - they're different beasts. They could get bought by a telco (we're seeing that in the US), they could get the subscriber growth they're targeting in the rest of Africa, Showmax could take off of they could muddle along or they could go broke. Lots of options. Below are the index changes effective at open 1 March 2019. Top40; MCG stays TRU exits Indi25; MCG stays MTH exits Findi30; MCG stays NTC exits Shoprite* (JSE code: SHP) results were not as bad as I expected with operating margin down 1% at 4.4% but much better than I expected and still about twice that of Pick n Pay (JSE code: PIK). Lots went wrong, probably half managements fault (strikes and IT upgrade issues) and half just what happens some times (Angolan hyper inflation and zero food inflation). At current prices the stock is attractive. Interesting is that Wiesse wants to sell his voting control shares that have no economic rights but some 32.3% votes. They've been valued at some R4billion when Star listed but they're hard to value and I'll wait and see what the plan is here. Tomorrow, Friday 1 March, the annual tax-free limit resets. Find the JSE Power Hour video we did here. Great comparison between the locally listed global property ETFs from Sygnia and Core Shares. Up coming events; 7 March ~ JSE Power Hour: Finding value the Benjamin Graham way * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes 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.

Making the CSEW40 SMART The CoreShares Equal Weight Top40 ETF (JSE code: CSEW40) has long been a favourite of mine, but now CoreShares want to change the ETF to a multi factor ETF under the code SMART. Those factors are; Value (portfolios of cheap shares outperform portfolios of expensive shares) Momentum (portfolios of recent share winners continue to win in the near term) Size (portfolios of small companies outperform portfolios of large companies) e.g. Equal weight Quality (portfolios high quality shares outperform poor quality shares) Low Volatility (portfolios of low risk shares outperform high risk shares) I chatted to Chris Rule of CoreShares asking why the changes? What will the new methodology be and what's its attraction? Lastly how will the process work - including voting by existing holders of the ETF. I initially was too thrilled with the changes as I like the equal weight methodology. But one of the key points for me is how many stocks I effectively get exposure to and this is illustrated by the chart below. with a generic Top40 ETF 12 stocks drive returns. In an equal weight Top40 all 40 stocks drive returns. The new SMART ETF will see 41 out of the 52 stock driving the returns. So I end up with a wide diverse ETF which is exactly what I want. Kristia also wrote a blog post on the changes here. Contact Core Shares; [email protected] CoreShares.co.za Twitter.com/CoreShares eee Download the audio file here Subscriber to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes 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 Eskom is "technically insolvent" and load shedding is back, why are we surprised? This was promised us when we had some in December. Bottom line it's a mess, costly to the economy and fixing Eskom is critical and very difficult. Watch the budget next week. EOH woes continue as the stock lost over 20% on Tuesday on the news that Microsoft had cancelled their partnership agreement. In a late SENS the company stated the revenue was not material, but investors have three questions they're asking themselves. 1// Can we trust EOH management ?? 2// How do you get a Microsoft partnership agreement cancelled ?? 3// Why is EOH management always so slow on shareholder communications ?? Curro (JSE code: COH) results are not bad, albeit HEPS +23% with a PE of some 40x is light and the stock is expensive. We are starting to see operational leverage as revenue is +19% and HEPS +23% and a 12c dividend. However debt has jumped almost 20%, but still manageable. Learner numbers increased 12% while Meridian has halved their losses. Woolies* (JSE code: WHL) lose two non-exec board members with immediate effect. Pushed or jumped? Likely the latter. Wilson Bayly (JSE code: WBO) has been one of the very few construction stocks holding it together, until now. A trading update suggests profits 80%-100% lower after making a mess of an Australian contract. Wild and tax-free. Upcoming events; Tax-free investing review, who ate the returns? * I hold ungeared positions. Managed funds Managed funds are when you hand over your hard earned money to a third party to invest or trade on your behalf, supposedly with great returns in offer. Sure it works with the right processes in place, but it mostly carries huge risk. Firstly let me state up front I have never heard of a FX or crypto managed fund making money. They've all been scams with the first indication is that you find them on Facebook offering huge returns. They have zero verifiable track record and zero regulation or audit processes. Most trading managed fund accounts also end in tears. So how do we find a managed fund? Well firstly a unit trust, hedge fund or ETF is a managed fund of sorts with tons or regulations protecting the investor. Why not use these? The issue is usually that we want a managed fund with grand returns, don't we all? But seriously, some questions to ask; Who are you registered with? FSCA as an absolute first port of call. Audited track record. Compliance and dispute process? Fees. Here things get tricky as there is likely a managed fund fee and performance fees. But also transaction fees that can be excessively high. Mandate. What are they transacting in and what are they trying to achieve? Income, growth, derivatives? Withdrawal process. The short answer is that if you want a managed fund, buy a collective investment scheme. No you won't get rich in a hurry, but you'll also likely not get ripped off either. Subscriber to our feed here Subscribe or review us in iTunes 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 A green January with financials the winners but 2019 is going to be a wild ride, especially in the lead up to the elections expected in May. Tax-free year end is end February, don't leave it for the last minute if you want money in this tax year ending 28 February. Budget on 20 February we'll see if we get any changes to the annual limits. Clover (JSE code: CLR) is delisting at 2500c. A great price considering it was around 1500c last year. I held this stock for a number fo years as I considered it to have great promise, but it never delivered on that promised so I exited. I have had some questions around two stocks I own, Santova* (JSE code: SNV) and Metro File (JSE code: MFL). Both are under share price pressure and both finding growth hard (latest results were OK, nothing special). The share price decline is a factor of liquidity and small stock sentiment. Right now if I was two sell my holdings in each the share price would fall about 10%, that is not normal. Add to that some large sellers (certainly in Metro File) and prices are under pressure. I am holding. Not selling as I happy with the companies nor buying because I don't see the prices rerating higher any time soon, if anything likely lower. More in the main body of the show. Wild and tax-free. Upcoming events Tax-free investing review, who ate the returns? * I hold ungeared positions. Where's the liquidity? In the past week I have seen three reports that all point to a drying up of liquidity on the JSE. Now sure some has likely moved to A2X, but not any significant amount. Bottom line liquidity has fallen fairly markedly and this has impacts, most notable on share price movements. So where has it gone? Simple, investors are scared. Scared of elections. Sacred of EWC. Scared of an under pressure consumer. Scared of trades wars. Scared of no returns. Sacred of their shadow? So they are buying less leaving us with fewer buyers and sellers have mostly exited sitting on the sidelines with their cash. This whole vanishing liquidity is markedly more acute in the mid and small cap space and it is hurting the stock prices. Even us small private investors hurt the stock as we exit and many are throwing in the towel and selling, pushing prices lower causing more to throw in the towel and sell. This is typical in late stage bear markets (late stage bull markets see extreme high levels of liquidity). So what do we do? Well we double our research and make sure we really do like the stock, and if we do - we hold. You can buy more but I think we're a long way from the end of the liquidity squeeze on the small and mid cap stocks. If you're wanting to buy into this low liquidity, be careful. Place bids in the market and wait to be hit, even cheeky bids lower down will potentially be hit. But don't expect liquidity to return tomorrow, it may - but it may take a while longer. Further bad news for holders of small stocks is that when liquidity returns it'll come into the large cap Top40 stocks first, then eventually filter down to the mid and small. Point is it will return one day, we just don't know which day. As an aside, this impacts JSE earnings as they make money from data, listings and trades. less trades is less income with a fair fixed cost base. Last important point. Liquidity is NOT an issue with Exchange Traded Funds (ETFs) as they have a market maker. The market maker is (supposed) to be consistently in the market either side of fair value with their bids and offers. So we can always get what we want at close to fair value. Subscriber to our feed here Subscribe or review us in iTunes 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 Retailers, woe is worrid. Aside from Foschini (JSE code; TFG) and Lewis (JSE code: LEW) they have ranged from horrid to truly astoundingly horrid. Shoprite* (JSE code: SHP) has also put out a trading update to follow on from the so-so sales update and aside from some internal issues and Angolan hyperinflation the margins are also crumbling. EOH caught in a SENS from Eskom late on Monday, but took them until Wednesday morning to respond - simple too slow as the stock fell almost 15% on Tuesday. Ellies (JSE code: ELI) was a stock I was watching after they made almost 8c HEPS in the year ending April 2018. But now it seems they swung into a loss for the six months ending October and have a board that is falling apart. Taste (JSE code: TAS) announce they need some R580million and +5 years to at best reach break even? Minimalism: Can you eat it? The perks of being exactly average. Upcoming events Tax-free investing review, who ate the returns? * I hold ungeared positions. Where's Safcoin? So Safcoin finally started trading in December and I thought I'd send a series of follow up questions to the founder, NeilFerreira about how it's all going, promises he'd made and some odd things I was seeing on their trading platform. I sent the questions early Monday asking for reply by Wednesday 10am, and he hasn't responded? Find the questions I was asking this time here. They threatened to sue me here. They answered my first set of questions from August 2018 here. Subscriber to our feed here Subscribe or review us in iTunes 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 The rule of 72 (how long until your money doubles in value). Upcoming events Tax-free investing review, who ate the returns? Know your S12J Simon chats with Dino Zuccollo & Jonti Osher from Westbrooke Alternative Asset Management to really get to understand S12J. The rules, risks, benefits, what to look out for and more. Subscriber to our feed here Subscribe or review us in iTunes 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 Learn to love a lazy market Upcoming events Tax-free investing review, who ate the returns? 2019 predictions show Every year March Ashton, Keith McLachlan and Simon Brown do a predictions show. Three wild and wooly predictions for the markets followed by a call on the Top40 and ZAR. Every show starts with a review of the previous years predictions and you'll find them here. Subscriber to our feed here Subscribe or review us in iTunes 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares Somebody capitulated on Metrofile* (JSE code: MFL) this morning. The stocks hit 160c, then 239c and is now 1c up at 220c and I picked up a few on a DY of over 10%. Over R4million has traded so far, so decent volume for this stock. SENS just out is that Sabvest (JSE codes: SBV & SVN) picked up just under half of the volume at 200c - 235c. They already own just over 10%. Ascendis Health (JSE code: ASC) continues to plummet as directors continue to be forced sellers. Just messy. Position your portfolio for 2019. Next show, 17 January 2019. * I hold ungeared positions. End of year portfolio review What was the returns of your different portfolios for 2018? Across the different strategies (trading, equity, ETF etc.). Did you beat your benchmark over 1, 3 and 5 years? Here's how to work out your returns by unitising your portfolios. https://justonelap.com/tracking-performance-unitise-your-portfolio/ This is hugely important because if we're consistently losing against the benchmark frankly we should quit and just buy the benchmark. That said under performing over a year doesn't worry me, it's the three and five years that would worry me deeply. I haven't run my numbers yet, but pretty sure I am red for the year, not sure if I am below Top40 total return (my benchmark). But I have a good run in recent years beating the benchmark thanks to a diverse portfolio and 2018 has been a tough, very tough year. My ETF portfolio doesn't stress me, it only holds broad based ETFs (no niche or sub index ETFs) so it'll do just fine over the long-term. I also use his year end period to do a deep review of the stocks I hold. Naturally I am keeping on eye on results and news during the year. But year end I revisit my research and reasons for buying and check they're still in force and the stocks are the quality I'd hope they'd be when I bought them. This review is not about price so much, if the stock is quality in time the price will follow. What I also do is revisit my entry methodology for price. As I often mention the only thing we as investors really can control is the price we buy at, so we need to exercise that control. I use the 7 year average PE buying when forward PE is below. It is far from perfect but has served me well and kept me from buying over priced stocks, sometimes literally waiting for years and years before I will add a stock. Then of course sometimes it has me buying a stock that just keeps on falling (yes looking at you Woolies* and Famous Brands*). But mostly it keeps me out of over inflated stocks. Subscriber to our feed here Subscribe or review us in iTunes 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares Load shedding is back and reports are it's going to be around until maybe 2025 as Eskom needs R200billion. This hurts, we got our of recession yesterday with QonQ GDP growth at 2.2%, but we're going to struggle to grow without electricity. Importantly remember that the majority of the Top40 earnings are from outside of South Africa. So don't confuse the Top40 with the local economy. I missed the return of Pembury (JSE code: PEM) to trading on the JSE. A number of people have asked my view on the stock and it's a simple one. Avoid at all costs. They listed via attempted hype and management have only covered themselves in rubbish since then. Ideas are great but execution is what maters and this team can't execute (heck they can't even get results out in time). NaspersN (JSE code: NPN) results show Multi Choice is not the dead duck everybody claims. Sure some pressure on premium but they are growing subscribers across the continent and the listing next year will offer investors a great niche sector - buying of course is valuation dependent. Important lesson here is ignore the loud mouths on Twitter. Unpacking the Satrix INDI25 ETF, a monster long-term performer. Upcoming events 06 December ~ Position your portfolio for 2019 Everything is falling Over the weekend it looked like we may get trade peace in our time - but the market called Trumps bluff and sold off aggressively on Tuesday evening and we followed on Wednesday. US 10 year T-Bills, which is what I have been watching, also sold off to trade down at 2.92%. This confuses as I was watching this for the bear to start, but only at 3.5%. But it seems it couldn't wait. The trade war with China is hurting and while Trump is saying lots, the evidence on the ground does not support his Tweets and so markets are pricing in worsening trade wars. This will hurt the two largest global economies (USA and China) and the rest of us will suffer as a result. EMs may escape the worst of it, but we're not immune. At the end of the day I do expect some sort of trade peace. This is Trumps style, bully and berate before finally finding a deal (we saw this with NAFTA and Canada / Mexico). But it gets real messy until the final deal. So I expect weaker US markets into the new year, and frankly I expect the major indices to hit bear turf (20% off the highs). This is not a train smash and once the bear has been tagged markets will likely rally, helped with some trade peace. Locally we will not escape the turmoil but our market is much closer to bear turf having tagged it 24 October at 43,822 (Top40). S&P500 is bear at 2,352 (latest close 2,700) and Nasdaq 6,152 (latest close 6,795). So about another 10% down from here. FAANGs are already in bear market as I mentioned last week. This is not the end of the world, market go up and they go down. This sell off is not driven by a financial crisis as we saw in 2008/9, it is being driven by a bullying president and US markets that have gone without a bear in almost ten years (since lows of March 2009). Subscriber to our feed here Subscribe or review us in iTunes 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares Taste (JSE code: TAS), nasty results and they're running out of money and still not profitable. I think a delisting is likely. Another Viceroy research report just landed, this time targeting NEPI Rockcastle (JSE code: NRP). The sock is off 14%. Most are decrying Viceroy, but Cy Jacobs, boss at 36One, Tweeted in support of the report. We are still in the process of analyzing the Viceroy Report on Nepi. Our initial view is that the report is compelling as the conclusions drawn appear to be justified. The report echos the concerns we had and continue to have about the entire Resilient Group. — Cy Jacobs (@Cy36ONE) November 28, 2018 Coronation (JSE code: CML) results assets under management (AUM) and hence profits and dividend slip slightly. But on a yield of some 9% and priced cheaper then in a decade relative to AUM - it looks cheap. Pepkor (JSE code: PPH) results. Actually forget the results. The company has been fined R5million (largest JSE fine ever) as they did not disclose in the listing docs that the company had essentially under written the directors share scheme that ended up costing shareholders some R500million. Microsoft (Nasdaq code: MSFT) briefly over takes Apple (Nasdaq code: AAPL) as worlds largest company but neither is trillion US$ as all the FAANG stocks are now in bear market - off 20% from highs. Apple now US$826billion. Upcoming events 06 December ~ Position your portfolio for 2019 Smashed coin Bitcoin / BTC is now trading around US$4,000 and the bubble I was calling it a year ago has popped, spectacularly. Last year I was attacked from all directions when I was calling BTC a bubble, most of it hate filled bile. But here's the thing, I may not be the expert in BTC, but I do know markets and have been around them for a while and seen many a bubble. BTC is just another thing being traded. No different from tulips, stocks or anything else. They ultimately all behave the same. Also being 80% off the highs doesn't mean it doesn't have more downside. I am short (since US$6,400-US$6,700) along side the two I hold in cold storage, and I am not closing my short. BTC and other crypto can go lower, a lot lower. It looks like, for now, it'll settle around the US$4,000 level, but my thinking is next leg will eventually be down. Many are telling me BTC can't go below US$1,000. Maybe, but I wouldn't bet on that. This was a massive bubble that expanded in double quick time and the deflating will takes ages and even ages more to recover. The Nasdaq took some 15 years to get back to the 2000 highs. I am also wondering if the whole idea of the blockchain being so awesome is perhaps a weak idea. We have no large scale real world examples of blockchain being used and the technology is now a decade old. The future for both is blurry at beast. I see the theory on Twitter now is that BTCers must knuckle down, develop technology (what tech I am not sure) and it'll be the next Amazon? And sure you can now pay company taxes in Ohio with BTC. Until, like many others who accepted BTC for a while, that idea gets pulled. BTC was always too volatile to be a used effectively as a method of payment, now even more so. The knuckle down and develop also makes no sense, most dot bomb stocks are no longer in existence. Being a first round technology is great, but that doesn't ensure survival. In fact most often first round tech dies as the future generations of the tech solve the problems that existed in the first generation. For BTC be very careful if buying - there is no rush and any bottom could be a way off. Whatever you do as always only use money you can afford to lose. If you're trading pick your platform very carefully as some may not survive. Haters can email me here or sub tweet me here. I also note that while Safcoin was supposed to launch last week Tuesday with an international (whatever that means) launch this weekend. After asking on Twitter why they haven't launched, they have replaced the entire website with a single page saying now the launch will be 13 December. Frankly even aside from my very strong misgivings I would not want to be launching a crypto currency in this environment. I also note that they're still adding tokens to the system, eight days after the supposed launch and the reason for the delay has been presented as they wanted a better withdrawal system. Colour me skeptical. My view on this crypto remains as it always has. Stay away. Subscriber to our feed here Subscribe or review us in iTunes 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Invicta (JSE code: IVT) HEPS at 2c with the SARS fine costing 187c in HEPS. Wescoal (JSE code: WSL) results knocking it out of the park with a PE and DY both around 4. Yet market hates small caps, so great quality and amazing price- but when / why will it move higher? Start building your list of small caps you like and want to own. But don't start buying just yet, this may take years. The Fat Wallet five concepts that'll make you rich Unpacking the preference share ETF )PREFTX) Upcoming events 06 December ~ Position your portfolio for 2019 Subscriber to our feed here Subscribe or review us in iTunes Structured product ~ Euro Stoxx 50 Gary Booysen & Viv Govender - RandSwiss 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares Mid terms, Democrats sweep Congress while Republicans keep the Senate and now things get interesting. Markets will likely ignore this, remember the immediate sell off after Brexit and Trump victories and then the rally. But this removes Trump and the Republicans free hand on taxes etc. while also making it almost impossible to pass big laws as the two sides hate each other. Also Democrats in Congress are going to start digging into Trump from every direction. That said, markets will get over it as the US economy remains strong and profits continue higher. Importantly after the Smoot-Hawley Tariff Act** of the late 1920's trade was removed from Congress and given to the president. (**1928 the tariffs started on wool and sugar and ended up on over 800 products and was mentioned in the movie Ferris Bueller day off) The Fat Wallet Car edition Unpacking the Africa Palladium ETF OUTStanding money with Outvest: Dividends explained Upcoming events 08 November ~ Master Technical Analysis with Moxima Gama 06 December ~ Position your portfolio for 2019 Subscriber to our feed here Subscribe or review us in iTunes The art of losing money If you haven't yet experienced a truly massive loss in the market you're either exclusively in Exchange Traded Funds (ETFs), a newbie or lucky. Because one day it will, and I have spoken about panicking quick and selling dogs. This week the five stages of grief. But first the pain of losing is twice the joy of making. Compare being scammed out of ten bucks vs. finding ten rand on the pavement. You'll remember the former for days, ages afterwards. the latter you'll have forgotten before you even spend the money. The Kübler-Ross model of the five stages of grief. Yes this is around death, but it can work for any loss and so I am using it in terms of a large loss on the markets - typically in one stock (lots of recent examples here). The 5 stages are; denial, anger, bargaining, depression and acceptance. Denial. It's not happening. All will be fine. Fake news. Rotten governments. Nasty passive providers. Over reaction. The diagnosis is mistaken, and we cling to a false, preferable reality. Simple we put our head in the sand and pretend it's not happening. Anger. It seems real and now you're angry. A pile of your hard earned money is gone and somebody needs to be blamed. Never yourself, somebody else. Your broker, that expert on TV, the CEO, a politician. It's not fair. Stomp, stomp, stomp. Bargaining. Still trying to not blame yourself, you start to excuse your actions. How could you know? It will recover, the market has over reacted and things will improve. Everybody got duped. You're trying to excuse your actions, not so much the buying, but the not selling immediately the bad news broke. The news isn't really that bad and it'll recover eventually. Depression. This is bad, real bad and now you hate markets and are never watching BusinessDay TV ever again. Everything is corrupt and rotten. This 'thing' is rigged against the small guy. Acceptance. We all end up here eventually. Things happen, often bad things but this is a natural part of investing. At times we get it wrong, fraud happens, shares collapse. Now we can start looking at ways to prevent this happening again. What price do we pay (the only thing in investing we have control over). A diverse portfolio with lots of passive to reduce the impact of a single stock collapse. Recognise what stage you're at and importantly what can you control. 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares Calgro M3* (JSE code: CGR) results a horror. Sure some is due to the new IFRS, but a lot else hurting them right now and I am selling my last remaining shares having sold the bulk in December 2015 at over 2000c. Santova* (JSE code: SNV) results show stronger Rand hurting, but also very tough trading condition locally. I am not selling here. Horror update from Shoprite* (JSE code: SHP). Some due to negative inflation on products, they say "11,607 items in September remaining cheaper than they were a year ago". That hurts as costs rising. But they also had issues in their Gauteng distribution centre that made for stock issues in stores. Famous Brands* (JSE code: FBR) are a two part story. GBK in the UK remains an absolute mess and they're trying to get reductions on leases, an I assume they tried to sell it and failed. Locally they doing alright considering very tough trading conditions. But that UK deal remains a disaster. Naspers (JSE code NPN) closed Tuesday at R2,370 and is now trading Wednesday up almost 8% at R2,555.00. This is in part thanks to Trump saying maybe they could be friends with China and that boosted Tencent. Also MSCI deciding to not make any major changes to index weighting's with the plan being to reduce weight of stocks with low voting shares, such as Naspers share we trade on the JSE. Vivo (JSE code: VVO) trading update confirms that the Engen deal is done, albeit without the Democratic Republic of Congo assets. This expands them into eight new countries and adds 225 service stations. But Morocco remains an issue as we await the Kings announcement on regulating the fuel price. That are seeing margin pressure here and it is the biggest market for the company - so it's important and while I like the business I want this sorted first. IG CFD conversations; exposure and leverage explained Understanding the NewFunds Momentum Equity ETF* OUTStanding money with Outvest: What you get when you save Upcoming events 01 November ~ JSE Power Hour: When does the bear market arrive? 08 November ~ Master Technical Analysis with Moxima Gama * I hold ungeared positions. 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares More delistings. I write about this for next weeks FinWeek. But it is expected and does indicate we're at (or near) a bottom with quality at really cheap valuations. Top40 just holding above 45,000 making us literally a few hundred points away from an official bear market locally. El Niño likelihood now at 70%, bad for food producers and consumers. I have found a website that tracks the likelihood, it Australian but weather don't care for borders. Saudi Arabia oil chief says OPEC in 'produce as much as you can' mode and Brent drops to $76 after peaking at $84 recently. Bad news for Sasol* (JSE code: SOL) but coupled with ZAR at R14.40 potentially good news for consumers. Long4Life* (JSE code: L4L) results, they have cash and cash equivalents of R1.05bn, about 115c a share. Still mostly the old Holdsport business at 60% of revenue and 64% trading profit. Nu-World (JSE code: NWL) results show HEPS +11.5% and dividend +11.9%. Really good results in a very tough economy (helped by a swing in currency translation gains of some R46million). One concern is a bank overdraft of R133million, up from R59million and I always ask why an overdraft and not a formal loan structure? The stock is on a PE of under 5x and a dividend yield of over 6%, staggeringly cheap, but this has always been the case with this stock and the question is what will trigger a rerating higher? MTBPS R27.4bn revenue shortfall for 2018, and a R85bn shortfall in revenue over the next three years. Treasury revised down its growth projection for 2018 from 1.5% to 0.7%, rising to 2.3% in 2021. Debt as a percentage of GDP will continue rising, reaching 59% at the end of 2022, from 50.7% in 2016/17. Three items – white bread flour, cake flour and sanitary pads will be zero VAT rated from next year. "Demolish the walls between public and private sectors." Privatisation? IG CFD conversations Investing in listed property Upcoming events 01 November ~ JSE Power Hour: When does the bear market arrive? 08 November ~ Master Technical Analysis with Moxima Gama * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Correlation is not causation Correlation is when two things are seemingly linked but more important is causation when they really are linked and one leads to another. As humans we live by the mantra of 'what causes what' and this remains very important to our species, but we get it wrong far to often. Some are simple and correct, increasing earnings from a company will in time result in a higher share price. But in the short term all sorts of issues are driving price that most often have nothing to do with the state of the company underlying that share price. Hence stocks get cheap and expensive creating opportunity for investors. But we need to be very careful of linking events that while they seem linked are not linked. A great website Spurious Correlations has many correlations that have no bearing on each other. One example is "people who drowned after falling out of a fishing boat" correlates 95.24% with "marriage rates in Kentucky". Now nobody really believes that in this example one causes the other. We're constantly being bombarded with data and trying to figure out what drives that data and what impact it'll have. Part of the problem here is the 24 hour instant news agenda. Markets move and news needs a reason beyond buyers vs. sellers. So we find a reason, one that seems to fit but may very likely not be true. The point here is two fold; Understand our desire as humans to link one event to another (think of the things we 'see' in the clouds). More often then not the links that we take for granted are weak at best and more likely Spurious. Be very skeptical about supposedly causation. Interrogate the logic and confirm it for yourself, don't just trust what seems right. 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.

This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. Simon Shares NO show next week (18 Oct 18), I am holidaying. Remember the chart of the Top40 I posted a few weeks back, showing the trading range? We broken the range again, but this time to the downside and we're not almost 15% off the November 2015 highs. Not the end of the world, yet. We do however need to bounce back into that range ASAP. There are now only 5 stocks with YTD gains within Top40: SOL 26%, AGL, 25%, BIL 23%, MND 11%, INL 5% — Andrew Todd (@andrewbtodd) October 10, 2018 Upcoming events 11 October ~ JSE Power Hour: Investing in listed property 18 October ~ JSE Power Hour: Maximising your tax-free investing 01 November ~ JSE Power Hour: When does the bear market arrive? 08 November ~ Mastering technical analysis Subscriber to our feed here Subscribe or review us in iTunes Too small to matter Portfolio construction is way more than just deciding which stocks to buy or sell. It's also valuations, about asset classes and position sizes. The first question is how much of my portfolio should be passive, how much active (your own DIY investing or an active manager) and how much for trading? I always state that passive should be a minimum of 50%, this protects us from the follies of trying to beat the market either ourselves or with a supposed expert. The more we put towards passive the more certainty that we will at least match market return. Now sure we want to get rich quickly so we want to beat the market, trounce it. But the truth is that this is hard with the professional active industry seeing only some 15% of active managers beating our market. Once we know how much (if any) we're putting into active we need to decide how this will work? An active fund manger or DIY or combination of both? How will we select the active manager or fund and how will we measure (and potentially fire) them? What about trading? Geared, ungeared? Equity or indices or FX? Then we need to start deciding what shares we want to own. This process is slow, not only in the selection, but then also in the waiting for the prices that we want to buy at. What is also very important here is how much of the share we should be buying. Any share needs to have a chunky enough size to be material but not so large that it could be catastrophic. I hold 10-12 individual shares within the 40% of my portfolio that is set side for my own active management making each share around 4% of the overall portfolio. With growth some shares may in time become more chunky and then I stop buying and in time may even have to sell down the position to avoid being over exposed. I also need to monitor what's in my passive investments. For example Naspers (JSE code: NPN) is very large in Top40 ETF (except the equal weight ETF from CoreShares) so adding some active Naspers makes you likely over exposed to the stock. But there is another issue, position sizes so small as to be meaningless. I often see a stock sitting at under 1% of a portfolio. Now even if this stock doubles in value it'll only add 1% to the overall portfolio. Yet it is taking as much effort to select, research, read results, valuing and transact as a full size position. So same work but for less reward. These small positions are sometimes dogs that have collapsed and investor is unwilling to sell in the misguided belief that one day it will return to its glory (spoiler alert - it won't, Sell the dogs). But at other times they because of a lack of conviction. You want to own the stock, it seems hot and everybody is talking about it and you're afraid of missing out but you're also afraid of the risks. So you take a small insignificant stake to serve both fears. But investing is about conviction. Either like a stock and give it full weighting or don't buy it. No half measures. Another potential reason for the small fry is legacy. Every portfolio starts small and when starting out we often buy stocks that in years to come we'll look back and wonder why we ever bought them. Yet there they sit, small and insignificant. In all cases small fry must be dealt with. Either increase the position to a meaningful size (waiting for the right valuations) or sell it. Don't keep a stock that has no significance in your portfolio. 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 This JSE Direct is proudly brought to you by IG, the specialists in CFD trading and a registered financial services provider. September was such a rough month that the best performing full equity fund in South Africa returned -0.4% for the month. Not a single full local equity fund was positive. Upcoming events 11 October ~ JSE Power Hour: Investing in listed property 18 October ~ JSE Power Hour: Maximising your tax-free investing 01 November ~ JSE Power Hour: When does the bear market arrive? Small cap pain Small caps, we love them because when they get going - they go. Really go. Ten baggers are a dime a dozen when things are hot and markets are running. But right now - not so much (see chart below) and here's why. Subscriber to our feed here Subscribe or review us in iTunes Firstly small caps are typically very SA Inc focused due to their smallness. Now this is not 100% true as there are stocks with offshore exposure, but generally the statement holds. That being said the economy is struggling, recession, VAT increases, petrol prices etc. are all putting the kosh on the economy and hence SA Inc and smaller stocks. The bad news is that I don't expect this to change any time soon. Make no mistake there are a bunch of high quality small caps at very attractive valuations. Companies that are not going to go bust and in many cases continue to make profits even in these tough times. The problem is that the same can be said of the large Top40 stocks. Sure some dogs in this index, but equally some really great companies at attractive valuations. Forward PE on the Top40 is 13x, cheapest I have seen it in a decade. Yet the selling continues. Further before small caps start to run I'd expect the larger Top40 stocks to run hard, become expensive and then investors start hunting down the list and buying the small cap stocks. So with the large stocks not running we have little chance that small caps will start to run. I hold a few small (and mid) cap stocks, and I continue to hold but I am not running in and buying, even at these levels. I have enough and I don't see them recovering any time soon. [caption id="attachment_8634" align="aligncenter" width="1080"] MidCap weekly close 03Oct18[/caption] 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 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 11 October ~ JSE Power Hour: Investing in listed property 18 October ~ JSE Power Hour: Maximising your tax-free investing 01 November ~ JSE Power Hour: When does the bear market arrive? * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes 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. 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 CPI 4.9% vs 5.2%, rates on hold? Naspers (JSE code: NPN) unbundling Multichoice. About R5.5billion profit so market cap some R55billion on 10x PE. That puts them into the Top40. The theory that Multichoice is dead is very misplaced. Aspen (JSE code: APN) gives another update to the market trying to help investors make sense of their results, and the stock is off +9% at just over R170. JSE is looking for feedback "In response to a range of corporate scandals, speculation and innuendo that have characterised South African financial markets over the past year". Details here Cash Club: Start where you are Upcoming events 11 October ~ JSE Power Hour: Investing in listed property Subscriber to our feed here Subscribe or review us in iTunes Managing fallen angels Those once unstoppable high flying stocks that have come back to earth with a thud, now what? We have a lot in our market right now; Aspen (JSE code: APN), Steinhoff (JSE code: SNH), MTN (JSE code: MTN), EOH (JSE code: EOH) and many more. Firstly understand the difference between cyclical and non-cyclical stocks. The former is resources, construction - those sectors that will always experience boom and bust and here we should really be long-term trading them rather then bottom draw investing in them. Secondly is to be careful when buying our high flying, unstoppable non-cyclical stocks. I may love a stock but if it's above my idea of a fair rice I simple won't pay the price. I wait, sometimes waiting years, for prices to be at my levels and then I'll buy. Sometimes like with Richemont* (JSE code: CFR) this works well when I was buying in the 80's some two years back. Other times like Woolies* (JSE code: CFR) I was buying from around 8850c all the way down to 6250c odd and then I stopped as I had full weighting and yet the stock went still lower. So manage the price you pay, you do not want to be the person who paid +R440 for Aspen and if you were ideally you want that to be one of many price points you paid with an overall much lower average price. But that all said these unstoppable angels do sometimes fall from grace, so lets delve into that. The first question is if this is naked fraud or horrid business that we (the market) had missed. With Steinhoff the answer was an easy yes to fraud. With MTN the answer is more complicated but my view at the time of the first Nigerian issues was that this was a massive failure on the part of management and that markedly changed the investment case - so I exited. Woolies the issue is over paying for David Jones and again messing up on women's fashion. Both repairable and not likely to be terminally damaging, albeit most definitely expensive. But what of Aspen? I think that the stock had got well ahead of itself with a PE of almost 40x just two years ago, wildly expensive but supposedly justified by HEPS growth that was around 30% a year. However nothing grows at 30% a year and this is the error I think the market has made. Aspen is maturing, all successful companies mature and when they do they rerate in terms of valuations (PE) but with Aspen the market seems to have been caught by surprise. So in short; Cyclical stocks are for trading. Buying price is very important. Don't overpay and ultimately stagger buying over many years (decades) to ensure a decent average price. Also stagger buying across many stocks, you don't want all your investment concentrated in a few stocks or sectors. Ask if this is as a result of a management error that is not terminal? If yes stay the course and maybe use the sell off to pick up some more - but again be carefull of being way over weight a single stock. Ask yourself if the fall off just a rerating / maturing of the business or as a result of real damage to the company (fraud, horrid management, etc.). Go back and check you initial notes from when you first bought the stock. What's changed and does that change make for a better (albeit different) investment or worse? Lastly, never just shrug and say "how much worse can it get?". It can get a lot worse, Steinhoff offered a +2000c exit last December when the news broke. Now it sub 300c. Last last point. Within a diverse portfolio not everything is always going up - unless it's a stonking bull market. * I hold ungeared positions. 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 were a mixed bag with the reduced dividend expected but they are essentially going to almost halve the cover ratio over two years and that is more aggressive than expected. Growth was modest, but the results commentary was even ore modest. Two analysts I know spoke to management and both came away very confident of the stock and its prospects. A lot of talk is about the move to digital and the cloud and firstly Metrofile is well positioned there and secondly I have been hearing about paperless office for over 30 years. ADvTech* (JSE code: ADH) purchase of Monash University looks great but expensive. On a PE of around 39x that is chunky. However will be able to remove a fair bit of costs plugging central services into existing infrastructure the company has. It also gives them degree levels offerings which is a great step and so while not cheap I like the deal. * I hold ungeared positions. Practical trading setups and rules with Petri Redelinghuys Understanding MAPPS growth ETF Moving your RA Subscriber to our feed here Subscribe or review us in iTunes Shares or cash for dividend? Often a company will offer you shares instead of receiving a cash dividend. Assuming you still like the stock (if you don't, then why haven't you sold it?) I always take the shares. The exception could be if I think valuations are crazy and there are other stocks with much better valuations to buy. Then I'll take the cash. By taking shares you save on brokerage, likely very saving but further often times a dividend is not enough to actually reinvest economically. My brokers minimum of R100 brokerage for a trade at 0.5% means that I need to do a R20k trade to get an effective 0.5% brokerage. Sure I can save up the dividends or add them to other cash I may have in the account - but taking the shares is easy and brokerage free. For tax purposes the free shares reduces your base cost price as the new shares come in at zero cost, so you have same total base cost but extra shares effectively meaning average purchase price is now lower. When you sell this new lower base cost will be used for tax purposes. However you'll save a little on tax as DWT is 20% (this is what you would have paid on the dividend) and maximin CGT is 18%. 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 MTN (JSE code: MTN). Woe is MTN, another $2billion for tax evasion. Is it a shake down? Maybe, maybe not. Truthfully we have no idea and it does cover the same period (2007-2015) of their previous Nigerian fine. I long ago sold my MTN shares and no interest in buying more. Steinhoff (JSE code: SNH) ex directors Jooste and La Grange have now both appeared before parliament and both blame everybody but themselves. Nice break out last week on the Top40, and then the retest and now we're back inside the range of 49-52k trading at 51,000 with ZAR at 15.46. Sure some if this is general EM issues but GDP data from Tuesday showing us in a recession is weighting heavy on markets. Where to next? Well let's see if 49k holds. Lots of talk about another drought locally in 2019, experts saying about 60% chance. Going to be rough, especially on food producer stocks (growing and makers). Practical trading setups and rules Tax Tuesday: Medical aid tax deductions OUTstanding money: The inflation monster Upcoming events 06 September ~ JSE Power Hour: Structuring your investment portfolio Subscriber to our feed here Subscribe or review us in iTunes NAV, value or trap? A listener asked about net asset value (NAV). Often when watching I hear a lot of market analyst talk about discounts to Assets, sometimes they say its bad sometimes they say its good. What does it actually mean when they say a share is trading at a discount to its assets or NAV, how is it calculated and is it good or bad? NAV is the break up value of a company. If all assets were turned into cash and all liabilities paid off, what's left? Divided by the number of shares is NAV per share and sometimes called book value. We then relate the NAV or book to the share price and get a ratio between price and NAV often called the price to book (P/B) ratio. Also note the difference between tangible NAV which excludes intangible assets such as brand value and good will. I prefer tangible NAV. As a rule a share trades at a premium to NAV as you're not buying the break up value of a company but the future earnings and cash flow. Different industries will have different premium, banks typically max out at around 2x while retailers at times 3-4x and miners anywhere from below 1 to 10x. A valuation strategy is to consider stocks cheap when their NAV premium is lower than typical for that particular stock and lower than industry peers. Sasfin (JSE code: SFN) is a case in point. NAV is around 4400c and the longer term average is some 1.5x, so seems like a steal. Except the stock has now fallen to around 3400c! Another strategy is to buy below NAV, essentially you're getting future earnings and cash flow for free. But is this value or value trap? Argent (JSE code: ART) has traded at around 50% below NAV forever and a day while The Don Group (now delisted) was at a chunky discount to NAV but that NAV kept melting away and the stock price kept on falling. So a useful indicator but as always needs to be more than just one piece of data when buying a stock. 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.

The SAFcoin saga continues (my initial stay story here and the follow up with legal threats here), I hope this will be the last. Neil Ferreira finally offered to answer my concerns and I sent him a list of 43 questions Sunday afternoon and he returned them on Wednesday, you can find the questions and answers here. The tl;dr version; While SAFcoin did answer a lot of my questions and clear up some issues the key issues remain. So I continue to warn people to stay away. PTXTEN, been a rough, very rough, period for this ETF. Upcoming events 30 August ~ JSE Power Hour: Practical trading setups and rules 06 September ~ JSE Power Hour: Structuring your investment portfolio Subscriber to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes 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 Safcoin finally responded to my caution around their 'coin' with a lawyer's letter. You can read our response and see the letter here. One possible correction is the source of the coins. I stated that Neil Ferreira had created them via cryptocoincreator.com and he Tweeted me a link to Etherscan.io for Safcoin. Not sure if that means it wasn't created by cryptocoincreator.com but the new information does suggest there are NOT 222billion coins in supply. The Etherscan.io link shows 10million coins total supply rather than the 5million the website has been promoting, but I see Neil Ferreira updated his white paper on the day of my initial podcast to reflect this new 10million coins in supply (as well as a number of other changes to the white paper). @SimonPB Here is a link for further assurance that we are deploying all token transactions to the Ethereum block and by the time of launch all token purchases will correspond to the token tracker https://t.co/Kg2mRKFOYz— SAFCOIN (@SAFCOIN1) August 3, 2018 Shoprite* (JSE code: SHP) results show a very tough environment hurt by a number of issues. One of these issues is low or negative product which hurts as base costs rise faster than products squeezing margins. But on that point the operating margin remained at 5.5%. The market is hating the CellC and Blue Label (JSE code: BLU) results and the stock is off 8% on Tuesday and another 10% today (Wednesday). Many are saying that it is over done with some 120c of core HEPS making for a PE of around 5x. Maybe it is a bargain but we have also seen bargains become even more so and eventually go bust and CellC certainly wants lots more cash. For me, I do not like telco's so am not interested either way. Is Famous Brands* (JSE code: FBR) looking to exit their Gourmet Burger Kitchen misadventure in the UK? A SENS last week certainly seemed to indicate it and after promising to turn things around a trading update last week suggests it is still losing some R1.5millon a week. Exiting a bad investment is certainly something I support, but I also support people taking responsibility and the current CEO could claim he wasn't he boss when this was done – but he was still a senior exec as COO. So any heads to roll? Truth is it is tricky because then a company may lose one or more high quality senior execs if we roll heads every time something goes wrong. But are they quality if they can err this large? Are there surely not other of equal quality who can replace them? Or is this a one off and something we should forgive them for? Truthfully it is a tricky question, but it needs to be transparently dealt with, not just swept under the carpet. S&P500 has hit it's longest bull market ever. 3,453 days without a 20% correction (since March 9 2009). Understanding the SYGWD – a locally listed ETF making serious returns as apposed to our market. Upcoming events 23 August ~ JSE Power Hour: Three Ramaphosa Rally Recovery Stocks 30 August ~ JSE Power Hour: Practical trading setups and rules 06 September ~ JSE Power Hour: Structuring your investment portfolio * I hold ungeared positions. Alternative investments We're getting a lot of questions about the Fed Group impact farming offering as well as buying cows as alternative forms of investments. The questions are always if this is a good idea and my answer is generally – why? I think there perhaps are two main reasons. Firstly, novelty. Who doesn't want to own a hive of bees or a slice of a cow (not to be confused with a steak – that you eat). Second is that the local market has delivered zero returns over the last many years so we seek out other ways to generate returns. Now sure, but the real point is where do these sort of investments fit because make no mistake they are alternative investments, or as Kristia would say on The Fat Wallet Show, stuff you buy with your FU money. Alternative investments is that small section of your portfolio (5%? maybe 10% if you wanna be wild) that are outside of traditional investments such as we buy on stock exchanges. In the olden days you'd by gold, carpets, art or wine. Heck for a while in the 80's it was all about buying shipping containers. These days it seems to all be about crypto currencies and now bees. The theory here is that as alternative investments they are not correlated to normal investments so may survive crashes better. But in truth they often crash as much (if not more) as a crash reduces liquidity so the alternatives get sold as people need cash and alternatives being typically less liquid can crash harder. It is also important to understand the risks here. The biggest risk is the newness. These may be backed by real institutions but this is totally new territory for everybody and we're simple not sure how they end up turning out. Further we get all sorts of regulatory protection from listed assets and lastly we are simple not experts on these alternative investments so we have to rely on other 'experts' for guidance. As a last

Subscriber to our feed here Subscribe or review us in iTunes Simon Shares ZAR almost 15.50 early Monday morning on Lira rout. Improve to around 14.10 but now back at 14.60. Chart of the Top40 shows our market been moving sideways since February between 49,000 and 52,000. fairly small range that has made ALSI futures trend trading hard, very hard. [caption id="attachment_8270" align="aligncenter" width="1080"] Top40 going nowhere for last six months[/caption]Tencent (Hong Kong code: 0700) results saw revenue growing ahead of expectations up 39% but profit only up 25% (YoY figures for half year) and Naspers (JSE code: NPN) is off 6.5% (after being down some 10%) and Top40 -2.7%. Esor (JSE code: ESR) goes into business rescue, so now we have two construction stocks in business rescue (Basil Read the other) with some looking very vulnerable and a number of others already gone. This sector remains a horror story. Pembury (JSE code: PEM) finally issue a trading update, months late, and it is a horror show. Stay away, well when it is unsuspended, stay away. Upcoming events 23 August ~ JSE Power Hour: Three Ramaphosa Rally Recovery Stocks 30 August ~ JSE Power Hour: Practical trading setups and rules 06 September ~ JSE Power Hour: Structuring your investment portfolio When to buy more What are some triggers to buy more of a stock? And how often? I am finding this hard especially once a stock has run a bit. — Daniele Ferreira (@daniele_xyz) August 9, 2018 I run a few portfolios. ETF only, I buy monthly and every March I full up my tax-free and buy in one block. No timing considered. Lazy ETF, weekly charts trading ETFs using technical analysis. Sign up here. Long-term till death do us part portfolio. I use historic PE over last seven years buying when forward PE is below seven year average PE. Details here. Second tier portfolio. This is designed for small and mid cap stocks and this is where I want to focus today. Firstly I find the stock. Quality is important as is growth prospects and I am not looking for 'hot' stocks or sectors. Boring with great potential and low current valuations with a potential holding period of a year to a decade. Using Santova* (JSE code: SNV) as my example. Non-asset based logistics company with their own software based in Durban. Always been very well run as witnessed by results and strong steady growth, both organic and by acquisition. When I fist found it the stock was trading on a PE of around 5x with HEPS for the latest financial year being around 18c (price was 90c) and dividend of 2.5c. I ask myself how easy to double that HEPS in 3-5 years? That requires growth in HEPS of some 15%-25% growth a year. For Santova, very easy. Then I ask what a fair PE should be for this sort of stock? In the case of a logistics company I feel around 13x is fair with wild being 20x. So if HEPS doubles (share price doubles) and PE moves to 13x from current 5x share price goes up another 160%. This takes a 90c stock to around 335c in 3-5 years. Maths all adds up and I buy and wait. Often a very long wait hence I like a dividend to pay me while waiting. HEPS growth comes in and slowly the PE starts to improve and HEPS is 44c for 2018 financial year while PE is now 9.7x and share price is 435c. Do I add more? Well I do the same math again. Can earnings double in next 3-5 years (I think it can, meaning HEPS of 90c). Has PE got space to expand? Yes I still think a 13x PE is fair which targets a share price of some 1170c. Now a few extra thoughts. Firstly a fair PE here is 13x, but a wildly crazy PE is possible and could be 20x (50% of fair target PE). That would add another 50% potential price growth (share then 1755c). But I would only be adding to the position with the current PE well below the fair target (13x) in this case, ideally current PE at least a third below my fair PE, so around 9x. As important is the question about the actual business. Has it delivered? Does it continue to offer great promise? In other words, does the story from when I initially entered remain in force? As the story and price continue to keep playing out I keep on holding and adding. A last point. What will trigger the stock to move and rerate higher? Sure HEPS increases helps but the PE can stay stuck forever and I need both HEPS and PE to increase. hence I especially like stocks that pay a dividend as this pays me while holding and waiting. * I hold ungeared positions. 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.

Subscriber to our feed here Subscribe or review us in iTunes Simon Shares Fidelity in the US is no offering two of its index funds at zero fee. They do this partly perhaps as a loss leader but also they can generate revenue via script lending. I think we'll see negative fee funds (they'll pay you to hold) in time and even locally in South Africa zero fee funds are possible in time. Local July tractor sales came in at 525 units vs. 508 in July 2017. MTN (JSE code: MTN) results looked bleak. Even if you add all the 'one off issues' back into HEPS it's only 280c. As Ian Stiglingh pointed out on Twitter, we knew it would be a large miss as expectations (consensus) was for a large increase in HEPS and anything above 20% requires a trading update. So no update meant a miss. Apple (NYSE code: AAPL) is now worth $1trillion having listed in 1980 with a $1billion valuation and since then done almost 20% a year annualised return excluding dividends. On a PE of some 18x it is not even expensive compared to others such as Amazon on a PE some 5 times higher. I know Apples and Amazons, not really comparable and Apple has had it's ups and downs along the way. Wealth for three generations in one tax-free account 23 August ~ JSE Power Hour: Three Ramaphosa Rally Recovery Stocks 30 August ~ JSE Power Hour: Practical trading setups and rules 06 September ~ JSE Power Hour: Structuring your investment portfolio Is it a buy? No it is not. I have been asking and been asked this question for twenty-three years. Way back in the late 90's whenever somebody mentioned a stock on IRC or the email / user groups I belonged to I would ask if it was a buy. Mostly the answer was no, but even when it was yes - I never bought. So I totally understand the question. These days when I Tweet about a stock I get the question and my answer is at best no. Even if it is a stock I am buying my answer would be "I am buying" (and my portfolio is online here). But that does not mean anybody else should be buying. Here's why even shares I am buying are not always for anybody else. What's my risk profile compared to yours? What's my overall portfolio construct compared to yours? Our respective ages and so the list goes on. What's my expectation and valuation compared to yours? But I understand where the question comes from, heck I have asked it often enough of people. The market is frankly large, scary and unknown for everybody, especially a newbie. As a newbie we want some certainty and the 'experts' can in theory give us that certainty. Unless of course it is all those experts telling you to buy Steinhoff before the fraud news broke out into the open, and even then many rated it a buy stating that the assets were worth at least 2500c a share. An important point here, just because a stock has fallen does not mean it is a buy. Again witness Steinhoff. But even with MTN. I don't like the sector or the stock regardless of price, so for me it is never a buy. Of course I could be wrong about the sector and the stock - that's what makes a market, different views. Of course even if the 'expert' says yes buy it, one doesn't rush out and buy because we discover that that does not reduce the fear, the fear of losing money. So here's how to get in as a newbie. Firstly get your tax-free account going. Buy some Exchange Traded Funds (ETFs) and forget about them. Then get some free cash for buying individual shares. Decide on sectors you think will be good investments and start digging around the shares in those sectors. Then when somebody says a stock is great (be it David Shapiro on BusinessDay TV, me on Twitter or whoever), you don't buy, but rather you use this as a trigger to do deeper research into that stock. You're still not buying, but you're learning and you're also building a list of shares worth keeping an eye on. You're tracking their prices and their results - all the while your tax-free portfolio is working away in the background. 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.

Subscriber to our feed here Subscribe or review us in iTunes Simon Shares Jacques Magliolo and Business Consultants International (BCI). Two people have recently emailed me about this gent and his company specifically about the FSB warning against him and the company in September 2017. One emailer has already lost money the other wanted to know if he should worry about this as he wanted to invest money. Simple answer is always do a Google search before invest and if you find a FSB (or FSCA as they're now called), be very worried and run away. Last week I warned to stay away from Safcoin and offered them the right to reply. I have heard nothing back from them so I assume they happy with what I said? Further Twitter has dug up a lot more making the whole Safcoin even more dodge. Lots of panic about the Tuesday evening statement from President Ramaphosa regarding land restitution without compensation. My advice (and this always holds true). Before checking the screaming Twitter and media headlines read the actual statement and while you're at it also read the ANC statement from the 2017 elective conference at Nasrec. I am getting a lot of questions about impact farming from, specifically the offering from the Fed Group. A few questions in return. Counter party risk is likely very low here, the Fed Group are legit but that doesn't mean the impact can't go bust - just that Fed Group unlikely to run away with your money. Bigger question is why do you want to start investing in alternative investments? The returns are more or less in line with long term JSE returns, but they have to be at a higher risk (less over sight, niche, new etc.). At best this really is for your FU money that you would otherwise use to invest into Whisky and then drink one dark night. Ellies (JSE code: ELI) results show HEPS of some 8c while price is 32c - a historic PE of 4x. They looking good but aren't totally out of the woods and this is a risky punt. Wealthy Maths: How to calculate VAT The Fat Wallet Show - How to buy a house Upcoming events 23 August ~ JSE Power Hour: Three Ramaphosa Rally Recovery Stocks 30 August ~ JSE Power Hour: Practical trading setups and rules Keep winners. Sell losers From time to time people ask me about their portfolio. In all cases they wanted to sell their winners and keep the losers. I've been there. In the late 90's I was off on a holiday and needing some money figured I'd sell one of the two warrants I held. One was a winner and the other a loser, so I sold the winner. The emotional reason was simple. Sell the winner to lock in the emotional thrill of a winner and keep the loser in the hope it'll become a winner and I won't have to have the emotional hit of a loser. Of course this logic was kinda like marrying your ex. The wining position is what we should be keeping. It is winning which means we're on the right track and the loser is showing us we're wrong and we should get off that track. My trick for selling losers is simple. Sell it, delete it off your watch list and never look at it again. Go so far that if I am talking about it here, jump ahead. If BusinessDay TV talks about it, mute the sound for a few minutes. Just get it out of your life. This we we have no FOMO. 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.

Subscriber to our feed here Subscribe or review us in iTunes Simon Shares Steinhoff (JSE code: SNH) almost 400c then under 200c. If you're in SNH understand you are trading it, this is not a recovery story. Nothing wrong with trading but rule 1 is stop loss and rule 2 is profit. Don't forget either. Blue Label (JSE code: BLU) back below 900c. I have no idea what the story is here regarding the collapsed share price and neither does anybody I speak to. Results due late August and a trading update in the next week or two. Best is to wait for clarity from the results. Kumba (JSE code: KIO) results show what happens when everything comes together for a single commodity stock - cash flow galore and dividends. They're paying 1451c for the first six months. Sabvest N (JSE code: SVN) is doing a book build for two of their larger investors who want to exit. They are a holding company and the price is a discount to net asset value (NAV) of about 36% when a typical discount would be 15%-20%. This book build should improve liquidity and ideally help close the discount gap, but first have a look at their underlying companies they hold because while a steep discount is nice, they holdings are ultimately what you are buying. OUTStanding Money: Why do I want money? Investing in BBBEE schemes. Upcoming events 23 August ~ JSE Power Hour: Three Ramaphosa Rally Recovery Stocks 30 August ~ JSE Power Hour: Practical trading setups and rules Safcoin - stay away I first saw them on my Google news feed, a promoted story on IOL. Safcoin, not illegal but going to end in tears. That I guarantee. They're pre-selling 500,000 in an ICO at R70, then there are another 5million. In short the market will be flooded with these coins that have no use and sellers will drive the price to zero. Stay away. Read their white paper and then compare it to the white paper for Ripple or Ethereum. This white paper is just marketing material. Where does the money from the ICO go? A white paper should detail expenses etc. With Safcoin we can only assume that the R35million (500k coins at R70) goes to the founder (Neil Ferreira). What of the other 5million coins? Who holds them? Again I assume Neil Ferreira. What I also don't know is are the initial 500k ICO coins included in the 5million or added on top? How do I mine them? Who is the team behind Safcoin? On Twitter Neil Ferreira said they had a team of 12, but no mention of who this team is and typically one trumpets your team for their expertise. Who are the auditors? On Twitter Neil Ferreira said they were SmartDec Moscow Russia but we have no confirmation of this, have asked them on Twitter, as yet no reply. Coin limit is apparently 5.5million, but when you check the website he used to create them (yip not their own code even though they claim 12 people involved) it says 222billion coins. That's about US$1trillion! Heck out government should start a coin and clear our national debt. Ask you self what problem does this new coin solve? If it is not solving a problem then why will anybody want to buy it? No buyers equals over supply and price crash. Consider the fact that over half of new ICOs fail, and this is a conservative estimate. I have seen stats that suggest less than 10% of ICOs ever get to market. Scams, Scoundrels And Multimillion-Dollar Frauds: How To Check An ICO Isn't A Con They mention they will list on local exchanges. Which? Smarter people then me asked on twitter (with no answers); What mining algorithm does your blockchain use? What is the consensus algorithm used by the project and how was it picked? Where do the tokens fall on the Howey Test? You get paid a 5% referral fee if you send people. Referrals always bother me, they smack of pyramid schemes. As I said up front, not illegal. But before you rush off with your hard earned money, do some homework and 5 minutes on this coins offering and it is not going to make anybody a single cent - except for Neil Ferreira. On listing Neil Ferreira could use his income from ICO sales to be an active buyer pushing the price higher, but this never works for long as eventually one runs out of money and real demand reverts to what it really is - and here it likely is zero. I could go on and on with the issues about this new coin. Short version remains - stay away. Another local crypto scam, this time called Safcoin / 500k offered at R70 = R35m (nice work if you can get it) / After ICO 5m will flood market / No details on how I can mine / Paying referrals (always dodge) / Lots of paid copy (such as link below)https://t.co/PqoZyHyIsq — Simon Brown (@SimonPB) July 24, 2018 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.

Subscriber to our feed here Subscribe or review us in iTunes Simon Shares I was at the Mandela Lecture on Tuesday at which Barack Obama spoke. A special day. A truly talented orator and a speech well worth watching. Famous Brands* (JSE code: FBR) CFO quits. Now directors are always quitting, but the CFO when you have indigestion from a over priced UK burger? JSE (JSE code: JSE) trading update is strong. HEPS to be 30%-40% higher. In part thanks to a tax credit, retrenchments from last year kicking in the savings but also they say increased revenue. Rand slowly moving stronger. According to the big mac index, it should be R5.63/US$! A listener asked abut Group 5 (JSE code: GRF). A nasty chart and this after a R1.6bn offer by Greenbay (JSE code: GRP) for their European Toll assets they now have a market cap of some R120million. This suggests the rest of the group is totally bankrupt, which it may be and while it appears to offer great value, this is a globally tough sector I continue to stay well away from. Platinum around $820, lowest price since the post bubble crash in 2008 and before that 2004. Wayne McCurrie says on Twitter there is also the biggest net short position since 1999. This is a horror for the miners and another sector to stay well away from until we see some decent upside price action. Not just a few $ higher, a real sustained looking rally. Cash Club: Forget about the Joneses Make habits not goals We tend to focus on goals. I want to be a millionaire, a billionaire. I want to be a successful trader. I want to invest like Buffett and so on. But we do it wrong forgetting the steps to reaching the goal. These steps are the habits that ensure success. If your goal is to run a marathon, you don't start off one cold morning at the start line for a 42.2km run. You start with getting off your couch and trying a small walk to the other couch. Then maybe a short jog to the bottle store for supplies and so on until one day you do complete a full marathon. The large scary goals are seldom achieved because they are mono focused and overly large. So large in fact that we forget that a goal is actually a series of small steps that taken together get us through the journey. So instead of large scary goals, focus on forming habits. Winning habits that will help us reach the end. Habits that in time will become second nature to us. Focus on the small steps. Improve them. Review your trading and investing, where are you make mistakes? How do you improve and stop the mistakes? Focus on single issues that are holding you back and find ways for you to do them better. Focus on one or two small things until you're a master, then move onto the next one or two areas. You'll never run out of things to improve and you'll always be getting better. Do perfect trades. Become ruthless with stop losses. Only buy quality. And so on. Identify your problems and work to fix 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