I see that there has been quite a lot of talk about South African small caps in recent weeks. Probably because the market has been so kak that people have nothing better to talk about.
With that in mind, I thought it would be fun to look at some of the small-caps which appear on my screen and see whether other traders agree?
Beige Holdings
I have been tipping this one for ages and so far it has gone nowhere fast. This should in theory be an easy stock to double your money on, but geez I have been saying that for how long and I'm still waiting.
ISA
This is a good stock in a growth industry. Cash generative, no debt and it actually pays a dividend - a rarity in the IT sector. Internet and IT security is going to continue to be a key industry going forward. ASk anybody who has had their home or work PC or mobile device crippled by a computer virus and you will appreciate why a business like this has so much to offer and will consistently be able to achieve ongoing annuity income.
Interwaste
I walked to the shops this morning and was aware of all the uncollected rubbish on the pavement from last weeks municipal strike. Its unpleasant to live in a decent neighbourhood and be surrounded by flies and rotting waste and there is not a hell of a lot that you as the ordinary consumer can do about it.Now imagine how much waste is being generated by businesses and more importantly how much it costs to deal with that waste. This share hasn't exactly covered itself in glory since being listed, but its a good industry to be in with very high barriers to entry.
Buildmax
I was actually checking up on my Brait shares and I was reminded that the Brait guys paid R1.50 a share for Buildmax. Now its trading around 50c a share. I still think it is a good story for those with a longer-term appetite.
Anybody got any better suggestions?
Monday, April 19, 2010
Saturday, April 17, 2010
Goldman Sachs kicked in the nuts
I remember watching a movie once where a new kid starts a school after being bullied at the old school. Sure enough this geeky looking kid gets bullied on the first day and nobody wants to hang around with the local whipping boy. He goes home and asks his dad (or maybe it was his uncle?) what he should do because he can't go through another year of torment.
The advice he gets is very simple: "It doesn't matter whether it is a sneak attack, you walk up to the biggest bully on the playground and you kick him as hard as you can in the nuts in the most public place. If he drops, your year has been made and you will be the hero of the school".
Judging from the fun and games in the US on Friday, I reckon somebody over at the SEC has adopted a similar kind of strategy to "right-size" banking giant Goldman Sachs.
Much like it doesn't matter whether or not the bully has psychological issues or problems at home, I don't think that the SEC is all that concerned about the merits of their case. They've snuck up on an industry giant which believes it is untouchable and possibly fired the first salvo in a carpet bombing exercise aimed at the investment banking industry.
Will this even dent Goldman Sachs? Probably not - the guys that work there are too clever to even blink.
But for the rest of the industry, a very clear message has been sent.
The start of a genuine correction?
I'm undecided on whether or not markets are expensive and I think it is folly to try and play that game. Personally I probably wouldn't be buying too many shares right now if I was looking to make money in the next 6 to 12 months.
In fact if I had to hazard a guess this little assault on GS could be maybe the right kind of message to market participants that it is now time to step back and reassess the landscape.
How many compliance managers at the various investment banks and brokerages are scurrying around this weekend trying to double check that their systems are in place? How many are going to be advising their traders that the regulators are being a little nosier than expected and maybe they need to pull in any potential troublesome trades / activities?
Another interesting thing which was missed is that the VIX actually rose to its highest level in 12 months on Friday.
While I'm sure it certainly doesn't help (the traders) that regulators are being nosy and digging into the activities of some of the big guns on Wall Street, maybe it is just a sign that there is some downside risk in the near-term?
The advice he gets is very simple: "It doesn't matter whether it is a sneak attack, you walk up to the biggest bully on the playground and you kick him as hard as you can in the nuts in the most public place. If he drops, your year has been made and you will be the hero of the school".
Judging from the fun and games in the US on Friday, I reckon somebody over at the SEC has adopted a similar kind of strategy to "right-size" banking giant Goldman Sachs.
Much like it doesn't matter whether or not the bully has psychological issues or problems at home, I don't think that the SEC is all that concerned about the merits of their case. They've snuck up on an industry giant which believes it is untouchable and possibly fired the first salvo in a carpet bombing exercise aimed at the investment banking industry.
Will this even dent Goldman Sachs? Probably not - the guys that work there are too clever to even blink.
But for the rest of the industry, a very clear message has been sent.
The start of a genuine correction?
I'm undecided on whether or not markets are expensive and I think it is folly to try and play that game. Personally I probably wouldn't be buying too many shares right now if I was looking to make money in the next 6 to 12 months.
In fact if I had to hazard a guess this little assault on GS could be maybe the right kind of message to market participants that it is now time to step back and reassess the landscape.
How many compliance managers at the various investment banks and brokerages are scurrying around this weekend trying to double check that their systems are in place? How many are going to be advising their traders that the regulators are being a little nosier than expected and maybe they need to pull in any potential troublesome trades / activities?
Another interesting thing which was missed is that the VIX actually rose to its highest level in 12 months on Friday.
While I'm sure it certainly doesn't help (the traders) that regulators are being nosy and digging into the activities of some of the big guns on Wall Street, maybe it is just a sign that there is some downside risk in the near-term?
Tuesday, March 30, 2010
Time to go defensive?
It is interesting to look at some of the flash points coming up around the world over the last few weeks:
- Bombs in Russia (I think there is more to this story to come)
- Riots in India
- Problems in Thailand
- Violence in Mexico
- Some protectionist stuff happening in the US / China row
- Greece and Portugal debt problems won't go away
Slash your CFD trading costs by up to 80%
I saw this on the Rival Financial Services blog. It might be of interest to anybody trading CFD's.
We picked up this message from local derivatives trading firm Global Trader and thought it might be of interest to our readers:
10 years on we want to say thank you to our clients for their loyal support, and allow you to invite your friends to share in the benefits.
At the same time we think it’s important to stay true to our brand by leading through innovation and by delivering on something we have remained true to since the day we launched.
“That is to provide the man in the street with the tools, products and services to trade without limitations”, however this time at a lower cost.
“Cost has been the single differentiator over the last 10 years between Harry Hedge Fund and Trader Tom”
Cost erodes performance and cost creates barriers to entry. Well the costs are coming down.
In celebrating our 10 years we are giving you and your friends the perfect opportunity to become members of the most exclusive clubs in CFD trading, with member benefits that secure you the lowest cost of trading coupled with the highest level of service and exclusivity.
Clubs that don’t undercut the competition but quite frankly blow them away!!!
Entry to Global Trader’s Perfect 10 Year Gold & Platinum Clubs are only available for a limited 10 week period.
Entry is easy and qualifying members receive an immediate reduction in trading costs of 5bps (0.05%) with the opportunity to further reduce your trading costs all the way down to an astounding 10bps (0. 1%)
Is it worth my while to switch to Global Trader NOW?
If you switch your CFD Trading account to Global Trader over the next 10 weeks, we will not only guarantee* to reduce your current** trading costs by 5bps, but on switching you’ll also qualify for our Perfect 10 offer, giving you the ideal opportunity to reduce your trading costs all the way down to 10 bps (0.1%)
* Potential clients already trading at 10bps do not qualify for a 5bps reduction in trading costs
** All you’ll need to do is show us proof of your current trading rate and we’ll match it less 5bps
Sunday, March 28, 2010
Day Trading is for suckers
There is a really interesting piece on the Business Insider website written by Henry Blodget which talks about why day traders can never win.
You can read the full article here but here for me was a key quote which needs to be borne in mind:
Most Wall Street traders have skills, information, and tools that day-traders can only dream of. Trading is a zero-sum game: Market moves aside, every dollar won by one trader comes out of the pocket of another trader. Day traders competing against Wall Streeters is the equivalent of a college football team (or Pee Wee team, depending on the day-trader's skill) competing against a pro team. Is it possible to win? Yes. But it's highly unlikely (1 in 100). Wall Street's winnings do have to come from somewhere, though, so Wall Street thanks the day traders for playing.
Blodget's conclusion is right - if you are planning to day trade your way to enormous wealth then think again - you're probably chasing a pie in the sky dream....
That's probably not what you want to hear if you are visiting a day-traders blog but let's cut the bullshit - making trading wealth is incredibly hard.
Part of the problem I think is that too many private day traders want to cast themselves as institutional traders.
If you do believe you have what it takes then consider these steps:
You can read the full article here but here for me was a key quote which needs to be borne in mind:
Most Wall Street traders have skills, information, and tools that day-traders can only dream of. Trading is a zero-sum game: Market moves aside, every dollar won by one trader comes out of the pocket of another trader. Day traders competing against Wall Streeters is the equivalent of a college football team (or Pee Wee team, depending on the day-trader's skill) competing against a pro team. Is it possible to win? Yes. But it's highly unlikely (1 in 100). Wall Street's winnings do have to come from somewhere, though, so Wall Street thanks the day traders for playing.
Blodget's conclusion is right - if you are planning to day trade your way to enormous wealth then think again - you're probably chasing a pie in the sky dream....
That's probably not what you want to hear if you are visiting a day-traders blog but let's cut the bullshit - making trading wealth is incredibly hard.
Part of the problem I think is that too many private day traders want to cast themselves as institutional traders.
- They sit with multiple screens and charting systems open. They want to talk about resistance, break-outs and the double nipple formation.
- They feel they have to be "in" or "on" the market the whole time
- If they are not moving money they are not really "trading"
If you do believe you have what it takes then consider these steps:
- There is nothing wrong with buying a reliable share portfolio which includes dividend paying, cash generative shares with high returns on equity - profiting from gains made here is just as much "day-trading" as trading in and out of the global currency market every 10 minutes.
- If you are going to trade regularly identify one or two core themes and run with them. Don't try and chase every market and every instrument because that is what the news is doing.
- The trend is your friend. It is the oldest trading mantra and for good reason. We all want to call "the top" or "the bottom" of a market but you will go broke going against the trend.
- Use a bit of common sense - trading is made out to be more complicated than it really has to be. Buy low - sell high does not mean buying a stock or currency now because it was 1% lower than it was yesterday
- If you are waking up in a cold sweat at two in the morning and rushing to check your portfolio or positions then you are over-commited.
Tuesday, March 9, 2010
I'm not totally sure about this whole Twitter thing but I am reliably informed that I must tell people where they can find me on Twitter...
... so here goes.
DRUM ROLL PLEASE
...
If you want to find me on micro-blogging service then you can find me at:
http://twitter.com/liquidtraderza
.... there I said it!
DRUM ROLL PLEASE
...
If you want to find me on micro-blogging service then you can find me at:
http://twitter.com/liquidtraderza
.... there I said it!
This is probably very speculative
... and definately not for the widows and orphans fund but did anybody notice that SENS announcement from IPSA late in the day?
Here it is in a nutshell:
IPSA PLC (AIM: IPSA), the developer, owner and operator of power generation capacity in Southern Africa, announces that on 5 March 2010 the Company entered into an agreement with RAB Energy Fund Limited and certain other investors (together the "Loan Note Holders") to issue GBP650,000 of unsecured loan notes (the "Loan Notes") to the Loan Note Holders.
On the same day, the Company also entered into an agreement with Standard Bank PLC ("Standard Bank") and TurboCare S.p.A. ("TurboCare") regarding the marketing of the Company`s gas turbines, which also provides a standstill arrangement
regarding funds due to both these parties.
Now IPSA's problems with Eskom have been well documented - they've been royally screwed over and now suddenly Eskom has realised that perhaps independant power producers (IPPs) may actually serve a purpose.
The tone of the IPSA SENS announcement is pretty downbeat - but GBP650000 of unsecured financing is a sizeable chunk of change for a business which should be technically failing.
For me what is interesting is that since the start of the year the share has lost 17% and is now trading around 140c. If you go back to when the shit really hit the fan at Eskom, this was priced around R2 a share... Logically the case for IPPs has been reinforced by this whole Nersa tariffs issue.
As I said - not for the widows and orphans but definately something which could be worth a cheap and nasty punt?
Here it is in a nutshell:
IPSA PLC (AIM: IPSA), the developer, owner and operator of power generation capacity in Southern Africa, announces that on 5 March 2010 the Company entered into an agreement with RAB Energy Fund Limited and certain other investors (together the "Loan Note Holders") to issue GBP650,000 of unsecured loan notes (the "Loan Notes") to the Loan Note Holders.
On the same day, the Company also entered into an agreement with Standard Bank PLC ("Standard Bank") and TurboCare S.p.A. ("TurboCare") regarding the marketing of the Company`s gas turbines, which also provides a standstill arrangement
regarding funds due to both these parties.
Now IPSA's problems with Eskom have been well documented - they've been royally screwed over and now suddenly Eskom has realised that perhaps independant power producers (IPPs) may actually serve a purpose.
The tone of the IPSA SENS announcement is pretty downbeat - but GBP650000 of unsecured financing is a sizeable chunk of change for a business which should be technically failing.
For me what is interesting is that since the start of the year the share has lost 17% and is now trading around 140c. If you go back to when the shit really hit the fan at Eskom, this was priced around R2 a share... Logically the case for IPPs has been reinforced by this whole Nersa tariffs issue.
As I said - not for the widows and orphans but definately something which could be worth a cheap and nasty punt?
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