Jsedirect With Simon Brown

If you secretly hate us but haven’t been able to find a different source of financial information, I have some great news! I found a Freakonomics Radio episode that summed up exactly the principles we champion on this show. In this episode, Simon and I take the financial literacy survey. It’s only three questions, but understanding their answers will enable you to make great financial decisions. If this sounds vaguely familiar, you might be thinking of this podcast we did last year. Here are the questions: Suppose you have R100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? More than R102 Exactly R102 Less than R102 Imagine that the interest rate on your savings account was 5% per year and inflation was 6% per year. After one year, how much would you be able to buy with the money in this account? More than today. Exactly the same as today. Less than today. Do you think the following statement

“Brought to you by Absa ETFs” Simon Shares I mentioned last week it had been a negative first quarter for the Top40 and it just continues weaker with the current theory being trade wars. Looking at the charts of the main indices it looks ugly and we're now some 15% off the all-time highs of November. A proper correction that may still go lower and my sense is we're close to the end of the sell off. I also asked last week how we could select winning fund managers. The answer I got back was mostly that you can't. A few gave very detailed answers mostly revolving around finding the best managers - but scant details on how we spotted these quality managers. Total return ETFs and CGT. Complicated. Win a book with The Fat Wallet Show. Upcoming events; JSE Power Hour: Investing in the best of SA Inc.  Spot the losers Steinhoff (JSE code: SNH) announces that their property portfolio is only worth half what they thought. Boom there goes another R16billion. I cautioned when this story broke that bad news would b

“Brought to you by Absa ETFs” Simon Shares Back from holiday and with lots of ideas around what you do and don't like for JSE Direct. That said main comment was not to really change except maybe some experts occasionally on broad topics. Markets falling and Top40 is down some 8% for the year so far. End of the world? Not likely. As always, traders know and obey your stops. Investors know your stocks and entry points. Naspers (JSE code: NPN) is under R3k and off some 30% since the November highs and is in large part why our market is under water as it's the largest stock by a mile in the indices. MPC cut repo rate by 0.25%, 4 members voted for the cut and three for no change. No discussion of a 0.5% cut. Interestingly the VAT increase effective on Sunday is expected to temporarily add 0.6% to inflation. Moodys kept us out of junk and improved our outlook to stable from negative. Anchor group (JSE code: ACG) results were bleak but seemingly the bad news is now behind them and the share is responding well, up s

“Brought to you by Absa ETFs” 300 shows, I haven't been making a fuss because it just feels old, very old. Add to that almost three years as a live radio show on Classic FM, starting from 8 July 2008. It's almost ten years of a weekly (albeit changing) show. We started life focusing outside the Top40 as the other shows seldom ever did anything in the small and mid cap space - then everybody did. So we have evolved over time. The question is where to next? Another ten years (truthfully that scares me). Send me your ideas on what we should or should not be doing. 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.

“Brought to you by Absa ETFs” Simon Shares 2017 GDP was 1.3%, better than the expected 1% and hopefully means that the treasury 2020 GDP expectation of 2.1% is wildly low. Bleak trading update from Sasfin (JSE code: SFN). But still trading at tangible net asset value (TNAV) levels. MMI drop their dividend in favour of share buy backs and drops cover from 1.5x-1.7x to 2.5x. Considering the dividend yield was some 6% and a good reason to hold this is a major change. Now sure a share buy back is in theory share holder value enhancing and tax efficient but it is also not hard cash in ones hand. Making sense of CGT tax. New Stanlib tech ETF. Upcoming events; ABSA NewFunds ETF seminars (JHB and webcast) JSE Power Hour: Small cap stock picks with Anthony Clark  Fallen angels (devils?) When a share is hit by scandal it can take ages to recovery as investors shy away from the stock. Some like Steinhoff (JSE code: SNH) will never recover due to the seemingly rampant fraud hat happened. Others like EOH may but wil

“Brought to you by Absa ETFs” Simon Shares The new cabinet is of course a compromise, that's the nature of our political system. But the important departments are markedly better hands (SOEs, treasury & mining). New tax-free year kicks off today. R33,000 per year and transfer are now also possible. Up coming events; ABSA NewFunds ETF seminars (DBN, CPT, JHB and webcast) Leverage your investment portfolio Borrowing money to increase your portfolio is something most investors ponder at some point, but two questions come up. How and what are the risks? The theory is easy, over the long-term equity markets do better than the cost of borrowing, but there is more to leverage then just that. So here are some options, with the risks involved. Derivatives such as CFDs; Easy enough. But costs and margin calls are real issues. Keep it small. Home loan Clean and simple if you can afford the repayments remembering that when markets collapse interest rates typically rise. Make sure you can make the repayments

“Brought to you by Absa ETFs”  Simon Shares Discovery* (JSE code: DSY) results were top notch and complicated as they always are. I own this stock as the business model really works, but as I have mentioned before the complexity adds risk. Risk I am happy with as most stocks I own have real simple business models. JSE (JSE code: JSE) results show HEPS down 6%. But look at value being traded these days. R25billion a day has become a regular feature, last year average was around R15billion. That equals lots of extra revenue in this financial year. Mining charter back to the drawing board. Good for local miners (of which we have very few). January CPI dropped to 4.4%, interest cuts coming to a prime rate near you? But budget may add to inflation (fuel being the one, not directly but will increase transport costs so food inflation). Up coming events; ABSA NewFunds ETF seminars (DBN, CPT, JHB and webcast) * I Hold ungeared positions #Budget2018 Firstly I think Cyril Ramaphosa may have played it real smart by

Simon Shares Market continues to wait for president Zuma to go. It is taking time but ejecting a leader usually does take time and markets are patient and way more interested in what is happen in the US with inflation data out after I have recorded this podcast. This will likely be the driver for now. When Zuma eventually goes, and he will go, then market can move on that info. It is messy (as politics usually is) but it just a matter of when, not if. Oceana (JSE code: OCE) CEO quits to buy their boats? Resilient, Nepi Rockcastle, ForstressB & Greenbay (JSE codes: RES, NRP, FFB & GRB) continue to flounder after 36One report surfaces. Was it leaked? Does that matter? Resilient have responded via SENS and a conference call and a FAQ - now the market gets to vote. http://resilient.co.za/faq.htm New African property ETF. RA, pension or provident fund by Carina Jooste. Up-coming events JSE Power Hour: Kick off 2018 with ETFs and tax-free investing Avoid the big losers or risk your portfolio A -60% r

Simon Shares Dual CEOs at Investec (JSE codes: INL / INP)? Market sells off and rebounds (a bit) and we're in correction territory (down 10%). The falling property stocks of Resilient, Nepi Rockcastle, ForstressB & Greenbay (JSE codes: RES, NRP, FFB & GRB) continue to trade down at the low levels they hit when Viceroy concerns initially hit the market in early January. Capitec* still under fire from Viceroy and share likely to be subdued for a while. Brimstone (JSE code: BRN) has sold down their stakes in both Tiger Brands (JSE code: TBS) and Life Healthcare (JSE code: LHC). Now what will they do with the R750million cash? Stress free tax year Up-coming events * I hold ungeared positions. Section 12J (S12J) Introduced in 2009 this enables a tax payer to invest into a startup (via the S12J fund, Section 12J Venture Capital Companies (VCC)) and claim it as a deduction on their tax return effectively reducing ones income by the amount invested. An important point is that the investment has to be held f

Viceroy charges into Capitec* I think we're missing a point with this latest Viceroy report on Capitec. Sure we're proud of the business and if you're a shareholder you've made amazing returns. But we seem to be circling the wagons and shooting the messenger rather then actually discussing the merits of the report. Two important thoughts to ponder. What if Viceroy had published their Steinhoff report before Steinhoff admitted to their fraud, would we have believed them? Simple answer is no and we would have looked stupid when the company admitted the fraud. A fund manager does their research in a company, decides it's a great sock. They buy it and then they go out into the world promoting the stock - talking it up in the media and notes to clients. How is this different from what Viceroy is doing (aside from Viceroy shorting rather then buying)? Here are some others who have been asking questions about Capitec. Benguela Fund Managers wrote to Capitec on 19 January 2018 asking questions. Summit Financial Part

Global Dividend Aristocrats ETF This week Simon chats to Chris Rule from CoreShares on their soon to be listed Global Dividend Aristocrats ETF. It uses dividends as a quality metric rather then searching for yield and much like the MSCI World ETFs we have locally it is concentrated in the US at 53% with Europe making up another 22% but it is light on tech. You can book for the events 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 Aspen (JSE code: APN) being vice squeezed. Woolies* (JSE code: WHL) trading update, "impact of a potential re-assessment of the carrying value of the David Jones assets". Watch out for the "goodwill write downs are not cash", true but they were paid for with cash. Shoprite* (JSE code: SHP) update seemed lighter then I had expected, good but not awesome. That said market liked it and stock is up over 6% since the SENS. * I hold ungeared positions. New year resolutions for investors "Everybody has a plan until they get punched in the face" Mike Tyson Stop watching the prices. These are long term investments, check them every so often if you must but certainly not even weekly never mind intra-day. Only own stocks that you have at least three strong reasons for owning and revisit these reasons at least once a year. Sell the dogs in your portfolio, sell them now (I'll wait). Sell anything that is not the best management and be very careful about what qualifies as best management (think Steinhoff).

Every year the first JSE Direct of the year is our annual predictions show. Marc Ashton, Keith McLachlan, Small/Midcap fund manager at Alpha Wealth and Just One Lap founder Simon Brown review their predictions from the previous year and make their top three predictions for 2018. They then also make a call on the Top40 and ZAR/US$ for the year. You can find the 2017 edition 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 EOH (JSE code: EOH), so the collapse was because of directors margin calls that forced them to sell? This is an epic disaster, if it was my board I would fire them. A share price collapse has real consequences, especially for a company like EOH that uses their shares for acquisitions. Steinhoff (JSE code: SNH) mess continues but an interesting meme occurring in an attempt to make sure the asset managers take no blame. The same happened after African Bank, Enron and other notable corporate collapses. I not saying we should be jailing the asset managers but we should be asking hard questions and having the debate. I am seeing more and more analysis on the fact that SNH was not quality, sure it is in some (but not all) cases after the fact but enough people are speaking out. Yet this low quality stock was valued at around R300billion at its peak and suggesting that it was impossible to tell is an outright lie as proved by many people being short and querying the numbers. Surely as an industry it i

Our signature yearend JSE Power Hour presented by Just One Lap founder, Simon Brown. Simon looks at what he predicted last year before embarking on his 2018 predictions that include; Steinhoff (JSE code: SNH) Naspers (JSE code: NPN) Bitcoin (BTC) The December ANC elective conference, who'll win and how will this impact our market Junk status The R50billion tax hole looming in the February budget Interest rates The Rand International markets Commodities His preferred stocks and ETFs for 2018. The PDF of the presentation is here and video here.

Simon Shares Twitter poll for tonight's JSE Power Hour presentation ~ What's your expectation for the Top40 in 2018? Time for my annual poll .. What's your expectation for the Top40 in 2018 ?#JSE — Simon Brown (@SimonPB) December 4, 2017   Steinhoff, where there's smoke Markus Jooste has also quit Stenihoff (JSE code: SNH), Star (JSE code: SRR), PSG (JSE code: PSG) and Phumelela Gaming (JSE code: PHM) boards. Steinhoff CFO and Star CEO Ben la Grange has quit as CEO of Star, but seemingly stays on at Steinhoff, for now. It's an oldie but it always true. Where there's smoke theirs fire and locally that is Steinhoff. Forever people have been in one of two camps on this stock. They either loved it or didn't understand the financials and stayed well away. I have always been in the latter camp and recently the warnings have gotten dire and now the CEO is out, results delayed and an investigation by PwC to try and understand exactly what's happen. Now hindsight is easy, but there has been a lot of smoke around St

Simon Shares More downgrades as S&P Globals makes our local debt junk as well to go with Fitch. Moody's gave us 90 days which takes us to just after the February budget and if they drop us then we full on 100% junk, AKA Brazilian. The Rand is powering ahead trading in the R13.60's against US$. My call for a stronger Rand remains in force. Slowly but surely. The latest Long4Life* (JSE code: L4L) deal is a perfect fit with the Gauteng based contract bottler they are also buying. I like the share at these lower prices. Yearend portfolio clean up is coming up and the one I eyeing is Calgro M3* (JSE code: CGR) in my second tier portfolio. I sold most back when Nene was fired keeping a few and they have pretty much halved since then. Checking my notes from when I sold my plan was to monitor and sell if I saw weakness. Well we got the weakness, but I didn't sell. Now I could hold them on a prayer - but I'd rather just bin them. I've been writing my yearend columns for FinWeek looking into 2018 events and stocks

Simon Shares I am traveling this week so recording on Monday and hence no thoughts. Naspers (JSE code: NPN) hits R4,000.00. Survey results are out. Up coming events; Position your portfolio for 2018 * I hold ungeared positions. Stop faffing, start trading I want to aim this mostly at the newbie traders. Those who've been flirting with the idea of trading for ages. Maybe you've tried your hand at it but failed or perhaps you haven't dipped your toe into the water as yet. Trading is not hard, the psychology is hard, but there are ways to deal with that. First find a strategy you think makes sense, then start working on it. Test it with hundreds of back tested paper trades. Tweak as required and test again, rinse and repeat until you have something that seems to have a profitable edge. This may take you weeks of manual work - that's fine. Then when you have something that seems to work, start with a small amount of money. Small as this will help reduce the stress. Set the rules and risk management and get

Simon Shares Zimbabwean coup, or not coup or whatever. People are all asking me what's the best investment thesis here. There isn't one, a coup is not great for an economy. A democratic functioning state is what is good for investments. My comments last week about large M&A activity seldom working promoted a number of responses about successful deals - but all were private (not listed). This makes sense, no hype, no over paying. Just good old fashioned due diligence and right price paid. Consolidated Infrastructure Group (JSE code; CIL) update and delayed results is a massive mess. Third update and this one says we simple don't know how bad things will be nor if previous results are sound. Major management failure both to communicate to market and to manage the company. Spar (JSE code: SPP) results show revenue up 5.4% while operating costs increased 19.2%. Not good at all. Switzerland seems to be coming right, Ireland not and South Africa is tough. Netcare (JSE code: NTC) trading update is all about the

Simon Shares More highs locally and global for markets. And of course that makes everybody worried and certain we're about to crash. Well we will most definitely crash, just nobody (and I mean nobody) knows when. So as always ignore the doomsayers. Tencent buys a 10% stake in Snap, a clever deal as it gets them into the US market. It also means we now all own some Snap via any Top40 ETF we have with Naspers (JSE code: NPN) in it. Purple Group (JSE code: PPE) results were rough. Ignoring a write down of Real People, GT24/7 made a sliver of profit, Emperor is losing AUM hand over fist while EasyEquities continues loses. With almost 60k users the burn rate for EasyEquities is about R3m a month with revenue of some R800k a month. That's a large gap that needs a lot more customers to close. They do however have the money from Sanlam that tides them over for the next 3 years while they try turn the low cost idea into profits. Steinhoff (JSE code SNH) is back in the bad news on reports that it hid US1billion worth