The Preamble
For the background to this series of posts: here, here and here. And the summary:
- Small investors have some investing options.
- You can invest occasionally in lump sums (the once-off investors) or monthly through debit orders (the monthly investors).
- As for things to invest in, I’m a general fan of low-cost equity-index-tracker ETFs (as is Warren Buffett). But there are other possibilities as well.
- This series of posts is there to see which would work out well.
- Then there are some indicators at the end. Because why not.
A look at the week everyone had:
Once-Off Investors
In numbers:
Could we all please take a moment to watch Naspers? And that wasn’t even the exciting part, because it’s missing the entire week’s drama. Here’s a graph for the last 5 trading days:
And some commentary from my friend Hilary:
Watching the move in NaspersN was simply staggering. If you take the time to look at the chart it will become clearer:
- On Wednesday, Tencent announced their Q3 figures and NaspersN fell from 142444 to 134010.
- On Thursday it rallied to 144190 .
- On Friday NaspersN announced a tie up with Schibsted and the shares surged to a high of 160397 and finally closed down to 155500.
- Until Friday, the traders were selling Tencent and buying the rump.
- By mid-afternoon they started selling the rump and buying Tencent “nice trade if you can do it” terrifying for the rest of us!
Some trader talk translation:
- You get listed companies that own shares in other listed companies. In this case, Naspers owns shares in Tencent – but the bigger global example right now is Yahoo owning a significant chunk of Alibaba.
- This creates trading curiousness – because you have the Naspers and the Yahoo, which have value in themselves, and then you have their Big Listed Investments (the “Rump”), which also have value in themselves.
- In theory, you expect those values to have something in common. For example, you shouldn’t have a situation where the value of Yahoo is less than the value of its Rump (ie. the value of its Alibaba stake). As happened a few weeks ago (see here).
- In those situations, you would expect the market to buy up Yahoo shares (“buying the rump”) and sell off Alibaba shares, in order to get back to things making sense.
- Something similar happened last week with Naspers.
In pictures:
Monthly Investors
In numbers:
Clearly, Naspers is having a good week.
In pictures:
What I wanted to say is, if you have a look at how things are going:
- Investing regularly in volatile investments looks like it makes a lot of sense.
- Some might call it the power of dollar-cost averaging.
- And the truth is: you do mitigate some of your risk by buying into a volatile stock at regular intervals.
- But that does not a sound investment strategy make.
- As I wrote about in this post: The Power of Dollar-Cost Averaging. Uh no.
The Indicators
The Exchange Rate is pulling back slightly:
The Stock Market is levelling off in Rand terms:
The Stock Market, in real terms, is looking up:
10 Year Government bonds:
Oil Prices continue to swallow-dive:
Gold and Platinum prices continue to do strange things:
Until next week!
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.
