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 their UK BMI Healthcare business and it's all bad news. Another large offshore deal gone all frot?
• South African bond issue on Tuesday at largest ever (R3,3bn vs. R2.75bn) and over subscribed 3x. But at 0.75% higher rates and maturing between 2031 and 2048. Compound that cost to our economy.
• Survey results are out.
• Up coming events;
  • Position your portfolio for 2018

* I hold ungeared positions.

When it's time to panic

My grandfather introduced me to markets in the 80's and one of his key sayings was "when it's time to panic, panic fast".

When bad news breaks (yes we looking at you CIL) and a stock crashes the immediate response is that it's too late to do anything. Maybe, but often times the will be continued weakness because news and response is not instant. It takes time for everybody to respond. The bigger issue is if the news markedly changes a view and saying the damage is done is not an answer.

This is especially true if the issue is management related and also in cyclical and small/mid cap stocks.

Importantly I am not talking about panicking when the market crashes. This is about exiting a stock forever and moving on until it proves its bonafides again. Selling crashes is nice in theory but never works. Stocks are different because they can go to zero worse case or spend years, decades, forever languishing around little or nothing.

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