February 10, 2016

JSE Direct 201: Where to park cash?

23 minutes

Simon Shares

Grindrod (JSE code: GND) just hit multi-year lows trading just above 900c with a net asset value (NAV) of over 2200c. Don't fight the trend, especially on cyclical stocks.

RBA (JSE code: RBA) went bust on Tuesday. Of the three; RBA, Seakay and Calgro M3 (JSE code: CGR) only Calgro M3 remains. Lesson is simple. Go back five years, Calgro M3 was by far the best of the three, always buy the winners.

Volatility, lots of it. Welcome to bear markets, they move fast and trading them is tough, very tough.

Eugene Chemaly - Afrifocus Securities

Chris asks "how does one protect cash?".

Preference shares are debt instruments issued by banks and others that pay set dividends linked to the prime rate.

Typically trade at discount to their cash levels and have no market makers meaning capital loss is possible. In an ideal world they would offer no gain or loss, but reality is different.

New Basel 3 rules may see preference shares phased out by the issuers (via repurchase) and there is a risk that the budget speech will see an increase in the dividend withholding tax rate (currently 15%).

PREFTX is the Exchange Traded Fund (ETF) or individual ones liked by Afrifocus are; Discovery and the three form Investec.

We Get Mail

Thando

Jean Pierre Verster mentions that hedge funds will be available to us mini-me retail investors this year. What was that about?

Sandra

What will the TFSA be increased for next year?

Chris

How does one protect cash?

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