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A prayer before Top40 explodes

 

Our Fed, Who art in Washington, Yellen be thy name, Thy printing come, Thy will be done by Ben as it is with Janet, Give us this day our daily billion, and increase our debts, As we bail out our debtors, And lead us not into inflation, But deliver us from down markets, For thine is the printing, the bubble and the euphoria, Forever till taper. Amen

Hi Pilot,

 

Great thread, been following it since you started it.

 

I was wondering how you determine in which way the trend is heading? Is it through technical analysis?

 

Hi pilot thanks for the great advise. I'm sure most of us would like to know this but you keep talking about you triggers and indicators. Would you mind giving your break down of your ticks/rules that a trade needs to make for you to consider it?<br /><br />Thank in advance. 😄

 

Morning Gents

 

Just to give you bit of background.

 

I have been investing since 1994 and was fascinated with the Stock Exchange (and I still am). I have a strong maths background and wanted to figure out why and when to buy shares. Warren Buffet , had me hooked on value investing by 2005, but I was a big fan of technical analysis. So since 2006 I backed only value shares and used technical analysis to determine good entry points. I started using SSF in 2008 to increase my exposure, but at the end of 2008 and beginning of 2009 I lost everything. I was holding shares like BRN, OML, SHF and TKG. In those days it was the best value I could find on the market, and had I held them till today, I would have done well. But if there is panic and fear in the market, you can hold the best of shares, they will get smash. And when you think its the bottom.... they get smashed some more. 19 and 20 February 2009 was the end for me when OML dropped 7,3% and 5,8% in succession, after dropping from my R8-00 entry to R7-00 before the 19th. Not happy times, to say the least.

 

Now on to the better news. The lessons I learned from this experience, has changed my view on the way the market is moving. Fundamentals wasn't moving it, in the short term anyway. So my interest changed to reading up everything on market cycles and trends, which shares do best in which part of the cycle. It is all good to know this, but when is the start and when is the beginning and when do the certain sector start moving. It was very vague. And that took me right back to my Technical analysis. Three years ago I was full time into technical analysis and tried about 100 different technical indicators. Using them in different ways, and added % chance of success on each of them. Most of them don't work on their own effectively, but I had about 15 that worked the best.

 

The last year my focus swung to what happens right before an uptrend or downtrend and I found that certain (modified) indicators do the same thing nearly every time a new trend starts (about 85% success). In March this year I ran preliminary data on Jan, Feb and March of 2015 and came to the astonishing conclusion, of doing 67%, 80% and 55% in each of those months (with gearing of course). Around 10-20% without gearing.

 

My next step was to prove it with real trading scenarios and thus the thread, I started here on sharechat. I am in the process of leaving my current job, and to pursue trading shares full time. 

 

If someone can come up with a descent 8 digit amount for my model, I would sell it.   But I don't want to jeopardise the sale of my model by giving all the information that I have. 

 

 

I do use RSI indicators, Divergence indicators (I developed myself), STS indicators (modified), MFI indicator (modified), sma's and wma's. Most of these indicators values have been changed to give smoother and more accurate trigger points. Some of the short term Indicators need to do the same thing at the same time, to validate a trend changes, but then I need to see a trend break on the RSI indicators as well. (Not on the graph). I would sometimes say a trend has broken, but it has broken on the RSI and not on the graph. 

 

Lastly, I would go to the graph, and especially with big formation breaks, it confirms the new trend and the break. Then a new trend has started (most of the time)

 

I know I'm not giving you a lot of information, but hope this will help. 

 

In the meantime, I will be posting on here, to share my view. Thanks to everyone for all the interest!

 

Happy Trading

 

 

Pilot

Attached is tommorrow's shares. 4 New shares showing bull trend entries and changes to some of todays missed trades.

The traded shares today did well with the 2 x one star Long positions (BAT + INL), being weakish, but is in the uptrend.

 

Heaven knows why I went for R66-00 on IMP today (should have been R67-30, where top 3 day resistance was)

Might have dozed off  Anyway, all traded positions are in trend.

 

JDG is a scary long, after its hard push, but has entered a new uptrend. (Not sure how fast it will move or for how long)

 

 

hey A, where do you get your seasonal info from? thx.

Learning the hard way by trading against it through the years, but mostly from UBS and their cycles!

 

Best is to go back and study historical charts (don't always follow the same pattern but more or less), other key factors includes earnings season months, ECB meeting dates, futures close-out, Santa rallies (triple witching), seasonal bearish/bullish months etc

 

Jan  - Earning season month (first half bearish..second bullish)

Feb - Bullish but if Jan bullish followed by an uptrend then could be a top month (refer to previous years)

March - Bearish first half but futures close-out month so rally latter part

April - Earning season month (first half bearish..second bullish)

May - Tricky, sometimes bullish sometimes bearish but known as a very zig zag month

June - Mostly bearish but futures close-out month, after it is bullish...

July - Earning season month (first half bearish..second bullish)

August - Depend on bullmarket or bearmarket, if bull then bullish, if bear then bearish

September - Futures close-out month, first half bullish, second bearish

October - Earning season month (first half bearish..second bullish), also called month of bottoms

November - Bearish

December - First half bearish, latter bullish (Santa rally)

 

BUT...all of this must fit in with the tape, pattern and trend it is busy with!

 

Again, not set in stone but a good overall guideline!

 

A

If Advanced Health (AVL) can execute to plan they look set to significantly benefit from a potential secular shift in the healthcare industry.  In an attempt to reduce costs the Health Insurance providers (Discovery Health leading the charge) are incentivizing specialist to perform more surgeries at day clinics. South Africa is only has 45 day clinics vs 245 private hospitals so there is plenty of room for growth.

 

AVL is raising R100mln to triple the number of Day clinics they operate. If mgmt can execute this stock could be a 5 bagger over the net 5 years.

 

Nevertheless the 100c/shr listing price looks reasonable. 

 

Here are some of my thoughts and numbers http://wp.me/p3RKee-6x . 

 

 

Good analysis although you may want to spend a bit of time doing a bit more risk analysis. The risks to this business are substantial.

Firstly, regulatory risk - as you know the private sector is under scrutiny and prices could soon be regulated (read WILL be regulate). Now this as you say could well play into the hands of Advanced Health. Thing is though, in the words of Warren Buffet, you need a moat and I don't see how these guys will compete against the like of the big groups. Surely if the trend begins to push patients from hospitals into day units the big boys are not going to sit around and watch it happen? If this market is viable, mark my words, you will se aggressive expansion of the big hospital groups into it. Advanced Health could get bought out if they have enough mass by then, or they will be relegated to minor leagues.

 

My question is, if they are so brilliant at what they do, why is it they have only 2-3 clinics in Oz?

 

ps, to be honest, I like this sector and possible macrotrend. I've seen it personally in other parts of the world and SA is slow to the crease however I'm not convinced this company is the right one to take advantage of it.

 

Just my 2c..

It reads also:
"MRI’s coal briquetting plant at the Vaalkrantz Mine in Kwazulu-Natal in South Africa (‘the Project’), which commenced operations from run of mine coal in October 2013, has now installed and fully commissioned a re-suspension unit allowing it to operate from the fines stockpile of the plant. With this initial ramp up now complete, the Project can commence full commercial production".

They have been producing briquettes from the 10% run off from the wash plant to date as they are right next to it with their briquette production. The waste fines stockpile is massive, it means now they can eat into the stockpile as and when they wish as well as using the day to day run off. They are ramping up production. Making as many Briquettes as they can. Good News.

Hi LWVi,

 

There are numerous options here:

 

1) TRADING IN YOUR PERSONAL CAPACITY

 

Pros

- Any profits/losses can be added to/deducted from your other income (salary etc) under normal circumstances (there are exceptions if make recurring losses, ie. ringfencing if you're taxed at the maximum marginal rate, but that becomes very detailed)

- Cheaper structure than Trust or Company

 

Cons

- If you're a director, hold a bond or have any other "risks" associated with your personal capacity, your portfolio is at risk to your creditors

- Forms part of your estate and when you die, would be subject to estate duty

- Can become quite tricky on your personal tax, and will probably lead to quite a few tax queries in the future in the case of losses

- Comes administrative, unless an accountant deals with the secretarial issues

 

2) COMPANY

 

Pros

- Easily accessible for other investors as you mentioned

- Can be sold quite easily (sell the shares of the company)

- Lower effective tax rate than marginal individual rate of 40% (38.80% taking into account profits after dividends tax distributed)

- Tax affairs are easy to deal with (for accountants anyway)

- Company continues after your death (see Cons - shares)

 

Cons

- May require an audit or independent review (unless you are the sole director and hold the shares in your personal capacity, and the Public Interest Score in terms of the Companies Act is low enough, then it would just be a compilation) - which can become costly (ie. more expensive structure)

- Shares will fall into your personal estate and are not protected (same as for individual capacity) unless the shares are held in trust - which will then definitely require at least an independent review of the financial statements (costly)

 

3) TRUST

 

Pros

- Assets are protected against your creditors if you maintain the trust structure properly

- Assets don't form part of your estate (better tax planning)

- Profits can be distributed to the beneficiaries and taxed in their capacities (ie. at lower rates), unless section 7 is triggered (don't want to go into the detail here, it can become lengthy)

- Tax affairs are fairly simple to deal with (by an accountant anyway)

- Cheaper than a company structure

- No audit required unless it is required in terms of the trust deed

 

 

Cons

- Not as easy for other investors to enter as you'd have to amend the trust deed and create very specific beneficiary groups - although if you have other investors interested you can start a company and dispose of the shares in terms of group rules (a simple section 42 transaction could then transfer the portfolio into a company structure, with the company's shares held in the trust)

- Can be slightly administrative (secretarial records, trustees, resolutions etc), but much less so than with a company structure

- New legislation regarding the capital gains in trusts expected soon, and it is expected to be onerous amendments

- If profits are not distributed, it is taxed in the trust at 40%, but that's the same as the individuals' maximum marginal rate.

 

 

Hope that helps. If you want further detail you could go see an accountant (CA) or attorney on the above.

 

From the info you've supplied, I would suggest a trust as this would be the least costly whilst protecting your assets.

Money Management (when trading) is simple:

Do not expose more than 2 – 3% of your trading on any given trade. So if your trade flops, do not lose more than the 2-3%.

 

The more difficult part is your trading strategy (regime and discipline). In theory, using the above Money Management strategy, will allow you to never lose all of your trading capital, BUT there will come a time when the money remaining (after many losing trades with little to no winning trades), you cannot physically adhere to the Money Management strategy anymore. So the goal is to balance your preservation strategy for money management with your growth strategy (trading strategy) for wining trades. It is a double-sided ethos.

 

Example: R100k trading account. Do not risk more than 2% per trade, thus a trade may never incur a loss in excess of R2k. This leaves you with trading a single Mini or 2 x Micro contract(s). Your trading strategy will be better if you allow a couple of 100 points leeway, so now you are left with trading 2 Micro contracts on ALSI (assuming IG) of which you will not risk / incur more than 500 points loss (a healthy margin in current market if you ask me).

 

If it is not clear, money management (how much and at what risk) is one side of the formula, the other is your actual trading strategy(when, how long and in which direction).

 

And also I know it's a broad question and many opinions, but what's the best way to money manage?

Even the Best Trading Strategy Won’t Save You

 

Trading strategies, systems and methods always look great on paper, but when it comes to trading in the real world, market chaos and human unpredictability often make even the best strategies seem inadequate to the task. The hard truth all traders eventually learn is that trading is far more difficult when your chips are down and the pressure is on, even if you have a very effective trading strategy.

Whilst the trading method you use is extremely important, it simply isn’t enough by itself. There are essentially three main components to successful trading: Mind, Money and Method, and if you don’t have all three pieces of the puzzle in proper working condition, you are going to be like a lost sheep, lacking long-term consistency in your trading.

 

 

Note, whilst I have said that a concrete trading strategy alone is not enough, I am not trying to suggest that you don’t need a good strategy, because it’s obvious that we need an effective trading edge to get us into high-probability trades. However, IF that is all your looking for, you’re going to end up broke, poor, bankrupt and depressed, because the other two parts of successful trading, mind and money, are just as important as the method you trade with.

 

You need to think of trading as 3 things: Mind, Money and Method

Successful trading is an art and a skill and unless you are firing on all cylinders; mind, money and method, you aren’t going to make it. When we have our real money on the line, it fires up our emotion, and the more money you risk, the greater your emotional responses to the market will be. Therefore, the simplest and most effective way to keep your emotions in-check as you trade and to make sure the “Mind” component of successful trading is working properly, is to manage your risk intelligently and logically on EVERY TRADE you enter.

 

Managing your risk properly will go a long way to helping you achieve the proper trading mindset, because it will keep your attachment to trades at a low level and will help you ignore the feelings you have after losing or winning money in the market. However, this is not the only piece of the Mind puzzle unfortunately. Traders still tend to over-trade and over-analyze the market, even if they are managing their risk properly. Thus, if you really want to be sure that you have the Mind portion of the three M’s in proper working order, you need to only practice proper risk management, but you also need to have patience and discipline to follow your trading plan / strategy and not over-trade. You also need to know how to trade during market uncertainty and volatility and not become obsessed with economic news and over-analyzing the market.

 

Money management seems to be like the elephant in the room that all traders are aware of but few want to discuss or be honest about. After all, facing the fact that you should only risk R6 per pip because you only have a R 50 000 trading account is not really something that excites many traders. But, the reality is that if you don’t practice proper money management, you will never succeed as a trader, even if you have your Mind and Method in order.

 

Proper money management makes controlling your mindset and emotions significantly less difficult, in this way, money management is like the “glue” that holds everything together in your trading. If you don’t practice proper money management, your mindset is probably not going to be calm and consistent enough to make money even if you’ve mastered your trading method.

 

Beginning traders often understand the importance of money management, but due to greed and other emotional errors, they think they can get away with putting it off its implementation until some later date after they’ve made XYZ amount of money in the market, this day never comes. Whether you have a R10 000 account or a R1 000 000 account, if you do not manage your risk and money properly as you trade, you will never make money over the long-run, even if you’ve somehow managed to master your mindset and your method is solid

The trading method, strategy or system that you use to trade the market with is obviously important, but as I’ve stated above, it will not reward you in the way it is supposed to if you don’t have your Mind and Money in proper working order, so keep that in mind.

 

If you’ve been following my posts for a while, you know that I trade the trend. I’ve been a huge proponent of simplifying one’s trading strategy "buy the dip", simply because it makes sense and it works. If we were in a bear market, i would say sell the rally. Also, trading with a simple bare-bones trading method like buy the dip, has a very positive effect on Mind and Money.

Traders who trade strategies or systems that require them to have indicators and other such nonsense plastered all over their charts are also usually over-analyzing their trading and thinking too much. This obviously is a problem for the Mind aspect of your trading because it makes achieving a calm and collected mindset nearly impossible.The moment you start thinking while trading, you are usually f*cked. I call the market a b*tch, it's out to f*ck everyone. 

 

Focus on what works in the real world, not what looks good on paper or what sounds good

 

Viva La Bull          

Point taken re certain Venture Capital Companies' challenges in a listed environment; but lets stick to the reality and facts, Afdawn is at this stage obliged to function within the JSE and other regulatory frameworks. Afdawn' stated vision is to be an investment holding company, or is it? The 'bump and dump' philosophy is a new Grindstone making.

 

On the 17th April 2012 (before selling out to Afdawn) Keet van Zyl proclaimed in a press interview; "Knife Capital is flexible about raising funds. We may look at raising a smaller (ouch)  tranche of funding - maybe R100m-R150m - which will allow us to close off a fund and build a track record before testing the investment market again. The 'entry ticket' will cost between R20m and R30m, which means that pension funds and institutions, as well as 'super angel' funders offshore, will be the initial targets.".....   

 

It must be noted that they were not successful in the above i.e. raising any funding and Afdawn was a last port in a storm for them, according to KvZ without the envisaged track record.

 

Regarding the past successes claimed as achieved by the KC team as managers of the HBD fund; Tim Harned of AGC was the sole financial adviser for HBD re the Fundamo HBD transaction which Knife Capital often claimed as a KC success (see AGC web site). Tim is often a speaker at the Grindstone exit-centric workshops... 

 

Even the iKubu transaction was according to Franz Struwig of their own making (interview on KykNet), it may be that KC has done some lesser paperwork for an undisclosed fee on this deal - as there is no transparency we may only guess.

 

No kudos there! So without capabilities in their field of expertise what did Afdawn buy? 

 

April 2014 Knife Capital sold a two year old seemingly insolvent company of which the balance sheet was bumped up with intangible assets of more than R10 million (to make the deal fly) to Afdawn for R10 million plus (please read the AD interim report to verify - 28th November 2014). So what can they lose? Who has done the independent DD on KC? My guess a related party, where are they now?   

 

Regarding open and transparent communication; at the AGM the CEO said that they subscribe to the King 111 Report, inter alia the Board is responsible for Governing Stakeholder Relationships;

 

o    Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.

o    Complete, timely, relevant, accurate, honest and accessible information should be provided by the company to its stakeholders. 

o    Communication with stakeholders should be in clear and understandable language. (please note the interim report was presented in very complicated and peculiar English and a lot of double talk) 

o    The board should adopt communication guidelines that support a responsible communication programme.

 

These are facts and not emotion or blind believe, there are only two Afdawn Board members that are not in one way or another compromised by the KC transaction.   

 

But let us wait things will pan out over time, the JSE may even have a say in the matter. Some people may think that the Afdawn Board is misleading the investor market by manipulating communications to suit the situation.  

 

 

 

 

 

cowboy rusq, for a man that 'knows nothing' (but wants to be in the top 2%) your opinion must count little...from the nature of your posts you don't strike me as man that gives opinions; but rather as one that takes others'...but thanks for your attempts at intelligent commentary anyways.

err, uhmm. HAU!

LOL - you probably correct in that my opinion is worthless (main reason why it is not for sale).

one of the first things i taught my kids, was to THINK for themselves. they do now, although they may also fail your requirement for intelligent commentary.

so be it...

Just for interest sake Roundtree, if you are willing to buy at that level, why do you not Short the hell out of her now.

 

 

you beat me to it, was about to ask the same question!

I'm glad you asked. It's all about odds, actually.

 

There are two levels I'm looking at. Two days ago professionals were buying when everybody was selling. They have to sell those longs eventually. My chart says they've been buying since 46545 and that's where they ultimately have to close. Anything can happen after that. 

 

Yesterday when the market was going up after the dip, they were opening short positions, when the dumb money was buying. Jakes and other smart traders took a long bet because the odds were in their favour and they made tons of money when everyone thought the sky was falling. Those short positions that the professionals opened have to be covered eventually. Remember, professionals never close at a loss. 

 

Now as a retail trader I have no way of telling which way this thing will move; there's not a single trading indicator in the world that can tell me which way this thing will move. Not a moving average, RSI or MFI. Anyone who says they know is lying to you. Not even the professionals know. 

 

We're currently hovering somewhere in between these two levels I mentioned earlier. Lets say I open a short right now. These crooks might decide to cover their shorts first (move south) in which case I'd make tons of money, or they might decide to close their long positions above, in which case I'd lose tons of money. Now that's gambling. The odds are 50/50. Not good at all.

 

So what should I do? WAIT. Wait until at least I think the professionals have covered their shorts and eliminated some of the risk. It's only then that I can say with a reasonable amount of certainty that the odds are in my favour. Right now, we're are sitting at 50/50. You don't have to be a professional gambler to know that those aren't good odds, brother. 

 

Of course this is based on the premise that we are trading a rigged market and professionals never close at a loss. 

 

Feel free to punch holes; I'm willing to learn from other traders. Unfortunately, I'm clueless when it comes to indicators - I only trade naked charts with horizontal lines.

 

Happy trading.

You know those documentaries about how, a long time ago, the dinosaurs were wiped out by a massive comet that struck the earth... They will tell you that everything was either dead or dying by the time the rock struck. They will also go on to conclude that, according to historical data, the earth is due for another comet strike that would most certainly wipe out every living organism on earth, and that it is not a question of "if" but rather of "when". It never matters how much they emphasize it, it feels unlikely to ever happen.

 

This bloody "market correction" feels like that comet that is "supposedly" on it's way as i am typing this. It feels as if it is never gonna happen.

 

So i would just like to take this opportunity to say Welcome Comet, i hope you had a pleasant trip.

 

C

Thanks for the heads-up Mokhachane and SB45 on further new listings in the pipeline. PSG-Konsult and now Sygnia are on my radar.

 

I will start a new thread entitled 'New Listings' so that we can get some more input as we may miss those guys and gals who do not read and contribute to the Visual Thread.

 

Thanks for the reccie out to the Visual site Goliath, I look forward to see how Friday goes 

Now the Bulls who are weak will close.

All the bears will jump in.

 

Bulls like us will jump in at the low.

 

Perfect time to buy, when everybody is jumping out.

Tomorrow will be great.

 We might hit the 39800 mark.

 

That's were the man will be separated from the boys

My god you lot, talk about having a day off I think you lot should. Clearly not busy making any money today any of you.

Sometimes in life you have got to look at things and make the judgement. It is easy to sit back and back favourites for a small return. Good luck to you but you will still be here years from now with your petty comments slagging off who you can.

In my opinion this will make me lots of money over a shortish timeframe and I won't be worrying about you at that point either.

Research done.

70 posts a day. 5 about trading. Rest about b$tching and moaning. *** this. I am done with this forum.