561 replies to this topic

[JLFB]

CML - 100%

 

Target price?

[Bread]

CML - 100%

[gamma]

Thank you for sharing the great insights guys

 

So, sure, interest rates are rising.  But even if we end the year at an interest rate of 6.25% that's still lower than the interest rate of 7% at the previous bottom of the interest rate cycle in 2006.  So yes, interest rates are rising, but historically - interest rates are still extremely low.

 

Just wanted to point that out.  But then again, in the context of the consumer ALREADY being under pressure any interest rate increase is probably bad news...

 

Next interest rate decision: 22 May

 

 

I'd be very surprised if they hike rates given recent rand strength. Unchanged is my guess.

[vlam]

Thank you for sharing the great insights guys

 

Whether or not there is a move this month, economists still expect the repo rate to rise to 6.25% by year-end, 25 basis points higher than the median forecast in a similar poll last month. [Source: Moneyweb, 15 May 2014]

So, sure, interest rates are rising.  But even if we end the year at an interest rate of 6.25% that's still lower than the interest rate of 7% at the previous bottom of the interest rate cycle in 2006.  So yes, interest rates are rising, but historically - interest rates are still extremely low.

 

Just wanted to point that out.  But then again, in the context of the consumer ALREADY being under pressure any interest rate increase is probably bad news...

 

Next interest rate decision: 22 May

[Saints]

It is also a psychological game with small gaps as their price is generally lower in particularly penny stocks below R1 so investors think they can buy more on a low price and a percentage move is easier off a smaller base than on a share with a higher share price. If it is growing company then this may be true but generally not the case and investors get caught by this perception.

[HDB]

On  a more serious note here's what i think about small caps. There is nothing wrong about investing in small caps as long as you understand what you are holding. Small caps are often under-capitalized which mean that they are much more interest rate sensitive. Small caps have been helped here by the falling interest rates the last few years. If you believe that we have hit the bottom in the interest rate cycle which we definitely have , then you should  reconsider your holdings in these small caps especially over the next few years. If you think their growth will exceed the interest rate increase and allowance for inflation, then by all means hold on to them, otherwise keep away!!

[HDB]

Sugafoot small caps are classified according to their market cap which is basically the number of shares by the price.

The Top 40 shares by market cap are the blue chips or large caps

the next 41 - 200 shares by market cap are the mid caps

The rest are small caps of which penny stocks are included

Penny stocks by definition refer to shares under R1

 

If anyone else has another definition please share

 

 

Loosers 

 

 

Run of the Mill rubbish

 

JBL and VIL included!!!

[Saints]

Sugafoot small caps are classified according to their market cap which is basically the number of shares by the price.

The Top 40 shares by market cap are the blue chips or large caps

the next 41 - 200 shares by market cap are the mid caps

The rest are small caps of which penny stocks are included

Penny stocks by definition refer to shares under R1

 

If anyone else has another definition please share

[HendrikB]

Just a question or two for my understanding, guys

In terms of price per share, below what price is it considered a small cap share?

Am I correct in saying a penny share is anything below 100c?

Thanks for your help

 

For me, a company under a billion rand qualifies as a penny share.

[Sugafoot]

Agree..I'm a victim of ELI

Luckily my portfolio is diverse and small caps are always only a small percentage of my holdings.

You need risk in a portfolio and small caps are a great way to add it but you also need to understand your level of risk and be comfortable with it.

Agreed 100%... small caps sweeten the portfolio returns but should never be the MAIN driver of performance

Just a question or two for my understanding, guys

In terms of price per share, below what price is it considered a small cap share?

Am I correct in saying a penny share is anything below 100c?

Thanks for your help

[Geelstert]

Great portfolio Goliath...I also want to add Attacq to my portfolio soon.

 

Currently I'm really considering Pallinghurst (PGL), Comair (COM), and ZEDER (ZED) as possible candidates for addition to my own portfolio. I see major director dealings by Christo Wiese made yesterday into Pallinghurst, and beause its NAV are currently way more than its share price, it might be worth a watch...just my two cents

[Zero Hedge]

Agree..I'm a victim of ELI

 

Luckily my portfolio is diverse and small caps are always only a small percentage of my holdings. 

 

You need risk in a portfolio and small caps are a great way to add it but you also need to understand your level of risk and be comfortable with it.

Agreed 100%... small caps sweeten the portfolio returns but should never be the MAIN driver of performance

[gamma]

...ELI and PNC are examples of where investors just couldn't exit the small caps...

 

Agree..I'm a victim of ELI

 

Luckily my portfolio is diverse and small caps are always only a small percentage of my holdings. 

 

You need risk in a portfolio and small caps are a great way to add it but you also need to understand your level of risk and be comfortable with it.

[Zero Hedge]

The lesson is: Small caps perform great in Bull market but when there is a problem (company specific or general market sell-off) the liquidity just dries up and you struggle to exit your positions at reasonable levels. The small caps then tend to fall harder than the general market as everyone rushes for the same very narrow exit (think of the FNB stadium after a soccor match with only 1 exit gate open). The blue chip companies will also fall but large investors will step in when the levels start to look compelling. So blue chips tend to find floor quicker than small caps during a market panic and they tend to recover first as the large buyers step in. What makes matters worse for small caps is that there are normally speculators in those names who are highly geared through CFD's and they usually are forced to sell/close-out as they can't meet margin calls during a market panic.

 

Then finally I have said before on this forum...never underestimate the benefits of a well diversified portfolio...I am not aware of to many investors that became millionnaires from investing just in small caps but I know of a number of investors who made millions from buying good quality blue chips when they are on offer at bargain basement prices.

 

Recent examples are Ellies (ELI) and Pinnacle (PNC)

 

The name of the game is to protect and preserve capital during market sell-offs and small caps make that very difficult as some high flying hedge funds found out during the 2008 market panic.

...ELI and PNC are examples of where investors just couldn't exit the small caps...

[Zero Hedge]

Zero, please can you share that 2008 history?
I'm not well versed, and I've been suspecting that my portfolio is heavily invested in small caps. And worried as well.
Thank you

The lesson is: Small caps perform great in Bull market but when there is a problem (company specific or general market sell-off) the liquidity just dries up and you struggle to exit your positions at reasonable levels. The small caps then tend to fall harder than the general market as everyone rushes for the same very narrow exit (think of the FNB stadium after a soccor match with only 1 exit gate open). The blue chip companies will also fall but large investors will step in when the levels start to look compelling. So blue chips tend to find floor quicker than small caps during a market panic and they tend to recover first as the large buyers step in. What makes matters worse for small caps is that there are normally speculators in those names who are highly geared through CFD's and they usually are forced to sell/close-out as they can't meet margin calls during a market panic.

 

Then finally I have said before on this forum...never underestimate the benefits of a well diversified portfolio...I am not aware of to many investors that became millionnaires from investing just in small caps but I know of a number of investors who made millions from buying good quality blue chips when they are on offer at bargain basement prices.

 

Recent examples are Ellies (ELI) and Pinnacle (PNC)

 

The name of the game is to protect and preserve capital during market sell-offs and small caps make that very difficult as some high flying hedge funds found out during the 2008 market panic.

[jhwolmarans]

I agree with Saints and Zero hedge. I reduced my smallcaps to only 10% from 30% of portfolio. Building up cash and will phase in small amount to my DBXUS if the rand strengthen.

[Saints]

Sugafoot, Zero is absolutely correct when a market corrects or goes down (bear market) there is blood on the floor with small caps. Small caps are great when things in the market are going well but when it is the opposite you need to be very careful. If you look back to pre-2010 World cup a good number of small construction firms listed e.g. Wearne, Esor etc. and after listing they went up and investors were doubling even tripling their money but after 2008 these shares went one way and fell below their listing price. If you have accessto charting draw a 5 year graph and this will illustrate my example.

 

Another important point raised is liquidity and illiquidity can also drive the share price down as investors get desperate. Be careful with small caps particularly with penny stocks!

 

Contrary to this small caps are an important component of a portfolio particularly a long term portfolio where you are prepared to take a knock in the hope the share will come back again if it is a good company. There is a always the chance of a 10-bagger lying around somewhere.

[Sugafoot]

I agree with you to dilute IPL and KIO. I will add sasol to the mix. Don't know your time horizon.

Agreed, will also add...be careful of being too overweight small caps...globally small caps are starting to show cracks...if and when our market corrects you don't want to be over exposed to illiquid small caps...cause it will be messy...I refer you to what happened in 2008

Zero, please can you share that 2008 history?
I'm not well versed, and I've been suspecting that my portfolio is heavily invested in small caps. And worried as well.
Thank you

[Zero Hedge]

I agree with you to dilute IPL and KIO. I will add sasol to the mix. Don't know your time horizon.

Agreed, will also add...be careful of being too overweight small caps...globally small caps are starting to show cracks...if and when our market corrects you don't want to be over exposed to illiquid small caps...cause it will be messy...I refer you to what happened in 2008

[jhwolmarans]

Hi Guys,

 

New to Sharechat so thought I'd post my portfolio to see if I can get any recommendations:

 

DSY = 20%

 

IPL = 20%

 

KIO = 20%

 

SUN INT = 10%

 

FINBOND  = 10%

 

ADAPTIT = 10%

 

UBUBELE = 10%

 

Looking to dilute Imperial and Kumba when the time is right. Please feel free to scrutinize. Looking to add Poynting and Mix Tel

I agree with you to dilute IPL and KIO. I will add sasol to the mix. Don't know your time horizon.