Plague diary — week one: it’s abundantly clear that it won’t be business as usual for the foreseeable future. The penny dropped when sickly events prompted the closure of the Fish Hoek Tennis Club, shutting off my safe space for weird and wonderful off-court banter. Unable to vent freely after hours, I may as well detail my trading endeavours which — if the HRI (Hasenfuss Reverse Indicator) still works — could be useful for other investors to assess the petrified confusion that characterises the market at present.
Do the opposite of what I do, and you’ll generally be OK … if history is anything to go by.
I’ve seen several market corrections, and should be an old hand. This one, in my experience, is by far the most ominous, and it’s not easy to apply the old market adage that share prices will always recover. There is a mildly apocalyptic feeling to proceedings. Still, one must keep perspective. Here I am worrying about the market, and my wife is celebrating that a strict lockdown might preclude the clerk of the court delivering summons for her speeding fine. This would be a pity, because I remain bewildered about how it’s even possible to get a Honda Jazz past 120km/h.
An even greater mystery is the length and severity of the current market malaise. At times it looks like we could talk ourselves into a deep hole as overriding uncertainty is fanned vigorously by the relentless chatter on social media. It’s incredible how sentiment for our beloved oil-from-coal producer Sasol, for instance, seems to waft back and forth so easily because of idle opinion-making. But I still think it’s prudent to withdraw my earlier proposition to the tennis club’s "Monday Marauders" that we form an investment club and buy the $h!t out of Sasol when it hits R20.
We probably should reconfigure that proposition for a hit at R10. But seriously, I have taken a nasty loss exiting some of my favourite positions – including Hosken Consolidated Investments, where the debt-to-equity ratio no longer provides me with comfort, owing to a plunging Tsogo Sun share price. I’ll hopefully get an opportunity to buy back in when the first signs that we are dealing effectively with Covid-19 outbreak are evident.
I probably would have skipped out of Brimstone (with its exposure to rand-hedged fishing companies like Sea Harvest and Oceana) as well as Premier Fishing & Brands, but no-one is offering realistic bids.
What did provide me with some hope for at least trading through this crisis was a scintillating short-term return (practically a few days) on global heavyweights AB InBev and cash-flush luxury brands business Richemont. Clearly the market opinion can differ vastly on such businesses in just a few days. Nevertheless, I was delighted to cash out and store up my war chest in preparation for another despairing skirmish on the markets.
British American Tobacco, on the other hand, has been less than convincing. But I retain my holding, firm in my belief that long-held bad habits will not be broken despite heightened health consciousness. I’m a little shy of local stocks at the moment. But I have been accumulating Adcock Ingram (a well-run pharma business at a good valuation) and newly listed asset manager Ninety One. Ninety One will hopefully become legend, spoken about with relish in years to come: a lesson about a great business listed in the worst of times. I have taken a light position in property giant Growthpoint — finding some reassurance in the enduring quality of the 50%-owned V&A Waterfront and a decent offshore portfolio. I tried to hold my nerve in Redefine, but I capitulated at about 210c last week and, in retrospect, am fairly happy with the outcome. I’m also building offshore positions — via deeply discounted Reinet as well as exchange traded funds like Sygnia Itrix 4th IR, Satrix Nasdaq and Coreshare Global DivTrax. And yes, I have NewGold and NewWave USD — in case you doubt how jittery I am.
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