Ask yourself this question.... if this was a horse race would you bet on the 100/1 outsider because he has never one a race but oneday is sure too or do you put your money on the horse in form. The one who has one his last 5 races and is bound to win again soon...banks as a group are down between 18% - 48% year to date .. African rainbow minerals is up 112% .... you chose.
it absolutly could and will depending on your time frame. Also thats not my point.. Active investing is about buying time... return = interest x time... therefore waiting around for things to turn can and should be measured as a loss as it has decreased your long term comounded rate of return....if you are economically active for 20 year and you hold a non performing share ( not loss making but flat) for 6 months that has cost you 2.4% of your time... measured against a peforming share you have a mulyiplier effect.. the guy who only hold winners ends up rich... simple.
What no commen???. Just because somthing has risen does not mean it will fall and just because somthing has fallen does not mean it will rise.Go look at IMU as an example of this and ask how many formites have lost money trying to bottom feed of the banks in the last 6 months.
Agree time frame is important. Anything can happen in the short term, but it is what happens in the long term that matters. ABSA,RMH, and SBK have on average increased their dividends by about 23% over the last ten years. This implies that their headline earnings have also compounded at a similar rate. Now if one adds in a depressed pe ratio to the mix, surely with a 2-3 year view this looks attractive. At these prices you could get a rerating to 10-12 times PLUS an increse in headline earnings of between 15%-20% (their guidance is CPIX plus 5%) PLUS 6-7% dividend.
I made quite a bit of money bottom feeding the banks. I tend to agree however that the wave has passsed and that Banks has become a longer term investment. On the other hand whats the alternative? I am just too scared to enter resources because most have had a had run and I am scared that resources is at the top or very near the Top of the Rollercoaster.
John is correct as far as trading goes.I also think even for the longer term it would be a good idea to wait till after the reserve bank meeting next month.Everybody seems to think its the actual one or half percent rise that determines where share prices go,when its actually what Tito says as share prices always react to what the FUTURE holds!....remember all too often,if u are in a hurry to enter"get in on the ground floor and out in the basement" as my pappy used to say.
out of interest a year ago to the week ARI was ther best performer with a yearly return of 137% ( price 12100 )this year it is still the besy performer with a return of 112% ( price 25699). Also ask yourself which of the 2 sectors Mining vs banks stand the best chance of unrealistic profits... now you go chose.
I am now more confused than ever !!! Active trading really works if you pick a runner, otherwise its more fun at Emperors Palace. Whats up with FSR - Lost 32,9% of its value yet trading 18 million shares a day?????? ASA has lost more than SBK - Simon do you know why?
I,ve read many books about different types of stock investment strategis over the years. Every single author believes that his/her style works and goes on to "prove" it. The truth is that all these styles do work, BUT at different stages of the economic cycle. The different styles will also only work if you have the matching personality for that particular style.i.e a conservative person will probably not suceed in aggresive trading. I,ve never tried to trade stocks in the short term because it does not form part of my investment strategy and by implication my less agressive(ie conservative) approach to investing. I would summarise my style as a long term dividend growth style. This is why I would rather back the banks as apposed to the resourse stocks. I have know idea where the prices of the resourse stocks or banks are going to be in 6 days, 6 weeks or 6 months BUT I do believe that in all probability that the banks will be declairng higher dividends in the longer term. This strategy works for me. The 100/1 horse that John refers to has flu right now(global credit crisis). It will recover and win many more races in the future, the problem is we do not know when. I think it was Rockefeller who said that the best time to buy is when their is blood in the streets.