HEDGING

[THRESHOLD]

My SOL and NED/SBK/BGA shorts are numbing the pain of my small cap portfolio. Targeted shorting as a general hedge - dangerous - but I am out of options (no pun intended.)

[Rams]

Why is it hurting so much? if you in derivatives , then you should be out, if you investing, then just wait it out? It's like putting more expensive bread into a broken toaster, will still get burnt. ( especially if toaster from Makro)

[THRESHOLD]

The market for small caps has evaporated. This has been a trend - there is no choice but to "wait it out." Face it RAMS - no one likes to see shares that you could have cleared at R4 sitting at R2 and dropping. Greed - sure - but still... Incidentally - I wouldn't "wait it out" in South African stocks.

[suki]

Watch the movie The Big Short and do what they did.

[THRESHOLD]

Wouldn't that be nice. BUT - Let's think about this as a serious option for a moment:- Most of them shorted the market using other people's money. If the banks had managed to maintain the con for another year - they would all have gone bust. They also entered into short contracts with the very companies that they were betting against... and then wondered why the pricing, which was set by these counterparties, wasn't accurate. It's like betting against the house - but in this case they got "lucky" and the house failed... in the nick of time! This allowed them to exit with a small percentage of their potential gain since they were effectively fleeing a sinking ship ie. their counterparties may not have survived to pay up. AND - for the most part - the shorters paid set premiums - they did not have to meet margin calls on mistimed positions!

[prancing_horse]

SOL? I'm not so sure, has it not become more of a Rand/$ play as to what in the past was purely tracking the oil price? BGA,SBK with their exposure to Africa a short maybe, but I wouldn't put NED & FSR in the same basket. Went long on the last two yesterday, I feel if there is a little value to be had at present it's in that sector, just personal opinion.

[Russ]

Well summarised Threshold! It was high risk, high stress trading.

[THRESHOLD]

I am trading these shorts. Cleared my banking shorts yesterday. I am convinced that our local banks are on a hiding to nothing given the local credit risk- BUT - I am very aware that they have been taking steps to "move" into USD - so I am more than a little nervous of just shorting them and holding on. As for SASOL - - the analysts kept selling us that flat rate benefit of exchange rate vs oil price. Given that they have dollar costs overseas and that they have a fixed cost component and that they are exposed and that they produce chemicals for fracking etc. - this is a load of... The danger here is that SASOL's input costs must be collapsing - which props up her profits. I am very wary of shorting in general - long term - they tend toward infinite loss.

[koos2]

only fing propping up sub-prime on the platteland is ze banks. Outstanding rates und taxes on a propety i just bought be R97k, ze banks dont even inspect the ***** they buy..

[THRESHOLD]

I managed to take back some of my banking shorts - this is a casino. it's funny - I hate gambling - couldn't even be bothered to pull a lever in a casino... yet here I am - day after day - gambling my life away!

[Rams]

So, is Iran oil priced in already?

[THRESHOLD]

Well - given that I am short SASOL and given my luck...

[Rams]

320 on SOL

[SimonPB]

rams did you buy your BIl and MTN when they hit your targets ??

[koos2]

gonna have to throw some $6 coins at the stripper at my local tonight.

[Rams]

BIL yes. MTN still in play... Also bought APN and CML at targets.Also short MSM at target as always.

[Preston]

@Rams, keep on shorting cos i exited/sold the equity a long time ago at a smallish profit.

[SimonPB]

you still holding KIO ?

[Preston]

yes,why?

[SimonPB]

coz it the best way to find out ..