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Online Share Trading

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Small caps.

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THRESHOLD
Super Contributor
A weakening US$, commodities catching a bid and first world investors seeking yield again... perhaps it is time for our small and mid cap shares to begin to move again. Maybe even property. Time for "Just a little dabble..."
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17 REPLIES 17
prancing_horse
Super Contributor
Property RSA, in an interest rate cycle that seems to be heading north?
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THRESHOLD
Super Contributor
The strengthening Rand may serve to limit this. Don't get me wrong - I don't like property stocks in general(although overseas ones are a potentially good Rand hedge) and I actively dislike South African property stocks - BUT - if the Rand is strengthening and our property stocks maintain historic yields - foreigners will see this as way better than negative yields on a devaluing currency. Long term - I am unwavering - get the hel!l out of dodge! Short term - I think there is a trading opportunity developing. The same logic applies to our banks. I hate them - but I think they will catch a bid (are catching a bid) for the very same reason.
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prancing_horse
Super Contributor
Banks, I agree, maybe as I have and still doing well out of them. Property RSA?, I missed the boat as far as buying listed companies goes, mainly because of my exposure to property in my personal capacity, which with retirement around the corner, know what an illiquid investment it is. But then again "the greater the risk, the greater the gain". Good luck.
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kwagga
Super Contributor
Small caps are the last to run in mature market. Why venture into small caps when some large caps have been sold off big time and has some great upside potential. Next in line would be mid caps. Small caps except for a few popular ones will probably remain muted for a while. Look at Santova, maybe a dead cat bounce on Curro, Pinnacle, Zeder, Quantum foods.
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kwagga
Super Contributor
..can maybe add Torre to the mix
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THRESHOLD
Super Contributor
Not small caps in general - just very specific ones. You won't catch them when they run!. That said - a more responsible approach is to leave illiquid SA small caps alone altogether!
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THRESHOLD
Super Contributor
I missed the SA property stock run for the very same reason. Some of my property took 8 years to move. I thought I had bought dirt cheap - but after the cost of holding and the ZAR exchange rate - never again! After 10 years - Still fighting with land in FERNDALE, BRYANSTON EAST, BENMORE(DALECROSS) and DURBAN NORTH. What a pain!
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Not applicable
big difference between property (land) and listed property stock. Listed property makes money every time you buy your vida e cafe late in the Waterfront. Land, on the other hand, loses money every time you buy your vida e cafe (rationale being that because that is money that should have been spent developing the land).
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THRESHOLD
Super Contributor
Depends on the land. I have owned land with a view to high density development in areas like Sandton Drive, Atholl, Bryanston, Craighall etc. Some of it went up 20x in 10years. But - as always - the best stuff went first.
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THRESHOLD
Super Contributor
Depends on the land. I have owned land with a view to high density development in areas like Sandton Drive, Atholl, Bryanston, Craighall etc. Some of it went up 20x in 10years. But - as always - the best stuff went first.
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THRESHOLD
Super Contributor
There have been a number of listed companies over the years with very interesting property on their books - most skulked away into the night (aka went private) and dumped me along the way - or worse yet - semi-stripped the assets (always a risk) with micro caps - SABLE, PPR, COL, IRA... Some of the small industrials or even financials have extensive property holdings too - SO - in short - I agree - generally speaking, rather buy the shares and leave the real stuff alone!
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Not applicable
well I have done very nicely out of NEPI and Reslient, thank you. Granted Redefine has basically moved sideways for the better part of 3 years, and hasn't been a great performer, and I am 10% down on ATTAQ. But take my super stars - plus the dividends, and it has been a great steady sector for years. Too late to get into it though, because the quality stocks are right back up there again. except Hyprop - which is maybe offering some value.
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THRESHOLD
Super Contributor
Sure - but those are the big boys - and as I said upfront - I missed the run on he property sector because I felt too exposed to property in my personal capacity. The small caps - well they were all being given away after the 2008 crash - I couldn't resist!
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partridge
Super Contributor
individual Property - the comments on holding and returns are insightful as to the real risks. If I was MARTIAN and I came to this World to invest - would I buy a property in a developing market as an investment? I might be green in colour but I am not crazy! Answer - generally NO( and you can list the reasons starting with diversification and illiquidity( Argh!!) and tax and cost of holding .. . BUT it is completely true to say that listed RSA Property stocks - which over the last 10 years have done EXTREMELY WELL - being one of the top performing asset classes- and this has transpired at least while the three Bears were out and Goldilocks was making herself comfortable, Alas the bears have just opened to the door - and the signs are there. Listed property is just a proxy for bonds...
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Not applicable
My point really is that individual property vs listed property are simply not the same asset class. Your stretch of land simply doesn't earn any annuity income every time Louis Vuitton sells a hardback in the V&A Waterfront.
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partridge
Super Contributor
Clearly they are not. But people behave and invest as if they were identical - the one just a fraction of the other....sigh!
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THRESHOLD
Super Contributor
Large listed property companies hardly behave like listed companies at all. You are right - they are treated like an inflation linked bond and trade at a premium to their underlying assets because of this. They can pump out endless dilutive issues and subject their holders to full marginal tax on their distributions and still achieve a premium rating. The market seems to have scant regard for the risks inherent in their model.Of course - when the model comes uncoupled - ie. they can no longer pass on inflation in their rentals (outsized because they are a target for local government tax collection.)... "beware below."
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