Firstly – Congratulations to South Africa on winning the Rugby World Cup. They did to England what England did to New Zealand. It’s a puzzle why Eddie did not see that superior scrum coming. By the time the penny had dropped, England were well behind. Reacting quickly to events is something that all investors often prize themselves upon… but in most cases, it’s the usual after the event head scratching scenario. Questions like… why did I not see that coming? Why did I ignore the signs? The truth is as humans, we can’t always remain ‘switched on’. Complacency often creeps in more through fatigue than anything else. That’s why it’s important to take stock. Reset from time to time. Take a deep breath and re-evaluate where the folio is at and where it is going. Unfortunately, that’s not a facility or option open to TheShareHUB top ten picks for 2019 nor the newspaper picks. These stocks are picked in January and success is based on where they end up at end of the year. In today’s markets you have to be a little more active. Of course that depends on your own personal investment strategy and goals. But the environment out there is far more dynamic than years past. More Algo’s and Bots feed the market. More Tweets upon tweets feed the Algo’s which also feed the masses and not necessarily in that order. After past embarrassments such as Lehman’s/credit crunch/Libor manipulation/Barclays private bailouts/Enrons/Carillions/PPi’s/VW Diesel Gate… the list goes on and on… there is perhaps an inevitability that ‘we’ cannot expect or plan ahead for what we do not know or cannot see coming. Much of the above should not happen. But it does. And that’s what makes investing so difficult today. Transparency is still woefully lacking. Accountancy firms still charging huge fees yet assuming none of the accountability.
It’s tough out there and made much tougher by those not playing by the rules. But standards are improving. Not fast enough but certainly heading in the right direction. For instance the reporting rules for Short positions over 0.5% are now available for all to see 24hrs to 48 hrs after the transaction. It’s a shame that in this modern technological world, that this notification period cannot be brought forward to ‘next day’ rather than 48hrs. This would provide more transparency to all investors.
Broker notes are another potential conundrum. If a Broker issues a broker note on a stock at say 50p with a price target of 100p, then surely there should be a rule that states an updated broker note is required if the stock drops by more than 50% (eg 25p in this case). Too many Broker’s issue broker notes like confetti. Many of which are issued at key times whether before fundraisers or after fundraisers. Some Brokers issue notes with lofty targets and when these fail to appear, they disappear… no broker update or comment ever again. It’s as if they’ve decided it best to just keep quiet. There’s no harm in starting coverage and discontinuing coverage. That’s fair. But just as long as you formally ‘end’ the coverage rather than just slip into the shadows when things go the wrong way. More accountability should be brought into the ‘Broker Note’ delivery. Perhaps then, the Broker notes might hold more attention and credibility?
Moving on… Saudi Arabia have at last confirmed that the world’s largest IPO is on. The only difference in past promises is that this will not be a global listing on UK or US markets as previously thought. Instead, it will be via the Riyadh Stock exchange. This will undoubtedly dampen or weaken the reach of the shares but none-the-less, there will be plenty of investor participation… just not that much at a retail level. The historic London Stock Exchange had prior to this, dropped its foreign rulebook to ensure it could get a slice of the Aramco cake. The ease at how these rules were bent was a concern but clearly the blushes were short lived. For now, LSE will have to wait.
Week 43 Review:
The newspaper picks continue to bobble about in the 5% range for the year. Not a bad performance but still moderate considering the all time highs seen across the pond. Commodities continue to be laboured as the markets seem content to feast on the easy 5%+ gains of safer bluechips. With interest rates falling across the globe, money is becoming cheaper again. In these scenario’s equities normally excel. And with US elections around the corner (Nov 2020), stability in the markets will be the Republican’s main goal. But as mentioned above, controlling the markets is never a sure thing and there are plenty of unexpected events awaiting around the corner. For Trump, one event and key catalyst he can control is the China/US trade war. One of the benefits of being able to invent Tariff’s one day and remove them the next is ‘control’. Add tariff’s and you create fear and concern across the markets. Remove tariffs and you create relief and more optimism. The truth is, some of these events actually never really existed in reality. They might have existed in a ‘tweet’ but not in reality.
TheShareHub picks continue to suffer against weak commodity interest. Rig counts are dropping to levels last seen in 2016 yet US production continues to remain steady at all time highs. That said, it’s not growing as fast as the EIA indicated earlier in the year and just like a Broker note that gets it woefully wrong… the EIA seem oblivious to this point. US production might be near highs, but there is no doubt about it, growth in production is slowing and that’s a concern for the oil markets. At $62pb Brent, there’s plenty of complacency factored into that number. Brent should be trading at $70pb minimum against current global backdrop and MENA unrest.
The Independent and Guardian continue to battle it out with TheShareHUB looking destined for the wooden spoon. A few updates from AMER, CERP, MATD, SOLG, PDL and PMO before year end could see a very strong rally in prices which ‘may’ just see the ShareHUB picks back into the blue.
News on Amerisur’s Formal Sales Process should be coming through soon and based on the company assets and increased interest in Colombia, expectations are high. TheShareHUB believes the winning offer should be in the 30’s. No guarantees of course. AMER currently trades at 19p a share.