Of course. I'm talking about the inherent risk in incorporating Capitec into a long-term portfolio. You do realise that "then you can sell" is a pretty piss-poor methodology to use as a part of your investment portolfios. Its fine if you're day-trading but I highly doubt that the members of this forum are day-traders...
Im not a day-trader either. I have some really moderate investments that I've played with for a number of years.
Over the years, I have learnt 2 things about getting in and out:
1) Listening to noise (and being influenced by it) is the worst way to pick your investments
2) When you do finally decide to invest, no matter how sure you are, know when you're going to get out
The only graphs I look at are the ones that show the share price for the last month/6 months/year/3 years/5 years/10 years. Go and do this for Capitecs shares.
Then do something that I haven't done yet, and read their last financial results and future plans from the board.
If it all seems good to you, and you want to get in, then do it, knowing that you don't know everything, and absolutely any investment could go pear shaped (there is inherent risk is any equities investment).
One of the worst things I ever did was pick up some stock during the recession, and after it lost 30% of its value, I thought it would be a great time to pick up more (calling a bottom), and I did. and promptly lost everything I had. Conversely, I also learned never to call the top either, when i stayed out of investing in EOH because it had just made over 100% since I started watching it - now its up over 200%. I have called a bottom before and made over 150%, but that was pure pure luck and never repeated.
I really love a little investment here and there - for me its like a hobby. And as its a hobby, I'm by no means a professional. I think educating yourself is key, and i think that over a long period of time you start to understand things alot more (like why share prices can go up when employees get retrenched), and also realise some of the things that you just wont ever understand.
Ultimately, before you decide to invest in anything, its good to have a "system". That's all I'm advocating at the end of the day. Be clear on what kind of investment you're making, and why you're making it. Be clear on what you want to achieve out of it, and most importantly, be clear on what you're going to do if you're expectations aren't met. If you are disciplined and leave you're emotions at the door, success will surely follow.
As an example: You pick up share x for R100, and you've done this based on a solid fundamental analysis (as solid as you can do without calling your accountant), avoiding as far as possible the noise surrounding the share and perhaps picking up on a few other interesting happenings (like share purchases by directors of company x). You know that any investment can go bad, so you set a stop loss at R90 (10% loss)
Scenario A: Things go well, the company pays a 4% dividend and in the first year the price grows by 10%. Awesome. This is after the price dropped 5% when European markets were a bit iffy, went up to level again, appreciated, came down again, came down to 6% went back up etc etc etc. But, like for the last several years, its trending upwards...seems like a good investment.
Scenario B: Unsecured lending starts to put a burden on the company. Before Joe Public know about it, the professionals have already got wind and started selling. The share drops by 10% to R90. You are unemotional about this. You dont worry about the loss (because you're prepared to lose all of this money anyway) and you sell your shares. You lose R10 and you walk away, and you dont care what happens afterwards. You dont care if the price goes back up, or continues down, or whatever, because you have a system, and it told you to do this, and you did.
Result: You've followed this strategy for 10 different stocks in different sectors. They've naturally all performed differently, but because you have worked out how to spot decent performers, 7 of them are appreciating, 1 is stagnating, 2 are approaching your 10% exit point, and all of them are paying you a decent dividend.
Long bloody post, but it highlights, to an extent, some of my own habbits that have worked really well for me so far, and I think elaborates a little more on my "then you can sell" statement
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