Thursday, 07 July 2011 - 20:00
Sharenet is pleased to announce the launch of our new publication, The Sharenet Daily. We have built on the success of our Daily Equity Report, while adding more content and helpful information. The result is a publication that gives readers a quick, easy to read and informative synopsis of market activity, company results and news on the JSE for the day, as well as an overview of what transpired on important overseas markets.
The Sharenet Daily includes helpful charts that give a graphical impression of events, and our news content is sourced from a number of contributors, including Reuters. In addition, Sharenet's popular price information is available in our Spot Price format which provides a snapshot of the JSE and world indices, currencies and commodities.
All the JSE trading statistics; major movers; latest dividends; upcoming AGM dates and more are provided to insure that you keep abreast of market developments. The Sharenet Daily is published at 8pm each day on the website and also distributed via email for your convenience. As always, we welcome your comments, feedback and suggestions at firstname.lastname@example.org
The Pain of Loss is Rational
There are many articles that discuss the behavioural finance concept called prospect theory, or loss aversion. Essentially this concept refers to the tendency for investors to feel more pain per unit of loss than joy per unit of gain.
Behavioural finance is built around the notion that humans – and by extension investors – aren’t rational. The research of our irrationality should therefore lead to either better returns, or reduced anxiety, as we at better understand why our natural instincts are out of whack with rational behaviour.
Loss aversion could, however, have some of its roots in rational behaviour – at least along the lines of my thinking. This is because losses and gains in investments aren’t equal. For every unit (percentage) lost an investor requires an increasing gain in number of units (percentage) in order to get back to the original starting point.
An investment’s first 10% loss is pretty similarly matched by a required 11% gain (1% difference) to get back to the starting point. At a 20% loss this difference increases to 5%, and at a 50% loss the required differential increases to 50% - i.e. one needs a 100% gain to get back to square one. From this point the chart goes parabolic.
The chart gives some sort of explanation as to why investors (with investment horizons longer than 5 years) generally aren’t too fazed about losses of around 10%. 20% losses become a bit more of a problem and any loss in excess of 50% is a big cause for concern!
Naturally no investor wants to lose even 1%, but the reality is that one is required to take on risk when investing in order to grow wealth in real terms on a consistent basis. This will typically result in a portion of one’s capital being put at risk. Over periods of between 5 and 10 years an investment into growth assets should be able to withstand capital reductions of up to 20% - 30% and still beat inflation. When the drawdown is much more than this, investors will have difficulty getting back to respectable real returns.
At Seed we stress the importance of having growth assets in your portfolio (although each client is different) but at the same time we ensure that all our portfolios guard against permanent capital destruction. Ideally clients won’t lose more than 20% of their capital over any period, but in extreme situations this could increase slightly further.
021 9144 966
Thu, 07 Jul 2011
World Markets (Spot Prices)
|JSE Top 40||17:00||28928.73||153.63||0.53%|
|JSE Indust 25||17:00||28089.98||19.47||0.07%|
|Rand / Dollar||19:58||6.6743||-0.0624||-0.93%|
|Rand / Pound||19:58||10.6207||-0.1350||-1.26%|
|Rand / Euro||19:58||9.5744||-0.0747||-0.77%|
|Rand / NZD||19:58||5.5467||-0.0245||-0.44%|
|Rand / AUD||19:58||7.1898||-0.0232||-0.32%|
|Yen / Dollar||19:55||81.2100||0.2700||0.33%|
|Euro / Dollar||19:58||0.6973||0.6973||0.00%|
|Dollar / Euro||19:58||1.4345||0.0025||0.17%|
|Pound / Dollar||19:58||0.6263||0.0016||0.26%|
Click here for the Sharenet Spot Price page
The JSE Today
|Index Name||RP||Move||% Move|
|Financial & Ind. 30||31,229.70||11.91||0.04%|
|Oil & Gas ||27,680.04||501.81||1.85%|
|Oil & Gas Producers ||14,883.05||269.82||1.85%|
|Basic Materials ||30,369.52||298.49||0.99%|
|Forestry & Paper ||14,927.67||60.35||0.41%|
|Industrial Metals ||30,769.95||313.06||1.03%|
|General Industrials ||78,707.27||-143.61||-0.18%|
|Consumer Goods ||27,852.56||38.27||0.14%|
|Automobiles & Parts ||3,509.91||56.61||1.64%|
|Health Care ||33,429.13||-150.19||-0.45%|
|Food Producers ||49,347.10||353.18||0.72%|
|Index Name||RP||Move||% Move|
|Personal Goods ||452.94||.70||0.15%|
|Consumer Services ||53,874.57||89.66||0.17%|
|General Retailers ||42,404.02||309.92||0.74%|
|Travel & Leisure ||3,755.20||5.77||0.15%|
|Support Services ||2,457.53||-42.65||-1.71%|
|Non-life Insurance ||32,493.78||133.37||0.41%|
|Life Insurance ||16,112.44||71.55||0.45%|
|General Financial ||2,329.61||22.47||0.97%|
|SHARIAH TOP40 ||3,198.48||28||0.89%|
|FTSE/JSE SHARIAH ALL||3,262.31||27||0.84%|
|FTSE JSE Fledgling ||4,604.65||-63||-1.35%|
|FTSE/JSE Alt X ||1,097.28||18||1.68%|
|SA LISTED PROPERTY ||391.76||0.75%|
|CAPPED PROPERTY ||321.93||0.07%|
|FTSE/JSE RAFI 40||6,733.58||26||0.39%|
|Capped Top 40||15,083.09||66||0.44%|
|Capped All Share||16,268.55||78||0.48%|
Click here for the Sharenet Index Summary page
Latest Consensus Changes**
|NED||NEDBANK GROUP LTD||SELL||04 Jul|
|SBK||STANDARD BANK GROUP LIMIT...||SELL||04 Jul|
|AIP||ADCOCK INGRAM HLGS LD||HOLD||04 Jul|
|LHC||LIFE HEALTHCARE GRP HLDG ...||BUY||04 Jul|
|EQS||EQSTRA HOLDINGS LTD||HOLD||04 Jul||
|Expected||Company Name||Fin. Date|
|13 Jul 2011||AQUARIUS||June 2011 (Q)|
|13 Jul 2011||AQUARIUSCVT||June 2011 (Q)|
|15 Jul 2011||ROCKWELL||May 2011 (Q)|
|VMK||Verimark Holdings Ltd||08/07/2011||Unconfirmed|
|SOV||Sovereign Food Investments Ltd||13/07/2011||Confirmed||
Stock Exchange News Service
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