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 The Sharenet Daily 
Tuesday, 22 May 2012 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

The Rational Investor

I first encountered the rational investor at university introduced as the efficient-market hypothesis (EMH). Most hypothesises, theories, and models are based on the notion that everyone is a rational investor, but are we?

In short, most of us aren’t rational investors. With the amount of information that we are bombarded with these days, through news and social media, it is difficult for investors to make unbiased and educated choices.

The traits of a rational investor can be broken up into three factors:

  • Investment Choice – Preferring securities in your portfolio over alternative investments, e.g. if you prefer Standard Bank you will buy Standard Bank, not ABSA because it is also a bank.

  • Risk Aversion – If you have the choice between portfolios with the same expected return, a rational investor will take the one with the lowest risk.

  • Rational Expectations – Incorporating all available information in an unbiased and coherent fashion. An example of this is that some investors expect 20% pa from equity markets going forward, but all evidence suggests this is way too high.

    Unfortunately the rational investor has been missing for a while. Some of the irrational behaviours to which investors can fall victim are overconfidence, loss aversion, anchoring, and herd behaviour.

    Overconfident investors/traders tend to believe they are better than others at choosing the best stocks and best times to buy or sell. Studies have shown that overconfidence leads to overtrading.

    Overtrading normally leads to the investor selling losers at low prices and buying winners at high prices. Investors tend to buy recent winners, even if they are by then significant overpriced. The increase in trading also leads to an increase in trading cost and taxes liabilities; this reduces the yield of the investor.

    Loss Aversion
    Loss aversion is part of being a rational investor, but taking this to the extreme can negatively affect an investor’s prospects. An example of this was in the credit crisis, where investors sold all of their shares after the markets crashed. They therefore locked in the losses they suffered because they didn’t give the markets time to bounce back.

    Investors tend to anchor the price of a share on past experiences. An example is when a share drops significantly investors will buy the share believing that the price will rebound to historic levels without doing research to see if the drop in price is due to fundamental changes in the company.

    Herd Behaviour
    One of the most infamous financial events in recent memory would be the bursting of the internet bubble. Herd behaviour happens due to two main reasons:

  • Investors (who are also human after all) don’t want to be outcasts so they follow others.
  • The rationale that, “everybody is doing this and not all of them can be wrong so this should be correct.”

    Being a rational investor is extremely difficult. Investors should only invest with available information and without being biased by emotions. It is therefore imperative to have a solid process and to do research on the company or fund that you invest into.

    Kind regards,

    Gerbrandt Kruger

    (021) 914 4966

  • Tue, 22 May 2012
    Top News
    South African government bonds firmed on Tuesday as yields fell on demand from foreign accounts buying into higher yields and as a well-supported auction brought buyers back to the long end of the yield curve.  Full story

    Gas-rich Tanzania's energy shortage has driven its current account deficit to widened by 135 percent on soaring oil imports to generate power in the face of shortages and blackouts.  Full story
    The U.N. nuclear watchdog director said on Tuesday he expected to sign a deal with Iran soon to unblock an investigation into suspected work on atom bombs, potentially brightening prospects for big-power talks with Tehran to stop a drift toward conflict.  Full story
    Russian President Vladimir Putin named several trusted former cabinet ministers to Kremlin posts on Tuesday, asserting his authority in a move likely to weaken Prime Minister Dmitry Medvedev's new government and undermine its mandate for change.  Full story
    The leader of Mali's March 22 coup condemned the beating up of the interim president by pro-putchist demonstrators and called on Tuesday for a peaceful transition of power in the West African country.  Full story
    Financial and housing shares nudged Wall Street higher on Tuesday after U.S. existing home sales rose in April to their highest rate in. . .  Full story
    European stocks recorded their biggest daily gain in a month on Tuesday, boosted by expectations that Europe and China would take measures to. . .  Full story
    World shares gained for a second consecutive day o n T uesday on hopes European leaders will tackle the region's debt crisis, but. . .  Full story
    U.S. stocks' early rally faded on Tuesday with the Nasdaq briefly dipping into negative territory and investors citing risks to the global. . .  Full story

    Britain's leading share index jumped on Tuesday, driven by gains in mining stocks as the demand picture for metals was brightened by hopes. . .  Full story
    U.S. stocks rose on Tuesday, driven by financial and housing shares, after U.S. home resales rose in April to their highest annual rate. . .  Full story
    European shares extended gains in tandem with Wall Street indexes on Tuesday afternoon as better-than-expected U.S. macro data further supported sentiment.. . .  Full story
    Gold fell on Tuesday under the weight of a weaker euro, as investors bet against a meeting of European leaders this week doing. . .  Full story
    SA Business
    South African power utility Eskom is worried about meeting peak power demand as the southern hemisphere winter sets in, although the situation should improve by the middle of June, chief executive. . .  Full story
    South Africa is likely to leave unchanged it maize output forecast for the 2011/12 season with the damage from a late-season drought seen milder than expected, a survey of traders showed. . .  Full story
    South African consumer goods firm Tiger Brands posted a modest rise in first-half earnings on Tuesday, helped by growth in its exports and international businesses as the domestic market remains subdued.. . .  Full story

    South African stocks clawed back losses on Tuesday, rising over 1 percent as miners and banks benefited from a global rally. . .  Full story
    Mediclinic International, South Africa's second-largest hospital group, posted a smaller-than-expected rise in full-year profit on Tuesday, hurt in part by higher. . .  Full story
    Petrochemicals group Sasol, the world's top maker of motor fuel from coal, on Tuesday launched a new 3.5 billion rand shaft. . .  Full story
    Chinese buyers are deferring or have defaulted on coal and iron ore deliveries following a drop in prices, traders said, providing more evidence that. . .  Full story
    Company News
    Datatec announced that its 100% subsidiary, Westcon Group, Inc. has acquired the 33.1% interest in its African subsidiaries (excluding Westcon South. . .  Full story
    Shareholders are advised that the ordinary and special resolutions proposed at the eleventh annual general meeting of shareholders of the company. . .  Full story
    The board of directors of the company are pleased to announce that at the general meeting of the company held on. . .  Full story
    Anglo announced that as part of the court's conciliation proceeding in Chile, to which the judge of the 14th Civil Court. . .  Full story

    Aquarius and Impala Platinum Holdings Ltd. confirmed that a fire occurred at the jointly owned Mimosa operation in Zimbabwe during the. . .  Full story
    Implats and Aquarius Platinum Ltd. confirmed that a fire occurred at the jointly owned Mimosa operation in Zimbabwe during the night.. . .  Full story
    Shareholders are advised that, with effect from 1 June 2012, Ms Fikile Sharon Mkhize has been appointed as an independent non-executive. . .  Full story
    Shareholders are notified that at the annual general meeting of shareholders, all the ordinary and special resolutions proposed were duly passed. . .  Full story
    Company Results
    Revenue increased to R66.9 billion (R61.2 billion). Operating profit rose to R16.6 billion (R13.7 billion). Net attributable R10.2 billion (R8.2 billion).. . .  Full story
    Revenue increased to R9.2 billion (R8.3 billion). Gross profit rose to R2.7 billion (R2.6 billion) and gross profit improved to R2.7. . .  Full story
    Interest income on advances increased by 32% to R4.6 billion (R3.4 billion). Income from operations was up 26% to R9.3 billion. . .  Full story
    Revenue increased by 15% to R2.2 billion (R1.9 billion). Gross profit rose by 14% to R923 million (R813.2 million) and operating. . .  Full story
    World Markets (Spot Prices)
    NameTimeRPMove% Move
    JSE Overall17:0033488.14402.141.22%
    JSE Top 4017:0029538.24393.321.35%
    JSE Gold17:002431.0160.032.53%
    JSE Financial17:0024883.87324.391.32%
    JSE Industrial17:0038144.62298.810.79%
    JSE Indust 2517:0032172.67269.460.84%
    JSE Resource17:0047555.32839.591.80%
    DJ Futures20:0012510.0032.000.26%
    DJ Ind19:4512542.4337.950.30%
    SP 50020:001321.385.390.41%
    FTSE 10017:355403.2898.801.86%
    All Ords08:574173.5049.101.19%
    NZSE 5007:463529.8636.471.04%
    NameTimeRPMove% Move
    Gold $19:581577.07-15.60-0.98%
    Gold R20:0013064.13-22.74-0.17%
    Gold R/kg20:00420012-510-0.12%
    Silver $19:5828.2720-.1860-0.65%
    Platinum $19:581447.50-15.00-1.03%
    Palladium $19:58612.201.700.28%
    Brent Crude19:56109.59-.09-0.08%
    Rand / Dollar19:588.28380.06650.81%
    Rand / Pound19:5513.02580.04890.38%
    Rand / Euro19:5510.5296-0.0013-0.01%
    Rand / NZD19:576.2846-0.0011-0.02%
    Rand / AUD19:558.15750.01170.14%
    Yen / Dollar19:5879.97500.67000.84%
    Euro / Dollar19:550.78610.00560.72%
    Dollar / Euro19:581.2718-0.0089-0.69%
    Pound / Dollar19:550.63390.00210.33%

    Click here for the Sharenet Spot Price page
    The JSE Today

    Trading Statistics
    * Includes all listed instruments on the JSE
    Major Moves Up
    SharenameSaleMove% MoveVolume
    1 LONFIN  2503516.28.%5400
    2 TREMATON  180127.14.%5000
    3 JUBILEE  15196.34.%163086
    4 BRIMSTON  910536.18.%3925
    5 ARGENT  705345.07.%28977
    6 DIGICOR  290103.57.%118971
    7 SAPPI  2730943.57.%896637
    8 GOLDONE  383133.51.%3000
    9 NEDCOR  170465613.40.%1279187
    10 KAP  325103.17.%83002
    11 ROLFES  335103.08.%13000
    12 TRNSHEX  340103.03.%43733
    13 MONDIPLCP  67881932.93.%218483
    14 INVPLC  42371172.84.%1692319
    15 MONDILTDP  67821822.76.%143032
    16 SYNERGY-B  560152.75.%550800
    17 HARMONY  79112072.69.%975350
    18 VILLAGE  15542.65.%709029
    19 ANGGOLD  292957452.61.%1606078
    20 OLDMUTUAL  1880462.51.%19692896

    Click here for more Major Moves...
    Major Moves Down
    SharenameSaleMove% MoveVolume
    1 AMA  305-20-6.15.%57080
    2 HOSP-B  350-20-5.41.%14096
    3 DELRAND  230-10-4.17.%145420
    4 VALUE  521-19-3.52.%82
    5 VERIMARK  120-4-3.23.%2400
    6 MEDCLIN  3740-115-2.98.%570581
    7 WITSGOLD  3400-100-2.86.%2750
    8 HULAMIN  610-17-2.71.%62868
    9 CADIZ  185-5-2.63.%493950
    10 KEATON   330-8-2.37.%48573
    11 TRADEH  625-15-2.34.%13000
    12 PALLINGHT  298-7-2.30.%11580
    13 AQUARIUS  1079-21-1.91.%199986
    14 CMH  1060-20-1.85.%29821
    15 ADCORP  2700-49-1.78.%212344
    16 DELTA  680-10-1.45.%900
    17 VUKILE  1600-23-1.42.%401191
    18 ELLIES   375-5-1.32.%174623
    19 BRIMST-N  830-10-1.19.%163973
    20 HCI  8400-100-1.18.%24538

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    New Highs
    SharenameSaleHighMove% MoveVolume
    1 SYNERGY-B  560560152.75.%550800
    2 LIFEHC  28322832632.28.%4626034
    3 SYNERGY-A  885885151.72.%200217
    4 NETCARE  15181528181.20.%10173914
    5 KGMEDIA  2000201510.05.%158070
    6 VUKILE  16001690-23-1.42.%401191

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    New Lows
    SharenameSaleLowMove% MoveVolume
    1 AQUARIUS  10791079-21-1.91.%199986
    2 REDEFINTL  496485-4-0.80.%113986
    3 BAUBA  1501400.78000
    4 LONMIN  1032410122740.72.%783962

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    Index Summary
    Index NameRPMove% Move
    Top 4029,538.24393.321.35%
    Mid Cap48,157.71325.150.68%
    Small Cap35,557.8229.190.08%
    Resource 2047,555.32839.591.80%
    Industrial 2532,172.67269.460.84%
    Financial 159,376.10138.791.50%
    Financial & Ind. 3035,558.22377.991.07%
    All Share33,488.14402.141.22%
    Oil & Gas 27,029.44634.152.40%
    Mining 30,555.38504.271.68%
    Gold Mining2,431.0160.032.53%
    Platinum Mining52.94.090.17%
    GENERAL MINING7,707.29131.431.73%
    Oil & Gas Producers 14,533.23340.972.40%
    Basic Materials 26,180.22435.341.69%
    Chemicals 14,684.93-11.08-0.08%
    Forestry & Paper 13,647.41409.573.09%
    Industrial Metals 28,894.73428.661.51%
    Industrials 32,531.67403.851.26%
    General Industrials 89.281.451.65%
    Consumer Goods 33,542.7798.270.29%
    Automobiles & Parts 5,595.4815.850.28%
    Household Goods172.9910.46%
    Health Care 43,080.60213.150.50%
    Index NameRPMove% Move
    Food Producers 60,313.79-103.96-0.17%
    Personal Goods 511.874.800.95%
    Consumer Services 65,521.47890.081.38%
    General Retailers 54,435.84268.440.50%
    Travel & Leisure 3,820.7524.240.64%
    Media 98.042.312.41%
    Support Services 2,385.61-27.42-1.14%
    Telecommunications 66,385.66341.430.52%
    Financials 24,883.87324.391.32%
    Banks 48,141.52686.951.45%
    Non-life Insurance 42,622.09127.610.30%
    Life Insurance 19,302.71356.881.88%
    General Financial 2,240.3736.421.65%
    Technology 28,657.42155.440.55%
    SHARIAH TOP40 2,975.62441.50%
    FTSE/JSE SHARIAH ALL3,095.35421.38%
    COAL MINING24,890.653271.33%
    FTSE JSE Fledgling 5,327.6860.11%
    FTSE/JSE Alt X 1,195.36-43-3.48%
    SA LISTED PROPERTY 420.470.55%
    CAPPED PROPERTY 340.770.61%
    RESOURCE 26,248.534611.79%
    DIVIDEND PLUS191.3431.51%
    FTSE/JSE RAFI 406,935.91981.43%
    Capped Top 4015,612.892081.35%
    Capped All Share16,943.742031.22%
    JSE TABACO 5,055.71-14-0.27%

    Click here for the Sharenet Index Summary page
    Latest Consensus Changes**
    CodeCompany NameStatusUpdated
    Results Expected**
    ExpectedCompany NameFin. Date
    23 May 2012LEWISMarch 2012 (Final)
    23 May 2012MRPRICEMarch 2012 (Final)
    23 May 2012MRPROBMarch 2012 (Final)
    23 May 2012PRICEPMarch 2012 (Final)
    23 May 2012SKINWELLFebruary 2012 (Final)

    Recent Dividends**
    Share NameDec-DateLDTPay-DateAmount
    TIGBRANDS12-05-2212-06-2212-07-02R 2.9500
    ADCORP12-05-2212-08-1012-08-20R 0.8000
    MEDCLIN12-05-2212-06-1512-06-25R 0.5500
    BARWORLD12-05-2112-06-0812-06-18R 0.8000
    ABIL12-05-2112-06-0812-06-18R 0.8500
    Ex Div**
    Share NameDec-DateLDTPay-DateAmount
    JSE12-03-1312-05-1812-05-28R 2.5000
    HOSP-A12-04-3012-05-1812-05-28R 0.6334
    REDEFINE12-05-0312-05-1812-05-28R 0.3150
    PHUMELELA12-04-1912-05-1812-05-28R 0.2500
    SPANJAARD12-02-2912-05-1812-05-28R 0.1800

    Upcoming AGMs**
    CodeCompany NameDateStatus
    ADHADvTECH Ltd.22/05/2012Confirmed
    AFEAECI Ltd.28/05/2012Confirmed
    AFEPAECI Ltd.28/05/2012Confirmed
    MTNMTN Group Ltd.29/05/2012Confirmed

    Stock Exchange News Service
    22/05/201217:44BIFR1 - FirstRand Bank Limited - Listing of New Financial Instrument
    22/05/201217:36 Hyprop Investments Limited - No change statement and notice of Annual
    22/05/201217:35 Beige - Intended Dealings in Securities by Directors
    22/05/201217:30 Datatec Limited - Dealing in securities by a director
    22/05/201217:22 Mobile - Disclosure of Significant Disposal and Acquisition of Mobile
    22/05/201217:13FCPD - Foord Compass Limited - Dealings by a Director
    22/05/201217:11 Alert Steel Holdings Limited - Additional information pertaining to
    22/05/201217:08 Datatec Limited - Datatec Limited acquires full ownership of the African
    22/05/201217:03TBSNIH - Nedbank Limited - Dividend distribution announcement in relation to
    22/05/201217:00 Exxaro Resources Limited - Results of meetings and fulfillment of
    22/05/201216:52 Convergenet Holdings Limited - Notice of General Meeting
    22/05/201216:37 Gold Fields - Dealing in securities by Director
    22/05/201216:30 Dorbyl - Legal proceedings against a Former Director - appeal to Supreme
    22/05/201216:05 Mobile Industries Limited - Audited results for the fifteen months ended
    22/05/201215:59 Finbond Group Limited - Consent from the South African Reserve Bank to
    22/05/201215:57SGA/SGB - Synergy Income Fund Limited - Revised forecast and financial
    22/05/201215:54 Metair Investments Limited - Dealing in securities by a Director of a
    22/05/201215:49 Top Fix Holdings Limited - Results of the General Meeting
    22/05/201215:26 Anglo - Anglo American and Codelco agree to talks and suspension of legal
    22/05/201215:05 Metmar Limited - Dealings in securities by a director
    22/05/201215:00 ZCI Limited - Failure of the ball mill pinion shaft at the Mowana Mine
    22/05/201214:30 Mediclinic International Limited - Audited results of Mediclinic
    22/05/201214:27 Capricorn - Mandatory Offer Results
    22/05/201214:24BISASP - South African Securitisation Programme (RF) Limited - Interest Rate
    22/05/201213:51BIRPIF - Resilient Property Income Fund Limited - Increase of Domestic Medium
    22/05/201213:41 Massmart Holdings Limited - Trading of Massmart ordinary shares on behalf
    22/05/201213:33 IQuad Group Limited - Resignation from the board of directors
    22/05/201213:15 London Finance & Investment Group P.L.C.- Dealing in securities by
    22/05/201213:14 Aquarius Platinum Limited - MIMOSA Safety incident
    22/05/201213:08 Impala Platinum Holdings Limited - Mimosa Safety Incident
    22/05/201213:06 Ellies Holdings Limited - Appointment of independent non-executive
    22/05/201212:58 ADvTECH Limited - Result of Annual General Meeting and voluntary Trading
    22/05/201211:40 Adcorp Holdings Limited - Audited Abridged Group results for the year
    22/05/201211:30 Sacoil Holdings Limited - Further cautionary announcement
    22/05/201210:12 Distell Group Limited - Dealings in securities by Company Secretary
    22/05/201209:33 Kibo Mining Plc - Appointment of Joint Broker
    22/05/201209:30SCIB - The Standard Bank Of South Africa Limited - Correction to announncement
    22/05/201209:00 Jubilee Platinum Plc - Shareholder Update
    22/05/201208:00STXDIV - Satrix Dividend Plus Portfolio - Listing of additional securities
    22/05/201207:10 British American Tobacco p.l.c - Transaction in own shares
    22/05/201207:10SYN924 - Synthesis Funding Limited - New Financial Instrument Listing
    22/05/201207:05 IFCA Technologies Limited - Results Of Mandatory Offer
    22/05/201207:05 Tiger Brands Limited - Unaudited Group Results and Dividend Declaration

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