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MarketViews - December 2016 Edition
Natalie Mayer
1 December 2016

Dear Readers

Welcome to the December edition of MarketViews.

Here we feature some of the most-read articles from Sharenet’s popular Views section, as well as those from our regular contributors. We also continue with Nicole Cameron’s interview series Femmes in Finance, focusing on women who are making waves in the financial sector.

Top reads this month

The Most Investable Shares On The JSE Right Now

Admit it - we love articles like this. All the research has been done by a reputable professional (Dwaine van Vuuren of PowerStocks Research, to be specific) and voila - you have a share shortlist at your fingertips. To PowerStock’s existing four automated share screening methods, Dwaine has added a fifth screen based on the results of a rather comprehensive 2013 study by C. Muller and M. Ward. This study stood out because it extensively tested fundamental share screens on the JSE, rather than foreign markets, which is most often the case. The five screens used together reveal the top ten shares on the JSE you could invest in right now - with a few caveats...

Top 5 Stock Picks for 2017

Here we have another shortlist of shares to be aware of, this time for 2017. Author Daniel Nel is a full-time trader and analyst at Sharenet, and gives us excellent summaries on five companies to watch next year. This article approaches share selection from a company fundamentals point of view, and is a great place to start if you’re reviewing your trading journal and planning any changes to your investment strategy.

What The Market Is Saying About The Trump Presidency

As things return to (a new) normal after the shock of Donald Trump’s victory, we can start to see how the US market is adjusting to the new administration. Capital International and Sharenet join forces in this article to give us a picture of the aftermath and expectations for the future. Though Trump’s policies have yet to be made clear, analysts are expecting aggressive infrastructure spending, some tax reductions and simplifications, rising inflation, a stronger US dollar, and the easing of some regulations. If you’re investing offshore, this article is helpful in identifying potential winners and losers by sector.

This JSE Indicator Is Giving A Stern Warning

If you’re wondering about the outlook for South Africa’s macro environment, this article is for you. Dwaine van Vuuren has created a macro-index that tracks together all the factors used to monitor overall market health (or risk) on a day-to-day basis, called the Composite Market Risk Index. Examining charts of the index both in the long and short term, Dwaine makes no bones about calling the current macro environment "hostile". To lower your risk, he suggests moving some of your stock market assets into cash, enabling protective puts or shorts, or making use of sector rotation and defensive share selection techniques. Find out more about the Composite Market Risk Index and what must happen before the macro environment can improve. 

How To Choose A Good Fund Manager

Surely the title of this article should be "How To Choose A Good Fund" rather than "Fund Manager"? Well, apparently not. In fact if you speak to the experts, the fund managers themselves, you’ll quickly learn that it is actually about the fund manager. While a company can have strong internal processes that help a fund to perform acceptably, it is surprising how human qualities such as investing philosophy, conviction, consistency, and risk aversion are the decisive factors in whether a fund under- or outperforms. But this article is not a list of vague characteristics. Instead it offers five very practical tips on what to ask and what comparisons need to be made when selecting a fund manager. 

FEMMES in FINANCE: Meet Gina Schoeman, South Africa Economist At Citibank 

This month, Nicole Cameron introduces us to Gina Schoeman, an economist at Citibank. Gina shares her typical day, career highlights, and how she balances demanding full-time work and being a wife and mother of young children. She also provides insight into how the gender divide in the financial arena is changing for the better, and what women in particular have to offer.

Why Quitting Is So Difficult

No doubt you’ve heard of Freakonomics, that best-selling book by Stephen D. Levitt. What you might not have known about this award-winning economist is that right after getting his PhD and being on the road to a great academic career - no small feat - he quit. His reason? He found his field crushingly boring. Levitt eventually found his niche in ’freakonomics’, a branch of behavioural economics, but he remained curious about why he - and other people - found it so hard to quit something that just wasn’t working anymore. AJ Cilliers applies some of his research to why investors often find it so hard to let go of losing shares. By looking at concepts such as sunk costs, risk aversion, opportunity costs, and the popular slogan "YOLO", we find some interesting answers. 

Wishing you good reading and a prosperous month’s investing, 

Natalie Mayer


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