Monday saw a break in the Seacom cable which carries internet traffic up the east coast of Africa to Europe (and repair is expected to take around a week). The effect of this break has been a number of service providers largely been unable to provide internet access to their clients as they rely exclusively on the Seacom cable.
 
Now the issue is why major ISP’s don’t have a backup plan, such as the Telkom owned Sat3 cable? But that's another story entirely. For now the question is -  what is your back up plan?

This is less of an issue for investors I would suspect, but for traders a backup plan is absolutely critical.

What happens when you power goes, or the internet fails or your PC dies? What if you are in a trade when this happens? Do you have a backup plan to monitor the trade and/or exit if needed?

First rule is to have your brokers support number stored in your mobile phone AND written down somewhere because maybe it is your mobile phone that is dead?

Work out what could go wrong and work out a plan to deal with it in case it happens.

Monday saw a break in the Seacom cable which carries internet traffic up the east coast of Africa to Europe (and repair is expected to take around a week). The effect of this break has been a number of service providers largely been unable to provide internet access to their clients as they rely exclusively on the Seacom cable.
 
Now the issue is why major ISP’s don’t have a backup plan, such as the Telkom owned Sat3 cable? But that's another story entirely. For now the question is -  what is your back up plan?

This is less of an issue for investors I would suspect, but for traders a backup plan is absolutely critical.

What happens when you power goes, or the internet fails or your PC dies? What if you are in a trade when this happens? Do you have a backup plan to monitor the trade and/or exit if needed?

First rule is to have your brokers support number stored in your mobile phone AND written down somewhere because maybe it is your mobile phone that is dead?

Work out what could go wrong and work out a plan to deal with it in case it happens.

I posted a comment on a chat forum a few weeks back asking why everybody always wants to be buying "cheap" shares? The answer is simple - as humans we always want to feel we got a bargain, no difference with investing.

But two thoughts where wandering around my head when I made the comment.

Firstly what of other investment strategies? Cheap is essentially a value investing strategy, and while that may be great for many it is hard as you generally have to buy when nobody else is buying and what of Momentum, discounting future cash flows etc. ?

Secondly, the issue I suspect is just that prices have risen and everybody is looking at what you could have bought a stock for in mid 2009 and regretting not having bought runs around saying - things aren't cheap I won't buy. It almost absolves them of doing anything.

But then this fixation with cheap falls into one of the biggest traps - price is not an indicator of cheap. In fact price tells you nothing except what others are selling and buy for.

So here's a simple method I have long used to help me find "cheap" stocks. Having identified a blue chip share on some basic fundamentals I now wait for it to be cheap and for that I turn to the PE ratio. The PE ratio tells me what value I am getting for my money, so it in a sense it'll help with cheap part.

I then get a long term chart of the PE ratio and figure out the low points over that time frame and look to buy around the average low point.

So for example below is the PE chart of Pick n Pay, we can clearly see that below 15 seems to be the magic number which gave you about 7 buying windows over the last twelve years - and everyone was a decent point for a long term buy and hold strategy for Pick n Pay.

For those wanting to be more aggressive one could then be selling above the 22 level - but that's another strategy entirely so we'll cover it another time.
 

http://twitter.com/simonpb

I posted a comment on a chat forum a few weeks back asking why everybody always wants to be buying "cheap" shares? The answer is simple - as humans we always want to feel we got a bargain, no difference with investing.

But two thoughts where wandering around my head when I made the comment.

Firstly what of other investment strategies? Cheap is essentially a value investing strategy, and while that may be great for many it is hard as you generally have to buy when nobody else is buying and what of Momentum, discounting future cash flows etc. ?

Secondly, the issue I suspect is just that prices have risen and everybody is looking at what you could have bought a stock for in mid 2009 and regretting not having bought runs around saying - things aren't cheap I won't buy. It almost absolves them of doing anything.

But then this fixation with cheap falls into one of the biggest traps - price is not an indicator of cheap. In fact price tells you nothing except what others are selling and buy for.

So here's a simple method I have long used to help me find "cheap" stocks. Having identified a blue chip share on some basic fundamentals I now wait for it to be cheap and for that I turn to the PE ratio. The PE ratio tells me what value I am getting for my money, so it in a sense it'll help with cheap part.

I then get a long term chart of the PE ratio and figure out the low points over that time frame and look to buy around the average low point.

So for example below is the PE chart of Pick n Pay, we can clearly see that below 15 seems to be the magic number which gave you about 7 buying windows over the last twelve years - and everyone was a decent point for a long term buy and hold strategy for Pick n Pay.

For those wanting to be more aggressive one could then be selling above the 22 level - but that's another strategy entirely so we'll cover it another time.
 

http://twitter.com/simonpb

I posted a comment on a chat forum a few weeks back asking why everybody always wants to be buying "cheap" shares? The answer is simple - as humans we always want to feel we got a bargain, no difference with investing.

But two thoughts where wandering around my head when I made the comment.

Firstly what of other investment strategies? Cheap is essentially a value investing strategy, and while that may be great for many it is hard as you generally have to buy when nobody else is buying and what of Momentum, discounting future cash flows etc. ?

Secondly, the issue I suspect is just that prices have risen and everybody is looking at what you could have bought a stock for in mid 2009 and regretting not having bought runs around saying - things aren't cheap I won't buy. It almost absolves them of doing anything.

But then this fixation with cheap falls into one of the biggest traps - price is not an indicator of cheap. In fact price tells you nothing except what others are selling and buy for.

So here's a simple method I have long used to help me find "cheap" stocks. Having identified a blue chip share on some basic fundamentals I now wait for it to be cheap and for that I turn to the PE ratio. The PE ratio tells me what value I am getting for my money, so it in a sense it'll help with cheap part.

I then get a long term chart of the PE ratio and figure out the low points over that time frame and look to buy around the average low point.

So for example below is the PE chart of Pick n Pay, we can clearly see that below 15 seems to be the magic number which gave you about 7 buying windows over the last twelve years - and everyone was a decent point for a long term buy and hold strategy for Pick n Pay.

For those wanting to be more aggressive one could then be selling above the 22 level - but that's another strategy entirely so we'll cover it another time.
 

http://twitter.com/simonpb

I posted a comment on a chat forum a few weeks back asking why everybody always wants to be buying "cheap" shares? The answer is simple - as humans we always want to feel we got a bargain, no difference with investing.

But two thoughts where wandering around my head when I made the comment.

Firstly what of other investment strategies? Cheap is essentially a value investing strategy, and while that may be great for many it is hard as you generally have to buy when nobody else is buying and what of Momentum, discounting future cash flows etc. ?

Secondly, the issue I suspect is just that prices have risen and everybody is looking at what you could have bought a stock for in mid 2009 and regretting not having bought runs around saying - things aren't cheap I won't buy. It almost absolves them of doing anything.

But then this fixation with cheap falls into one of the biggest traps - price is not an indicator of cheap. In fact price tells you nothing except what others are selling and buy for.

So here's a simple method I have long used to help me find "cheap" stocks. Having identified a blue chip share on some basic fundamentals I now wait for it to be cheap and for that I turn to the PE ratio. The PE ratio tells me what value I am getting for my money, so it in a sense it'll help with cheap part.

I then get a long term chart of the PE ratio and figure out the low points over that time frame and look to buy around the average low point.

So for example below is the PE chart of Pick n Pay, we can clearly see that below 15 seems to be the magic number which gave you about 7 buying windows over the last twelve years - and everyone was a decent point for a long term buy and hold strategy for Pick n Pay.

For those wanting to be more aggressive one could then be selling above the 22 level - but that's another strategy entirely so we'll cover it another time.
 

http://twitter.com/simonpb

I posted a comment on a chat forum a few weeks back asking why everybody always wants to be buying "cheap" shares? The answer is simple - as humans we always want to feel we got a bargain, no difference with investing.

But two thoughts where wandering around my head when I made the comment.

Firstly what of other investment strategies? Cheap is essentially a value investing strategy, and while that may be great for many it is hard as you generally have to buy when nobody else is buying and what of Momentum, discounting future cash flows etc. ?

Secondly, the issue I suspect is just that prices have risen and everybody is looking at what you could have bought a stock for in mid 2009 and regretting not having bought runs around saying - things aren't cheap I won't buy. It almost absolves them of doing anything.

But then this fixation with cheap falls into one of the biggest traps - price is not an indicator of cheap. In fact price tells you nothing except what others are selling and buy for.

So here's a simple method I have long used to help me find "cheap" stocks. Having identified a blue chip share on some basic fundamentals I now wait for it to be cheap and for that I turn to the PE ratio. The PE ratio tells me what value I am getting for my money, so it in a sense it'll help with cheap part.

I then get a long term chart of the PE ratio and figure out the low points over that time frame and look to buy around the average low point.

So for example below is the PE chart of Pick n Pay, we can clearly see that below 15 seems to be the magic number which gave you about 7 buying windows over the last twelve years - and everyone was a decent point for a long term buy and hold strategy for Pick n Pay.

For those wanting to be more aggressive one could then be selling above the 22 level - but that's another strategy entirely so we'll cover it another time.
 

http://twitter.com/simonpb

On Tuesday I was interviewing Stuart Thompson on my radio show (JSEDirect) and while we were talking about books he had a couple of excellent thought provoking comments with my favourite being;
 

Perfection is not when there is nothing left to add. But rather when there is nothing left to take away.
 

He of course meant it in an investing sense, and I immediately saw it in a trading light but of course it applies to life the universe and everything.
 

The message is that we believe that more complicated something is the better it’ll function. We think that by adding more formula, ideas, measures and the like we increase the odds of success in the market – but this is seldom true. The reality is that the more input data we have the more space for error we have.
 

In the trading space the issue is that when one opens a charting software package you’re hit with hundreds of indicators and oscillators and we immediately think that somewhere in there lies the holy grail of charting.
 

So you start making Christmas trees and end up with a chart of beauty – but does it make money?
 

Charting is really really simple. In fact my view is that all a chart does is give us the courage to enter a trade because we don’t have the courage to just jump in.

But with solid risk and money management a random entry would make money (to my mind the most important part of trading is the selling/exiting). What a simple chart does is give you a slight edge above the 50/50 of pure randomness and that coupled with your solid risk and money management equals profit.
 

So after a long road and bumpy through charting I have ended up using three EMA’s in my complicated system (Simon’s Lazy System), two in my day trading system (which I don’t trade at the moment as it is a day trading system and I have a life) and my real simple system just using 15 minute candles and nothing else.
 

So when putting together a trading or investing system, remember the phrase and put it into practise.
 

Perfection is not when there is nothing left to add. But rather when there is nothing left to take away

Back in February VOD did an odd-lot offer for those holding below 500 shares, offering to buy them at a price above the market.

It was free money, and now we have another free money offer, this time from Illovo..

Illovo is lookignt o buy out those holding below 500 shares, the price is set at 3072c each with ILV closing at 2825c on Friday. At these levels profit (excluding fees and taxes) is R1,235.00.

The LDT to take part in the offer is 05 August but importantly share holders still have to approve the deal at the AGM on 21 July – so it could be voted down, albeit I would suggest that is unlikely.

Lastly, the default is to sell. So if you have 500 or less and do nothing you will sell your holding to the company at the 3072c.

Dr Graham Condrington from Tomorrow Today is a generational expert who helps us understand the different generations, I am an avid follower of his writings (and lectures, podcasts etc.).

Here’s on old piece he wrote, but still it rings true and is something we need to understand and keep in the fore front of our thinking when investing, working , moving etc.

Comparing the generations: From Silent through Boomer to Xer and Y

I've been listening to podcasts for about 3 years now, since the early days when there really weren't very many worth downloading, an I got to wondering what other people are listening to?

Here's my list, give us yours in the comments below.

Buzz Out Load
A daily tech show from CNET hosted by Molly Wood and Rafe Needleman with guests.
Usually about 40 minutes, available Monday to Friday late evening.

TWiT (This week in Tech)
A weekly tech show from the TWiT network hosted by Leo Laporte and friends.
Usually about 90 minutes, available late every Sunday night.

BusinessWeek - Behind this weeks cover story
A look at the top BusinessWeek  story
Usually about 20 minutes.

PhotoFocus
A photography Q&A show hosted by Scott Bourne and friends.
Usually about 60 minutes, three times a month (5th, 15th and 25th).

TechCentral > TalkCentral
Weekly look at the week's top local tech stories from TechCentral. Hosted by Duncan McLoed and Candice Jones.
Usually about 25 minutes, every Friday.

TomorrowToday
Ad hoc show on social media, generational theory, management etc.
Usually about 25 minutes.

ZA Tech Show
Weekly tech show hosted by Simon Dingle and friends.
Usually about 60 minutes long, available every Monday (recorded on the previous Thursday).

And for me that's it. I only really listen when in the car, so time is limited. Also you'll note only one financial podcast, simply because I spend my days with my nose stuck into my Bloomberg terminal and countless websites, newspapers and my Kindle. Further I need the immediacy of the information here as I am often commenting on the financial news.

Simon

http://twitter.com/simonpb

Level 1 (one level bid/offer)
Live data at 7c plus Vat (8c) per hit.
Capped at 800 hits which them attracts a terminal fee of R49 plus vat (R56).

Level 2 (five levels bid/offer)
Live data at 13c plus Vat (15c) hit.
Capped at 800 hits which them attracts a terminal fee of R69 plus vat (R79).

Indices
Live data at 5c plus Vat (6c) per hit.
Capped at 300 hits which them attracts a terminal fee of R16 plus vat (R19).

The cap system has changed from a combined level 1 and 2 into separate cap system.

Different data vendors will charge differently, so ask them what the impact (if any) will be - the seperating of level 1 and 2 adds a fairly huge increase.

twitter.com/simonpb

We like to think that we're extra good at noticing things around us and generally paying attention.

But we're not - not even close.

Check out the video experiement below (from What Makes Them Click)

Also have a look at This is an awareness test.

twitter.com/simonpb

I like Twitter - I understand it (as opposed to Facebook that still confuses me) and it is a great tool for sourcing information and opinions.

With that in mind here's a list of the top 10 local market people on Twitter, it includes broadcasters, brokers, journalists and traders/investors. My immediate thought is that the list (and number of followers) is actually fairly small suggesting that Twitter hasn't as yet taken off in SA as it has in some other countries.

Importantly this is not an exhaustive list as I am certain to have missed some (put those missing into the comments) and of course there are some great ones who having joined Twitter more recently aren't yet in the Top 10 (will add them into comments as well). Further some are very quiet on Twitter so not sure if they really belong here and to solve that problem the list is actually 12.

What we spot immediately is that the top 3 are all on radio! The power of radio?

Bruce Whitfield - 2,759

http://twitter.com/brucebusiness

Alec Hogg - 2,436

http://twitter.com/alechogg

Lindsay Williams - 2,410

http://twitter.com/LindsayBiz

Peter Bruce - 913

http://twitter.com/Bruceps

Hilton Tarrant - 740

http://twitter.com/hiltontarrant

Paul Theron - 733

http://twitter.com/paul_vestact

Marc Ashton - 643

http://twitter.com/zamarcashton

Bronwyn Nielsen - 518

http://twitter.com/bronwynnielsen

Sasha Naryshkine - 408

http://twitter.com/SashaNaryshkine

Simon Brown - 320

http://twitter.com/simonpb

Igor Marinkovic - 244

http://twitter.com/ALSITRADER

Eleni Giokos - 232

http://twitter.com/EleniGiokos

The JSE is launching a series of events for 2011 called JSE Power Hour. 20 events over the course of the year with Key Note speakers and speakers presenting about the JSE for investing and trading.

The first event is Thursday 10 February 2011 and Russell Loubser (JSE CEO) will be the Key Note speaker.

DATE: Thursday, 10 February 2011
TIME: 17h30 – 18h30
VENUE: Johannesburg Stock Exchange, Auditorium, One Exchange Square, Gwen Lane, Sandown
PARKING: Across the road at Village Walk
FURTHER INFORMATION: Takalani Philip Nyelisani on Tel: (011) 520 7127 or takalanin@jse.co.za

To book go here and keep an eye out for future events.

I spend a fair bit of time in front of people answering questions; presenting, radio, TV and the internet and I am often asked my view on a stock, sector, industry, commodity , etc. I generally am happy to offer my 5c worth with the exception being that sometimes I simple know nothing so am unable to say anything.

Something that has long bothered me is how this fits in with what I own or don't own. In other words am I merely talking my book, front running or some other nasty? Truth is I am not, I merely give my honest view. But that doesn't mean there is a grey area that can become complicated down the line.

So with this in mind I have decided to publish my holding (and the holdings of my wife, sister and her two children as I manage their accounts).

The holding in these portfolios will be published at www.simonbrown.co.za and will be updated as and when needed.

VERY IMPORTANT this has nothing to do with advice and certainly one shouldn't rush off to replicate the portfolio or anything foolish like that, if only because the purchase dates/prices are not disclosed and my risk profile and desired out comes may be vastly different to yours.
 

twitter.com/SimonPB

Last week I did a webinar at JustOneLap on Dividends: The best part of investing and decided to run some numbers to illustrate.

Below is Standard Bank dividends from 2000 to date, both the individual dividends but more importantly also the cumulative dividend received.

3 January 2000 you could have bought Standard bank at around 2500c and today it is around R100. Nice, a 4 times return. But the other real beautiful part of this investment is the 2875c in tax free dividends you would have received since January 2000.

In other words instead of just a 4 times return on the share price you have received more than the price paid back in dividends effectively giving you a return of some 5 times.

Further the last two years has seen a annual dividend from Standard Bank of 386c, effectively a 15.4% return on your initial investment in each of the last two years.

Far too often we ignore dividends, but they are seriously powerful and must be a part of ones longer term investment strategy.
 

SimonBrown