Smart Investments For 2018
Bitcoin got you interested in investing? Good, then start by forgetting all about it and moving on to smart investments. We have suggestions.
Published: Thursday, January 4th 2018
It’s a brand new year and, in the paralyzing, feverish grip that is Bitcoin-Mania you’re undoubtedly asking yourself about investments. Of course, it’s important to realize that cryptocurrencies aren’t so much an investment as speculation. It’s got all the pundits babbling on about tulips in the 1600’s and those who missed the Bitcoin bus ten years ago are perched upon the edge of their seats waiting for the bubble to crash and burn. For everybody to lose everything.
Here’s something to keep in mind when it comes to trends. Warren Buffet, multi-billionaire once said:
“I will tell you how to become rich. Close the doors. Be greedy when others are fearful, and fearful when others are greedy.”
How did things fare on the 2017 investments front? Steinhoff, of course, took a scooter to the ankle. EOH fell from grace and Woolies, that household darling, had a troubled run.
In the face of political turbulence and economic distress, however, the market proved surprisingly resilient. The JSE All Share Index recorded repeated all-time highs. Against all odds, we even saw Gupta-linked Naspers double their share price.
The strangest of years has just, mercifully, limped across the finish line. We’ve sat, woefully aware of the passage of time, staring at our smartphones in the dark, watching society collapse like a dying star. 2017 was the year in which everybody was offended by absolutely everything, Blake Shelton was named the sexiest man alive and if you successfully avoided listening to Despacito you had a good enough year.
Going into 2018, you may think the best investment one could make is to dig a huge hole in your backyard and build a bunker, in case North Korea acts the fool. But, if you’re hopeful and optimistic enough, you may put your efforts elsewhere.
We sourced some of the best options, according to people who actually know what they’re talking about.
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The Cream Always Rises (Top Investments)
Simon Brown, founder of Just One Lap has put his money on a number of interesting options. We also had a look at Sharenet and Sanlam Private Wealth’s top picks.
Brown has favourites in retail giants, Shoprite and Mr Price. Shoprite does well, regardless of the economy. The ruin of Steinhoff has seen Shoprite’s share price put under pressure, which isn’t necessarily a bad thing. As Brown puts it, it’s a good chance for investors to buy into the company.
Improved consumer confidence will boost spending, and Shoprite will no doubt capitalise on this, more so than other food retailers.
Provided things start looking up and disposable spending grows, City Lodge and casino giants, Tsogo Sun, will also benefit.
With regards to property, Sharenet has also thrown a couple of names into the ring, being Greenbay Properties and Echo Polska. The former operates through Australia, Canada, Europe, the UK, Singapore and the USA. The latter is a Dutch dual-listed real estate company investing primarily in retail properties throughout Poland. Echo Polska is still pretty new to the JSE, but with Poland being one of the fastest growing economies in Eastern Europe, they should do well.
There was some controversy surrounding one of EPP’s non-executive directors, Przemyslaw Krych, who has since resigned. Now it’s business as usual.
May seem like a couple of odd picks.
Anybody familiar with construction will recognise the name Group Five and may be interested to learn that Greenbay Properties is the company that recently made an offer to buy Group Five’s European operations for R1.6 billion. As they attempt to unlock value in the concessions business, this is seen as a strategic move and they should be able to grow these assets. They enjoyed an amazing 2017, with the share price surging 69.2%.
Capitec, in general, seems to be on everybody’s favourite list. Brown also prefers Capitec, but believes that any of the Big Four – Nedbank, Standard Bank, FirstRand and Barclays Africa Group – should do well.
Capitec is currently the second largest retail bank in South Africa. Their ability to charm new customers and provide them with value is the key to their success. With their attractive business model they manage to draw more than 100 000 new customers every single month. This point is noteworthy. Most other banks struggle just to hold on to their current client base, never mind expand on it.
That’s right; I’m looking at you, ABSA, clearing my December salary after Christmas. Thanks for nothing.
Since listing on the JSE in February 2002 at R1.80, it has gained in every year but one. The price share has increased by 41.3% this year alone. Our economy, beleaguered by corruption and Zuma-politics, also seems to have no effect on Capitec’s share price, which is now quite expensive, compared to its peers. It’s almost a fairy tale, and will likely continue well into 2018.
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Sharenet’s pick, AngloGold Ashanti, is the third-largest gold mining company in the world as measured by production. It just released a strong third-quarter update, resulting in analysts increasing their target price significantly.
The gold mining sector in SA is a problematic sector to operate in, with most companies facing high-cost, structurally challenged mining operations. AngloGold is no exception, but it has a few things counting in its favour.
With 17 gold mines in nine countries and several exploration programmes in both the new and established gold-producing regions of the world, ANG enjoys some geographic diversification. It’s also one of the cheapest locally listed gold companies and is currently trading at a much lower price than in the past.
Speaking of discounts, Impala Platinum has been trading at almost 90% below the peak price it reached in 2008. Sanlam Private Wealth believes that the company is worth around R55 per share and is currently hovering around the R40 mark.
The mining industries are cyclical, and both of these companies have what it takes to operate through these trying times. This means that both represent amazing upside potential, and make for smart investments.
Not Your Usual Answer
This one comes from us to you. The best investments you can make are in yourself. It is wise to invest your disposable savings into stocks or even cryptocurrencies – by the way, go for Ripple, thank us later – but when it comes to time and energy, invest in your career and in your health.
Through whichever career you’ve chosen, build the skills, contacts and knowledge you’ll need to start your own business. Take better control of your financial destiny. Anybody who wants to make a decent living needs to roll up their sleeves and get the work done.
Sure, the bull market in Bitcoin does seem to be creating new millionaires every day, just as the tech stocks did back in the late 1990’s. Those of us standing by on the side-lines watching it all happen, as Buffet cautions, need to be guarded. Faddish investments have no accurate value. Be wary. Never invest more than you can afford to throw away.
2018 is your year, if you’re wily enough.
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