It’s all about making your hard-earned cash work for you, that much more aggressively than is possible in any other type of investment. But what do you need to know to succeed in the South African share market as we transition towards 2021? By Vanessa Rogers

In March this year, a piece on The Atlantic advised kitchen-table investors, in the face of the COVID-19 financial crisis, not to do anything. The reason? “Time in the market beats timing the market”, wrote the journalist. Essentially, she was saying that those passive investors who have bought and taken a hands-off approach will, on average, do better than the active ones who are continually shuffling things around in the face of change.

For those incredible individuals who managed, against the odds, to squirrel away a bit of dosh over the lockdown period, you are likely to be keen to find out more about how to add stocks and shares to your investment portfolio. Getting down to basics, a stock – or equity – is of course a security made up of a fraction of the value of a company. In buying units of their stock, otherwise called shares, you are now entitled to a percentage of that corporation’s assets and profits equal to the amount of stock you have purchased and now own.

Steady stalwarts

Right now, the market is flourishing due to an international trend towards tapping into the JSE’s relatively regulation and restriction-free share market. Five stable options, then, according to Business Report, are:

• British American Tobacco – one of the largest corporates with the highest market capitalisation and earnings that have been increasing year on year since 2017;
• Naspers – a high-value company whose strength lies in its decisive approach to doing business;
• Gold Fields Limited – a list-topper on the JSE due to how people take to investment in gold during uncertain periods;
• Curro Holdings – an independent education network with an affordable share price, but which has garnered the trust of investors due to the ongoing effectivity of its management strategies; and
• Grindrod – a freight company with high liquidity and cashflow, which has maintained an eight percent growth in revenue over the last few years.

Change: the only constant

However, in June, Bank of America (BofA) released a report that detailed which South Africa stocks could benefit most following the COVID-19 peak – a whole new investment landscape.

A critical element in their envisaged success was how agile the companies had proved in adapting their business models to the crisis period. BofA began with a few key themes, namely deglobalisation, tech wars, big government, health and the new consumer, and then added a country overlay to the proceedings.

The top healthcare choice arising from the report was Aspen – SA’s largest pharmaceutical company; while media conglomerate Naspers and tech giant Prosus ranked highest, respectively, in the technology and media segments.

The analysts commented that their “top 10 picks captured the breadth of post-Covid changes: digitalisation, increased focus on health, changing consumer preferences, but also the importance of localised supply chains and government protectionism.”

Get this party started

Getting excited and keen to launch yourself into this type of investing? The word from Louis Schoeman, managing director of SA Shares (https://sashares.co.za/) is that it pays to proceed with caution at the outset. “Read widely, think broadly and then invest in the services of a reputable broker who can assist you in surveying your options, streamlining your goals, and deciding on the level of risk with which are comfortable,” he advises. “The post-COVID world is much changed – the increased use of technology and the internet is not going to go away, as far as online shopping, working from home and videoconference calls are concerned. These changes should all be brought into the equation when you make your share selections.” Read more here: https://sashares.co.za/news/trade-like-the-pros-follow-these-easy-steps-and-start-trading/

Sources:

https://www.theatlantic.com/ideas/archive/2020/03/dont-touch-your-stocks-during-coronavirus-crisis/607672/
https://www.investopedia.com/terms/s/stock.asp
https://www.iol.co.za/business-report/partnered/best-performing-south-african-shares-to-consider-investing-in-2020-4b78999e-2191-4351-ba7e-52f71b5759d1
https://businesstech.co.za/news/finance/404517/these-3-south-african-stocks-are-set-to-benefit-most-post-covid-analysts/