In a force majeure event, such as the present coronavirus epidemic spreading worldwide, blind selling or buying in the market becomes the norm. But under more normal circumstances, when to buy and when to sell equities are important considerations based on calculated assessments.
There is a saying that a share can climb much higher than hoped. Or linger at the bottom far longer than feared.
A selling spree represents a correction, with buying opportunities. Some shares are usually overvalued. But many are also undervalued. Local property and retail shares could have been considered overvalued before the present dip. But now they almost certainly are in undervalued territory.
Platinum and gold shares have risen to overvalued levels, delivering growth of 200% over the past year in some respects, benefitting from higher commodity prices and a weaker rand. The same for the major global tech stocks, growing on average 50% from a year ago before the slump, just when it was thought that a correction then could have been imminent.
Inherent value is the real value of a company, usually linked to its net asset value. But companies rarely trade at these levels. Therefore, the price at which to buy or exit a share is fraught with difficulty and danger. But it is immensely important for future returns.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.