When valuations unwind

Good Morning Voornaam,

There's still time to register for these events this week:

Fresh out the oven

What is your investment personality?

In an interesting new article from the team at Satrix, you can answer a few questions to help you discover your "investment personality" - a r eally useful way to figure out what the most appropriate strategy and investing style is for you.

I highly recommend making time for this article this morning.

Don't buy property companies at a premium to NAV

I have a very simple rule when it comes to property companies, or investment holding companies for that matter: do not pay a premium to net asset value (NAV) per share.

These are companies that trade with reference to their NAV per share because the underlying assets are recognised at fair value at each reporting date. Liabilities on the balance sheet are usually measured at a fair reflection of what they would cost to settle, so the equity on the balance sh eet (assets - liabilities) is a good indication of what would be left for shareholders if all the assets were sold and liabilities settled.

This isn't the case in companies where the assets aren't recognised at fair value. You certainly can't assume that the equity on the balance sheet at a typical industrials firm is what the company is actually worth, for example.

The calculation of NAV per share is based on that equity layer in the balance sheet, so NAV per share in a property company is a strong indication of what the share price could be. It then gets more complicated, as the share price will only trade at NAV if the return on equity achieved by the company is equal to the return on equity being demanded by shareholders. If return on equity is higher, it may trade at a premium to NAV. If return on equity is lower, it will trade at a discount.

Complicated stuff, I know.

Put simply, if you want a return of 10% and som eone is offering you an investment that only pays 5%, will you pay full price for it? No, you won't. That's the principle here, much like government bonds.

Now, to find out how this relates to Stor-Age, you need to read Ghost Bites this morning. To entice you even further, the bites also include important news on a deal closing at Glencore, Novus reporting tough but interesting numbers, Omnia inching forward and Transaction Capital trying desperately to inject some positive news into the share price. Get the latest Ghost Bites here>>>

You want to learn more about the markets, don't you?

There was some technical stuff in there. If investing was easy, everyone would be rich and the Oracle of Omaha would just be another entertaining old man around the Sunday lunch table. Investing isn't easy, which is why the world's best asset managers are treated like superstars in the industry.

Together with my partner Mohammed Nalla, I'm absolutely committed to helping you learn how to research stocks. This isn't about the quick wins or the hot tips that traders use. There's certainly a place for that, but we aren't taking that approach. Instead, we show you how to genuinely assess the strategy of a company, together with many of the same technical indicators used by traders to help you try to optimise your entry and exit.

Each week, we cover a different global company. To give you an idea of the variety, our last six shows were on LVMH, 3M, Tripadvisor, Aston Martin, Salesforce and Topgolf Callaway. Best of all, you can get the entire library of research (over 80 stocks) for just R99/month or R990/year if you're ready to commit for a longer period.

If you are ready to take your money and your success seriously,subscribe to Magic Markets Premium at this link and prepare to see what "doing your own research" really looks like.

A quiet day, but not a quiet week

The US market was closed yesterday, so there was subdued activity that saw the rand weaken slightly and then return to ope ning levels. TreasuryONE expects activity to pick up today as we approach Jerome Powell's testimony in front of Congress.

Locally, inflation is due to be released on Wednesday and headline inflation is expected to drop from 6.8% year-on-year to 6.5% in May. Inflation risks remain significant and the market will watch this closely, as inflation informs future rate decisions by the SARB.

For assistance with managing market risk, contact TreasuryONE here.

Have a lovely Tuesday!

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