Buying good shares in bad times
IWAS FAIRLY HAPPY FOR A TIME. The recent market ructions pushed quite a few quality shares I had been coveting to levels I thought well worthy of consideration.
But these have now dropped further, making me a little more nervous about committing to building a long-term holding.
Then again, who am I to carp about the equity markets? Some of my dearest pals recently dabbled in the crypto currency market(s) ... presumably after persistent nagging by their offspring that ignoring bitcoin and ethereum would mean retiring poor.
To be fair, bitcoin — which peaked at almost $68,000 in early November last year — might have looked tempting at under $30,000 around six weeks ago. But as I write the flagship cryptocurrency was looking like breaking down under $20,000.
During market routs I follow a familiar habit. I start with buying Remgro (and more recently British American Tobacco), and then typically get a little adventurous after that ... seeking out the many small caps that have buckled badly.
This time it was a bit different, perhaps because I — as noted in my FM column — have some uncharacteristically high-risk positions in Premier Fishing & Brands, Choppies Enterprises, Kore Potash and, most recently, DRA Global (where there have been fun and games in the boardroom).
Then there’s the spectre of higher interest rates, and my wife’s blind spot when I try explaining our asset to liabilities ratio.
So I’ve stayed mostly on the sidelines, even clearing long-held positions. The most satisfying was emptying out my rewarding position in broadcast group eMedia after the last day to register for the sumptuous dividend, and then putting the bulk of the proceeds into the bond. I set aside a sliver to snap up some shares in vulnerably priced (but decently yielding) fund managers Ninety One, Coronation and Sygnia.
I’ve always been told to buy good businesses in bad times (rather then vice versa). To supplement these holdings I have rounded up a few shares in storage property specialist Stor-Age to enhance the dividend attributes.
My gut tells me there are more ructions to come, and probably for a prolonged period. I don’t particularly enjoy an equity-lite regime, but being on the right side of interest-rate calculations might provide some solace in the interim.