DON’T FOLLOW THE HERD
Ellies share price has been under pressure since hitting R10 back in May and we’re seeing the usual herd mentality. Everybody loved it at R10 but nobody seems to want to touch it at R7. It’s classic investor behaviour, which frankly makes no sense. Sure, we’ve had some modest results since that peak of R10 but fundamentally it is the same company and if people wanted to pay R10, why not R7? We see it in overall stock markets, at the peaks everybody is rushing in, happy to pay massive valuations. Then after the sell-off nobody wants to buy at the trough when stocks are actually attractive – it is classic fear and greed. Going back to Ellies, it announced that clients of Investec Asset Management now have a stake of some 5.13% in the company. This is how one should invest, use a sell-off to buy quality at better (cheaper) prices.