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Construction a Good Investment?

Some analysts identified the construction sector as a bet for the year – however, that was before the Hawks started investigating tender irregularities.

Eamonn Ryan

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Construction Sector

One analyst at a major bank who wishes to be unnamed, has called the bottom of the construction cycle in South Africa and comments that in the rest of Africa – in which most of the companies are active – the sector scarcely slowed at all.

However, news of a criminal investigation into anti-competitive behaviour set the Big Four counters tumbling in January: The FTSE/JSE Africa Construction & Building Materials Index (JCBDM) retreated 2,9%, the most since August 2012, wiping R1,89 billion from the index’s combined market value, according to data compiled by Bloomberg.

Murray & Roberts (MUR) dropped 3,56% to R24,37‚ Aveng (AEG) was down 3,56% to R29,80‚ Group Five (GRF) gave up 3,63% to R30,50‚ WBHO (WBO) lost 5,18% to R146,50 and
Stefanutti Stocks (SSK) was off 6,10% to R10.

This has been getting value managers excited – but not all of them are convinced that construction share prices have fallen to bargain levels.

The pros and cons

In announcements late last year, value managers Allan Gray and Cannon Asset Management managers said they were taking advantage of the fall in construction share prices.

For instance, Cannon recently highlighted in a paper the remarkable fact that retailer Mr Price has almost the same market capitalisation of six of the JSE’s largest construction firms. Is Mr Price worth the same as the JSE’s entire construction sector?

Moneyweb’s Unit Trust Portfolio Tool shows that Cannon has bought Aveng (AEG) and Group Five (GRF) for its clients. Similarly, Allan Gray has built up positions in Aveng and Murray & Roberts.

On the other hand, Piet Viljoen’s RE:CM issued a media release to motivate its reasons for avoiding construction stocks. RE:CM analyst Richard Court reckons construction stocks have not fallen enough to become cheap.

Says Court: “For example, at the height of the construction boom, Murray & Roberts traded on a price to book value multiple of six times. Compare this to its long-term average price-to-book value multiple of 1,5 times, which is where it’s currently lying. This indicates that it’s fairly valued at present and illustrates how far the share price needs to fall from its highs before it becomes cheap.”

David Shapiro, who manages Sasfin’s Value Fund, is similarly negative on construction, questioning whether the much-anticipated construction spend is really there: “A lot of people have put money into construction thinking the sector is cheap, but I think this is premature. There is a Competition Commission investigation into price rigging, and also the fact that to maintain capacity many firms have contracted to do projects at low margins – the effects of which tend to linger quite a while.

“I’m very cautious – I haven’t seen the evidence of a turnaround yet,” says Shapiro.

In review

The construction sector has had highs and lows over the last decade. Here are some highlights:

2006

In the formal employment sector, the construction sector has the highest annual growth rate (11,5%) from 2001 to 2006. For the same period, the mining sector declines at a rate of 6,4% per annum.
(Labour Force Survey, September 2006)

2007

Minister Trevor Manual allocates R8,4 billion for the construction and upgrading of stadiums for the FIFA World Cup in 2010.

2011

The formal economy absorbs over 1,5 million additional workers between 2003 and 2011. The greatest amount of growth occurrs in the construction sector where the number of workers grows by 7%.

SOURCE: Eighty20

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

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Digital Options With Olymp Trade – Online Trading Made Simple

Remember that communicating with others makes progress easier, so feel free to share with your fellow-traders any time and increase chances of your success!

Olymp Trade

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Innovation in trading  – is gain without pain possible?

In our modern age, trading has helped a lot of people earn handsomely. However, originally it was a complex exercise, involving a considerable investment of time and financial resources to understand the market. That has restricted its acceptance among people who wish to trade but have a busy schedule and limited budget.

The problem seems to have been solved to a great extent with digital options – a special form of a financial instrument. While it requires relatively less time to learn, it also reduces the risk exposure, which accounts for the growing popularity of digital options. With this type of trading, your investment amount doesn’t have to be equal to the underlying asset’s market price. So, even if the minimum price of a stock index unit is $100, you can take an exposure of just $1 on this.

A platform, which has achieved loyalty of over 16 mln. customers, despite being a late market entrant, is Olymp Trade. The company provides particular ease of use and a comprehensive educational kit, so we will use this example to explain how digital options work.

Related: How Investors Can Take Advantage Of The Rand’s Currency Trading Rates

Olymp Trade – a closer look at digital options

This type of trading requires an investor to anticipate the price movement of the underlying asset in a short term. On the Olymp Trade platform the asset range includes currency pairs, commodities, cryptocurrency, various stock indices and some individual stocks. A trader would then need to place an “Up” or “Down” call relative to the strike price, without having to bother about how far the price would move. You are also required to specify the time limit for keeping the trade open – it is called expiration time, and could last from 1 minute to several hours.

Since there is no need to gauge the extent of movement, analysis of parameters like where to put ‘stop loss’ or when to book profit is not necessary – and this makes the process so much simpler. Profitability per each trade is always known beforehand, and with Olymp Trade it may reach 80-90%. Another essential point is that a trade could be sold back to the market, if the trend behaviour contradicts your forecast. This flexible approach allows to recover some of the invested money, if it’s not possible to lock in profits.

online-trading-1

Developing a strategy that works

Since options is only intraday, fundamental analysis has almost no relevance. As a result, most of the trading happens employing technical charts. Yet, you cannot ignore the opportunity to trade based on news flow, which could actually generate higher returns than technical analysis. So, even if you are not connected with, say, Australia but sudden floods have caused huge supply disruption in the country, you could place a ‘Down‘ trade on AUD. However, one needs to be careful when analyzing the news. For instance, even if the employment figure is higher than last month, the currency could lose sharply – in case it is lower than expectations. Conversely, even if the GDP growth is negative, the currency could see a rebound if it has survived the crisis with minor damage.

The other benefit of news-based trading is that you can earn multiple times with the same news or insight. For instance, if you think dollar is going to rise substantially over the next few hours due to Fed’s move, you can place an ‘Up’ trade with a five-minute time frame. After this trade has expired, you can put another trade with the same ‘Up’ position if your judgment has turned out correctly and you still expect the price trend to continue.

Introducing cryptocurrencies

Another asset class that has gained lot of limelight recently is cryptocurrencies. They are highly volatile – and this is tricky on one hand, but lucrative on the other. Olymp Trade gives you an opportunity to trade in crypto while keeping your risks limited.

Related: Silver-Sphere Trading Gives Top Advice About Investing In (The Right) Precious Metal

Using Olymp Trade for crypto saves you the hassle of opening another account, which is usually time-consuming and involves several verification processes. More importantly, you would have to disclose a lot of personal information, which may not be very attractive proposition because the crypto-industry is still evolving. As for reliability and security, which is vitally important in trading (no matter crypto or traditional assets), Olymp Trade can guarantee it all – the company’s activities are supervised by the International Financial Commission.

The chart below gives an idea of Bitcoin price movement on a typical day. One can see clearly that there is sufficient volatility in the price to make money here.

olymp-trade

While you cannot own or store crypto with Olymp Trade, you can certainly earn from its price movement. The platform offers a dozen different cryptocurrencies to trade, including the top ones like Bitcoin and Ethereum. However, the returns generated for this asset class vary substantially: from 10% to 80%. You also need to note that these returns keep varying all time through. So, if you traded on an asset generating 80% return at a particular time, please confirm the offered returns when placing the next trade – as it may not be the same.

How can I really profit, if I choose trading options?

We have mentioned different trading methods – from the time-tested assets to the modern-day cryptocurrencies – and it only makes the tip of the iceberg.

In order to understand the process more deeply and start profiting, one should have a systematic approach to learning. But of course your self-study should be based on trustworthy sources. We recommend taking a look at the Olymp Trade’s “Education” section, where one can find well-structured lessons and webinars dedicated to trading. The platform provides a free demo account, so the users can put their new skills into practice straight away. The benefit here is working with platform features without depositing real money. Use virtual currency for demo trading, and take as much time as you need before getting ready to open real deals for real profits.

Online trading is a very popular kind of business nowadays. If you visit Olymp Trade page on Facebook, you will find a lot of proof to that, meeting people for whom trading has become one of the main pursuits in life. Remember that communicating with others makes progress easier, so feel free to share with your fellow-traders any time and increase chances of your success!

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11 Things You Need To Know About Bitcoin

The cryptocurrency has had a tumultuous existence so far.

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Gold Bitcoin Coin

11 Bits about Bitcoin

Even the most tech savvy among us have a hard time wrapping their heads around Bitcoin. It’s a hot topic and a frequent point of discussion among investors, entrepreneurs and stock traders, so you should want to know all about it.

For starters, here’s an overly simplified explanation of Bitcoin: It’s a digital currency (there are more than 800 now) that isn’t controlled by a central authority such as a government or bank. It’s created by “miners,” who use computers and specialised hardware to process transactions, secure the currency’s network and collect bitcoins in exchange.

Supporters say it allows for more secure transactions over the internet. That’s in part due to blockchain, a technology that records cryptocurrency transactions chronologically in a public digital ledger.

Bitcoin is only eight and a half years old, but it’s the oldest and most highly valued cryptocurrency out there. In such a short time, it’s had a rocky and controversial history, but it’s also attracted a fair share of high-profile supporters.

Related: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

Click through to read 11 bits about Bitcoin that will make you at least sound like you know what you’re talking about next time it inevitably comes up.

The birth of Bitcoin

birth-of-bitcoin

Starting point at 2008

The origins of bitcoin trace back to 2008, when its creator, who went by the pseudonym Satoshi Nakamoto, published a proof of concept for Bitcoin.

The proof was then published to a cryptocurrency mailing list in 2009. Nakamoto left the project in 2010 and disappeared, but other developers picked up the work.

Bitcoin’s birthday is Jan. 3, when Nakamoto mined the first 50 units of the currency.

An elusive creator

elusive

No one really knows

The true identity of Bitcoin’s creator has never been confirmed. Newsweek claimed to have found Bitcoin’s creator in 2014, identifying Temple City, Calif, resident Dorian Satoshi Nakamoto. He has vigorously denied it.

In 2015, an Australian entrepreneur named Craig Wright said he was Bitcoin’s creator, but he couldn’t produce the evidence to support his claim.

Whoever Nakamoto is, that person is very rich, as the creator is estimated to have mined a million bitcoins in the currency’s early days.

Very expensive pizza

pizza

We wonder what was on the pizza?

The first transaction involving bitcoin was reported on May 22, 2010, when a programmer identified as Laszlo Hanyecz said he “successfully traded 10,000 bitcoins for pizza.”

As of June 14, 2018, 10,000 bitcoins are worth about $64.8 million.


Fintech: Fusing Finance And Technology

Fintech has become a disruptive force in the financial sector that is threatening the current status quo of banking and finance. The main beneficiary of that is the consumer.


You can spend bitcoins

spend-bitcoins

How to spend your bitcoins

While it may not seem like it, people continue to use bitcoins to buy stuff.

Related: Make The Most Of SA’s Law And Initial Coin Offering

The largest businesses to accept the cryptocurrency include Overstock.comExpediaNewegg and Dish.

Federal Bureau of Bitcoin

Federal Bureau of Bitcoin

The banning of Bitcoins

At one point, the U.S. government was one of the largest holders of bitcoin.

In 2013, after the FBI shut down Silk Road, a darknet site where people could buy drugs and other illicit goods and services, it took over bitcoin wallets controlled by the site, one of which held 144,000 bitcoins.

Investors have been making a killing by bidding on government-seized bitcoins.

A mountain-sized setback

Mt. Gox

Mt. Gox

In early 2014, Bitcoin suffered a devastating loss after the alleged hacking of Mt. Gox, a Japanese exchange.

About $460 million of the currency (in 2014 value) was stolen. It was the largest loss of bitcoins ever and raised concerns about how secure the currency was.

The billionaires’ takes

warren-buffett

Warren Buffett

Warren Buffett, perhaps the most famous investor in the world, was not so keen on Bitcoin one of the only times he addressed the currency.

“Stay away from it. It’s a mirage, basically,” he told CNBC. “The idea that it has some huge intrinsic value is a joke in my view.”

Fellow billionaire investor Jamie Dimon, chief executive of JPMorgan Chase, had even stronger words about Bitcoin:

“You can’t have a business where people are going to invent a currency out of thin air. It won’t end well … someone is going to get killed and then the government is going to come down on it.”

But not all billionaires are against Bitcoin. Mark Cuban has said its value is inflated, but he recently invested in a venture capital fund that backs cryptocurrency. Richard Branson, however, has spoken more optimistically about it.


The Currency Revolution

The rise and rise of digital currencies – and how they’re affecting your business.


Wealthy twins and a smart teen

Cameron and Tyler Winklevoss

Cameron and Tyler Winklevoss

Other notable investors in Bitcoin include Cameron and Tyler Winklevoss (the Harvard-educated twins who sued Mark Zuckerberg claiming that Facebook was based on an idea they’d had).

They invested $11 million into Bitcoin in 2013, an amount said to be about 1 percent of all bitcoins in circulation at that time. The Winklevoss twins have been petitioning the SEC to create a bitcoin exchange traded fund.

The agency rejected the idea earlier this year.

Another is investor and entrepreneur Erik Finman, who invested $1,000 into Bitcoin when he was 14 years old and is now a millionaire.

Celebrities want in

ashton-kutcher-2017

Ashton Kutcher

Celebrities have also expressed enthusiasm for the cryptocurrency.

Actor and Goop founder Gwyneth Paltrow advises Abra, a Bitcoin wallet, and Ashton Kutcher, Nas and Floyd Mayweather have all invested in Bitcoin start-ups.

Support from a big financial institution

Fidelity Investments

Fidelity Investments

In August 2017, Fidelity Investments became a rare standout among financial institutions in embracing Bitcoin and other cryptocurrencies.

The company allows its clients to use the Fidelity website to view their bitcoin holdings held through digital wallet provider Coinbase.

“This is an experiment in the spirit of learning what these crypto assets are like and how our customers may want to interact with them,” Hadley Stern, senior vice president and managing director at Fidelity Labs, told Reuters.

A hard fork

Bitcoin Cash

Bitcoin Cash

On Aug. 1 2017, Bitcoin experienced what’s being called a “hard fork” as a result of a few issues, including the limited number of transactions that can be processed per second. Essentially, the cryptocurrency split into two, with Bitcoin Cash debuting.

Here’s how Rob Marvin of PCMag explains the situation:

“The Bitcoin fork speaks to a fundamental ideological rift over what’s more important: Preserving the decentralised nature and independent control of the Bitcoin network, or accelerating transaction speeds to make the cryptocurrency more viable for mainstream ecommerce and payments.”

Bitcoin Cash allows larger blocks of currency and more transactions per second.

This article was originally posted here on Entrepreneur.com.


Related: 10 Ways To Make Money While You Sleep

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5 Worthwhile Investment Lessons I Learned From Warren Buffett

Patience in long-term investing is one lesson. Investing in what you understand is another – the reason Buffett steers clear of tech.

Toby Nwazor

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It’s one thing to be a good investor; it is quite another to know how to teach investing. Warren Buffett is spectacular at both and has over 50 years worth of financial and investment success to prove it.

Nicknamed the Oracle of Omaha, Buffett may not be the richest man in the world, but he is, by a great margin, the planet’s wealthiest investor.

He also dishes out free and priceless investment advice whenever he can, mostly through his annual letter to shareholders.

His sage words of advice can benefit everyone across the investment spectrum, from the Class A shareholders of Berkshire Hathaway to the average investor involved in low-key passive income investing.

Here are a few of these lessons Buffett has offered throughout the years that may help you, too, become a better investor.

1. Develop an investment mindset

It’s true that any of us can become investors, but not all of us can own and manage our investments ourselves. For that, we’d need a fully equipped investor’s mindset.

Related: Why Warren Buffett Doesn’t Worry

And that means putting in thousands of hours of intentional study to build your investment-skill level and mental aptitude.

2. There’s a power to practicing patience in long-term investing

Whenever Buffett uses the word “investment,” he specifically excludes speculators who are in the habit of hit-and-run investment (meaning purchasing, then selling off investments at the slightest northward tick in value).

This is why the Buffett-led Berkshire Hathaway has never split its Class A shares (which as of March were worth $258,000 per share) and only created Class B shares to discourage the creation of unit trusts. One of Buffett’s famous statements, which alludes to his preference for long-term investments, is:

“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”

A real investor, in short, does not merely speculate; he or she makes informed and intelligent investment decisions and rides it for the long haul. That kind of investor eventually ends up with more success than the short-term kind.

Case in point: Berkshire Hathaway’s 2014 letter to shareholders disclosed that in the period extending from 1964 to that year, 2014, the company claimed an overall 751,113 percent gain.

3. Prioritise value over money

Ferrari

Sometimes, the amount of money we spend on something and the value we get back from our purchased item do not correlate.

Just because you purchased a Ferrari for $400,000 doesn’t mean that your overall quality of life will improve because of the car you drive.

Many people make the mistake of ascribing ultimate value to money. Buffett disagrees. An investor understands that the market prices of commodities and stocks are driven by demand, supply and general market sentiment about the company or commodity in question.

Related: Billionaire Buffett’s 2-List Success Recipe

Buffett has a general formula for investing, especially in stocks. He suggests that the best time to invest in any business is when the price of its stock is lower than its intrinsic value. In simple terms, you should invest in companies when they are undervalued.

4. The human factor plays a big role in investing

Buffett’s decades of consistent success are further proof that the now largely discredited efficient market theory is flawed. Investing is both a science and an art, and Buffett believes that modern financial theory does not adequately take into consideration the artistic side of it – the human factor.

Human emotions and sentiment and intelligence affect the market much more than modern financial model is willing to admit. The latter makes things look too easy and straightforward, assuming that something that has never happened can happen.

The modern financial model leans more on past and present market data (physical science) than the human factor (behavioral science) when the reverse should be the case.

Buffett has suggested that controlling the emotions is much more important. According to him, “Success in investing doesn’t correlate with IQ  … what you need is the temperament to control the urges that get other people into trouble in investing.”

5. Invest in what you understand

Drawing on his “circle of competence” belief, Buffett advises that you “never invest in a business you cannot understand.”

In other words, don’t choose businesses requiring knowledge outside your circle of competence, at least not until you have acquired sufficient knowledge to do so. Buffett lumps factors affecting a business into categories: The knowable, the unknowable, the important and the unimportant.

Related: The Top 25 Self-Made Billionaires In the World

So, what he’s saying is that businesses are a good bet for investing only if their important factors are knowable – and known.

If you don’t have sufficient knowledge about a company, it becomes harder to hold long-term investments and predict what the company (and its industry) will look like a few years down the line.

Buffett, for instance, usually stays away from tech industry businesses; he puts most of these businesses in the “too hard” pile on his desk. He refers to investing in businesses you do not understand as trying to jump over seven bars when you should be looking for a one-foot bar (a business you understand) that you can step over.

Clearly, the Oracle of Omaha, over the years, has found and profited from plenty of those one-bar businesses.

This article was originally posted here on Entrepreneur.com.


Related: 9 Quotes Every Entrepreneur Should Live By

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