#313: Where's the smart money?

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Simon Shares

• Basil Read (JSE code: BSR) has filed for business rescue and nobody should be surprised. Blaming government and labour is also weak, construction is a weak industry and only really boomed in the lead up to the world cup in 2010 (not forgetting the price fixing). Of concern was that the stock was not suspended until Monday lunch time and it turns out it a settlement issue. Apparently "Someone bought BSR at 1c in on Friday now it turns out the seller does not have the stock. JSE trying to reverse."
• Liberty (JSE code: LBH) got hacked. Exact details are scarce as I record, the company is saying it was "largely emails and possible attachments" and that no clients have lost money. Well maybe not yet. But you email all sorts of personally stuff to a long-term insurer; bank details, residential address, medical, etc. That frankly puts clients at risk. Bigger picture is that our future unfortunately includes us being hacked sooner or later.
• PPC (JSE code: PPC) results were not exciting and they have challenges. Local is weak, DRC is having issues already. Not a stock I would want to be holding.
• I honestly am not sure what the deal is with trade wars. Not in the sense of if Trump is serious or when they'll happen nor to who or what. But if they do happen they are bad - end of story.
• The Rand is under all sorts of pressure and the hysteria is out in force. So to clear some of it. We're not at risk of an emergency rate hike. This is not because of local protests, land expropriation, it is a general Emerging Market (EM) rout right now. But it is looking ugly for EMs with currencies and markets under pressure as investors flee. Will this get worse, a little or a lot? No idea. So as always here's what we do; as a trader - obey your stops. As an investor - don't panic and buy quality and great prices, but no rush.
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The smart money myth

I hear it all the time - the smart money which typically seems to translate into somebody with lots of money. A big trade goes through the market and everybody is talking about smart money? There is no smart money. Money does not talk and having lots of it doesn't make somebody smarter than anybody with less.

So why did Christo Wieses money warn him?

Also witness Steinhoff (JSE code: SNH). Including preference shares total value was some R300billion now a few million and the smart money all owned it up at the lofty levels. When the story broke Coronation (JSE code: CML) wrote a long letter saying they were holding on as all will be fine. Yet news last week is that they have bailed. They did the same with African Bank (JSE code: bankrupt)

Read Fooled by Randomness by Nassim Taleb. We ascribe behaviours to money and people with lots of it that is simple seldom true.

There is no smart money, just money. You can of course make smart money decisions and that would include not blindly following anybody.

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