Piggy’s Trading & Investing Tips: Cards or shares?

Trading floor versus casino.

ONE Friday night, Piggy took some time to visit one of the largest casinos in the country. As expected, he was alarmed by the large scores of people that gathered there.

Getting parking was a big struggle as the venue was extremely packed. As Piggy entered and walked into the main casino area, he felt like he had stepped into a trading floor on the New York Stock Exchange (NYSE).

The atmosphere was charged, every player was focused on the porker machines and over-head screens where displaying the sums of money that had been won in the previous weeks and months – in millions.

Meanwhile, others were busy on the poker tables, rolling the dice.

While most people would like to think of it as entertainment, one observation made by Piggy was that it was more than just the games. Everyone in the room had a drive and passion to win and most importantly, they all trusted that the poker machines were programmed to give everyone a fair chance or probability of winning. Of course, there is an element of excitement when it comes to betting and casino in general.

The same can also be said of stock market trading given the fact that traders have the potential to experience the rewards of successful investment and trading decisions.

Most people often think that one needs an Economics or Finance degree to trade shares on stock markets, but the truth is that any person, with extensive or very little trading experience, can trade shares successfully.

The trading game is simple – all you need is to follow the markets and act on the right information.  Through online share trading, retail investors can now have direct market access (DMA) on global stock markets such as the JSE and NYSE.

In Zimbabwe, an exciting new development has happened, which is C-Trade and ZSE Direct. These platforms are home grown solutions that enable anyone to access the stock market in Zimbabwe in real time from anywhere, anytime using everyday basic gadgets.

The greatest advantage is these platforms are used in a market which is regulated by the Securities and Exchange Commission of Zimbabwe (SECZ) and as such, it provides for investor protection.

So, the big question is; where would you put your hard-earned money? In cards or shares?  Piggy likes the stock market given that it offers a feasible option to hedge against value destruction over the long term.

Stocks on the ZSE and FINSEC are looking cheap, especially after the movement in the exchange rate. Timing is everything on the stock market and NOW could be the best time to buy.In his book, Stock Market Intelligence, Investing Made Easy, Jeff Luke proposes the PALMS Filtering System as a technique for stock picking. Investors should answer the following question before buying a stock;

Profitable — Is the company profitable?

Adaptable — Is the company adapting to changing technology?

Loyal customers — Are customers devoted to the company’s brand?

Moat — Does the company possess a durable competitive advantage?

Sensible price — Is the stock selling at a price that makes sense?

The PALMS technique is useful for identifying good stocks to buy. Remember the key is buyinglow and selling high. On the ZSE, Piggy likes companies with regional operations, that are well managed or are net exporters as they provide value preservation opportunities to investors with a long-term perspective. Piggy recommends investors to take long term positions is well-managed blue-chip names like Delta Corporation, Econet Wireless Zimbabwe and Innscor Africa. Get tidbits on the stock market by joining a PiggyBankAdvisor WhatsApp Group (+263 78 358 4745).

Matsika is the head of research at Morgan & Co and founder of piggybankadvisor.com. — [email protected] / [email protected] or mobile: +263 783 584 745


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