Beating the stock market

 Trading opportunities, or should I say investing opportunities. I aspire to be a Trader and my definition of investing is "using resources to generate more resource", and for that reason I consider my trading activity to be a form of investing. But, periodically we disagree on "investing" and how it should be done. I also find myself questioning myself, is my approach the "correct" route to reach my destination, financial freedom. No doubt, trading is a good way to reach financial freedom, there's enough evidence, the question is can I do it? If I can't what other approaches can I use, and when to throw the towel.

Is it possible to pick stocks that can return 10x or stock picking is a fool's game? This is one of the topics we tackled last week following Simon Brown's poll on Moneyweb, and a tweet by the Vector Equilibrium. Simon asked how "investors" performed in 2021, some didn't do well and VE asked how bad do you have to be as a trader not to make money in this market. I had a good year (anything is possible with the few remaining trading days) but marginally above the JSE Top40. Was it worth it though? I could've just bought the JSE Top40 ETF.

I believe that limiting draw downs, exiting positions when the market is on a downtrend, will yield better results than buy-and-hold. What I can't say for sure is whether Rand cost averaging can help buy-and-holder. As an investor, I regularly fund my trading account, and stay away from securities that are on an downtrend.

I'm still gonna continue to pick stocks and manage risks, and that's the purpose of this communication. For investing purposes and to try to net 10x returns, I'll try to buy stocks just as they start to trade above the 200EMA. This setup offer the best risk-to-reward and it has served me well in the past.

African Rainbow Capital (AIL)

The stock seem to be in a healthy uptrend, we had a previous buy level around R4 when it bounced of the 40EMA (weekly time frame). This ignores everything outside the chart.

PSG Group (PSG)

PSG has managed to stay above the 200EMA and the 50EMA is now above the 200EMA. I want to see PSG above R85, last week it touched it and then pulled back. I'll be adding to my position once it clears R85.

Tsogo Sun Gaming (TSG)

Another stock on a reasonably strong uptrend, it dipped after the discovery of the omicron variants. Last week it close above the 10EMA. My opinion is that TSG is a BEE spin-off from Sun International and I prefer to own SUI rather than TSG. However, the chart show that TSG has done well compared to SUI. The chart doesn't lie.

ArcelorMittal (ACL)

Nearly 6 months consolidation, ACL finally broke above R7.50 with a descent amount of volume. The stock is already up 1000% plus from the R0.70 close above the 200EMA, there's more than enough room for growth.

Coronation Fund Managers (CML)

That's a bit disappointing, I hope it's just a simple shakeout. Will consider a long position above R57.

It's been a long year, I hope that we all did better than the JSE Top40 or ALSI. Next year is still another year to do better, or to invest in ETFs (see the video below).

Thank you for the support.