Umbhali Oqavile

We all use different approaches in the markets, the good news is that there is no wrong way, just your way.  I use Systematic Trend Following to trade the markets. It is an approach that I learnt from Traders who mostly trade other securities besides stocks. It is a technical analysis approach that is based on moving averages. It works well across many instruments, at different time frames. It is a good approach for indices and commodities. Whilst it is applicable to forex and stocks, it has some limitations, especially with stocks, at least in a short time frame, below 1-day. Even though I joined the markets with the intention of becoming an (a stock) investor, over the years I have evolved into a stock trader. At first I was just a kid who wanted to invest for his future self; unit trusts (I know hey) there and couple of stocks there. Eventually I caught the wind of "trading" and I wanted in. I realised that I needed a strategy, unlike buying index tracking unit trusts or ...

 Is that even possible, yes. Can I do it, yes. The Stock Market. The Market of Stocks Beating the stock market is probably the main goal for every DIY investor. I mean if I was not obsessed with beating the market I would just delegate the investing task to the professionals and get whatever returns they can manage to get annually. By beating the stock market I mean generating alpha, have higher returns than the market. If the JSE All Share Index return 14% in the year, return more than 14%. Foundation of beating the market The first and major component is having a strategy that has a proven edge. Edge is described as the probability of one thing happening over another, in this case you need to have more profit than losses. However, your win rate does not mean much, it is the size of your wins/losses that matter, the trick is in asymmetric risk-to-reward. Your wins must dwarf your losses by a broad margin.  I use Trend Following, this approach is known to have a low win ...

At some point I nearly quit trading, or whatever that I was doing and thought it was trading. I had a strategy, by then I had already read  Trade Like a Stock Market Wizard  and  Trading in the Zone . In theory I was already in the path of consistent profitability but I was still not profitable. Not trusting the System This could be not understanding the System, but I will stick to not trusting the System despite proven results that it works. Systems, set of rules, work in certain markets, they are designed for certain markets and will not work in all markets. A Systematic Trend Following system will only work in a trending market, in a range bound market you will die by multiple cuts as you will be taking a series of stops. If you trade support and resistance levels you need a range bound market. So, the lack of trust often comes from not understanding the system and when it works. It is important to understand any system before you use it. I had a system, the JSE was i...

I am tempted to say this is a follow up Blog from the  Diworsification  Blog. Perhaps it is closely related. We are often tempted to do everything at once, whilst possible, it can yield below par results. I think I read from one of Nassim Taleb's books that the reason why Professors have average salaries is because they are generalist, they do not specialise. Conversely, neurosurgeons rake the dough, few can do what they do. I have an opinion on this argument; generalisation is good, it allows you to have a conversation with anyone about anything, the limitation of course is that you know little about anything. On the other hand, whilst specialisation is good, it can actually narrow your thinking. If I know more, a lot more about Chemistry, I may end up not knowing about Messi's departure from FC Barcelona to PSG; this is not necessarily a big deal but it does present me as an ignorant and oblivious  person. I digress.  Warren Buffett and Bitcoin Warren Buffett ...

Diversification is key This is the conventional wisdom, spread your investments to reduce risk. No doubt, it is a proven working formula. Few people are interested in placing all their eggs in one basket. But, Warren Buffett says those who diversify has no clue what they are doing. I am not in a position to argue with the Oracle of Omaha, he has made billions of dollars doing what he know. Diworsification Too much of something is a problem, just as too much diversification can defeat the purpose of diversification. Obviously, you are chasing the noble goal of minimising risk, while you are it, you are thinning out your investments! In the process, the risk and the returns just cancel each other out, making the whole process a pointless exercise. Not all is lost though, if you want to own too many stocks, just buy an ETF Bro . An exchange traded fund (ETF) is a diversified tradable security, some of the ETFs are even less volatile than individual stocks. Even there, be careful not ...

Is Aveng a good investment? I did something bad, I broke my rules and dived into Aveng's financial statements. It was for the Channel's viewers and subscribers, so it was done out of altruism. I do not do fundamental analysis, although what I did cannot be fully described as fundamental analysis. Note that I have already made a video of Aveng analysis using technical analysis. I did this to help the people who are supporting the YouTube Channel; most of those people are interested in Aveng, some of them know why whereas others do not, they bought the hype. What is in the financials? I used the company's 2021 interim results for the analysis. I then compared those with their most recent trading statement . Below is a summary of the interim results. As you can see, it is green everywhere. I love the growth in revenue, it means that there is money coming into the business bank accounts. Another great thing is the net cash, I do not know what it means but it good to see the ...