FINopsis

Why The U.S. Bans Crude Oil Exports: A Brief History

Treading carefully...... Markets are reaching all time highs and this leaves the investor (both enterprise and defensive) with the notion that a market correction or bubble might occur soon. So what can you do to prepare yourself for this potential market correction? Here are a few options at your peril: 1. Cash pile-up: At the current rate of returns on the stock markets, this seems like the worst option as cash savings can not provide returns in excess of inflation. However, there are two main benefits to this: It provides a buffer against any market corrections; and It provides flexibility to buy again after the market has been corrected and prices have fallen a lot. 2. Small Caps: Instead of focusing on the Top stocks on the market, consideration should be given to small caps that are value stocks and that will not be affected as severely as large caps in the case of a market correction. Some small caps on the JSE to consider include: ISA Holdings Limited (P/E of 10

1. Glencore and BHP Billiton: Global demand for coal is expected to slow down slightly however many institutional investors think that the coal prices are currently at an all time low and is expected to increase due to increases in supply. This coupled with the weakening of the Rand against the Dollar favours companies like Glencore and BHP that are global multi-nationals. Both companies also have a very attractive P/E ratio. 2. Anglo American: Anglo is planning to dispose off it's interest in LaFarge (50%) for a juicy price which will buff up their cash covers and help them to possibly improve their gearing and pay off some debt. 3. African Bank Investments Limited (ABIL) ABIL plans to dispose off the troubled Ellerines unit which will provide them with much needed cash. The company is also priced at a major discount to its fair value/net asset value.