You may be interested in:
THREE that could SOAR: Get my urgent penny stock plays for 2020
Read my new, urgent briefing and discover:
• Why property is still the best investment
• Thanks to a shortage of pork and chicken in China, this South African poultry business could see a 106% increase in its share price in less than 12 months!
• This penny stock health administrator has been quietly buying up market share and very few investors have noticed… But that’s all about to change… And when the mainstream catches on its share price is going to explode
Shortages are going to take their toll on the markets and company earnings and you need to be prepared
I was sitting with a client yesterday and he was telling my how, as the treasurer of his school, he needed to place an order for 25 PC’s. Unfortunately, the suppliers couldn’t match his order as the Chinese component supplier was not able to deliver.
But the evidence of widespread shortages is not just anecdotal.
Apple released a statement saying the company will not meet its March revenue guidance. The reason? The coronavirus epidemic. The shutdowns across Asia have caused many of Apple’s Chinese factories and stores to either be closed completely or at least operate on reduced hours.
Apple is not the only company having to deal with this issue. Starbucks has closed more than 2000 outlets. That’s about half its Chinese operations.
For many years, hundreds of companies invested heavily in China. As a result, they now rely heavily on China for a large chunk of their earnings. Chinese manufacturing is intricately woven into the global supply-chain.
When these companies come to report, they will feel the pressure in their bottom lines. I am terrified of what will happen as Q1 results start to filter through later this year.
I’m sure many companies will follow Apple in announcing they will not be able to stick to their previous revenue and earnings guidance.
You need to hedge your portfolio!
You could sell out of your stocks and go into cash… but that is a bit extreme. For one you’ll likely get whacked with a big Capital Gains Tax bill.
What you might consider instead is entering into a “hedge position”. This is essentially like buying a bit of insurance for your portfolio. If markets tank, then you get paid back the money you would have lost on the stock collapse.
One of the best ways to get a bit of protection is to buy “put options”.
With low volatility the pricing is very reasonable and, depending on your requirement, you could pick up “out of the money” puts to keep the costs even lower.
Don’t miss your chance to pocket fast gains from the global financial markets - Like 389% on the South African Rand, 52% on Brent Crude and 37% on the US500
A small group of traders are banking profits every 3 to 6 weeks on the international markets…
• 389% gain on USD/ZAR punt
• Then 2 weeks later another 52.88% on BRENT CRUDE trade
Readers are poised for yet more double-digit wins in the weeks and months ahead.
So, how do you buy options?
Unfortunately, the options market in South Africa is almost non-existent. For retail investors I prefer to go offshore where the spreads are tighter, the pricing better and the variety of options is much wider.
You might think investing overseas is difficult, but it’s actually much easier than most people realise. These days, we can fully externalise a portfolio in under 24 hours start to finish.
You simply fill in a few forms, provide FICA documents and fund a local account. You’ll also be able to log into your account online and keep an eye on your investments whenever you like. Amazing what technology can do for you these days!
If you still don’t have an offshore account, I will happily get you set up. Just send me a mail on email@example.com
or give me a call on 011 781 4454.
Rand Swiss, Wealth Manager