Investment Risk Expert Daryl Ducasse

question

Posted by: Stewart Clark | 2013/07/19 07:28

What do I do with an investment that is just going down?

I have an investment in the Satrix RESI for the last 2 years and it is just going down and down. Do I withdraw from the RESI? Is there any chance in an upturn in resources?

expert answer

Posted by: Daryl Ducasse | 2013/07/19 08:45
Hi Stewart,

Thanks for your question.

Firstly, I do think it's a good idea to consult a stockbroker on specific issues like this. Do you have one?

At what price did you get into the counter? e.g. if you got in early Jan 2009, you'd be in the money.
I'm assuming that if you've had it for about 2 years, R53 - R55? That being the case, you're in a loss position, and depending on how many units you have, it could be quite a substantial Rand loss - these are details that I am not familiar with.

Satrix Resi seems to have flattened out to the July 2009 level. It reached a high of R77 per unit which I doubt it will reach again anytime soon. The second level was around R61, which I also doubt it will see soon. 

It seems destined to stay in the range of R48 - R54, so the answer pretty much depends on your total entry cost, your current level, and the estimated loss if you had to exit now.

Notwithstanding a loss, you could make up the loss in a more aggressive counter, if you have the appetite for it.

In terms of resources, yes I believe there will be a return to resources in the future - perhaps not right now, but it will return.

Try Gold, or AGL below R200ps.

It is always advisable to have a stop loss on any investment - the line beyond which you are not prepared to cross, and which triggers a sale, cutting the possibility of further losses.

NB! Please consult a stockbroker in terms of your decision to stay in or exit STXRES. 

Wishing you the best.

Safe & happy investing,
The Merkurius team.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers, and disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site.

user comments

Posted by: bob | 2013/07/23 22:26
don't touch gold for heavens sake, if you like ETF funds which I'm guessing you do, then sell your SatrixRes & rather buy SatrixINDI. It looks like you've only taken a 15-20% drop, thats not a train smash, don't fall in love with your shares, just cut your loses and move on if you are not happy, after all the stock market is run on emotion. And as for asking a stockbroker, umm yeah come on please, there are almost 500 companies on the JSE, are you telling me your stockbroker knows all their profiles and ins and outs, yeah right.
Reply to bob
Posted by: Terry | 2013/07/23 19:36
Stay the hell away from SA gold stocks. they have never been able to take advantage of gold prices and have ever increase unit labour costs. Having invested in Satrix resi i would assume you wanted a passive investment with potentially high returns.With QE potentially being tapered that SATRIXRESI may continue to slide. I dont think the earnings outlook for SA miniers is positive at the moment.I would look at switching to the satrix divi or top 40.I think diversifying with some retail bonds is always an option. Also look at some of the equity funds run by some institutions like abax, nedbank,investec, etc etc.In the end with commodities always be careful.passivity is not always good particularly in SA
Reply to Terry
Posted by: TUMELO | 2013/07/23 15:29
It depends also on whether you need the money urgently or not. You may take a position that the stock is making a loss and sell at a loss to salvage whatever you can. Or you can place a 10 year wait period on the stock and only get out when there is another peak if you are can carry on and accept that the stocks may be junked while you are holding on
Reply to TUMELO

comment on this story

3 comments
Read the comments policy
Your comment has been posted and will appear shortly.
Please fill in the required fields.