IABFM Expert Opinion

BUY: break-out of World Cup Trade: LONG South Africa

By Michael Preiss

Thursday, July 23, 2009 03:32:49 AM

[b]For information only:[/b]


South African Rand so far this year is the world’s best performing currency against the US dollar +23.6% YTD

South Africa will hold the Football World Cup in 2010 and as such is expected to receive increased investment and flows and potentially more foreign investors’ attention

Germany which held the World Cup in 2006 was the world’s major best performing stock market that year benefiting immensely from the [b][i]“World Cup Factor”[/i][/b]

Resource rich South Africa is now gaining optimism and the market increasingly seems to be willing to place a bet on LONG South Africa, charts on EZA seems to show a “break-out” to the upside

EZA (ishares South Africa) is one way to gain exposure to the [b]South Africa World Cup 2010 Trade[/b]

[b]Trade idea:[/b]

LONG EZA at market

Target price: $70 on EZA implying a potential up-side of + 40%

Cut-loss levels: $45 on EZA implying a potential down-side of about -10%

[b]Risk-Reward ratio of:[/b] 1 to 4 should merit a LONG position to trade the break-out and some portfolio allocation in a well diversified portfolio if stop-loss is adhered to.

Please see chart below:
[img]http://www.theiafm.org/blog/images/blog23-07.gif[/img][/i]

FEAR of losing money or FEAR of losing out?

By Michael Preiss

Thursday, July 23, 2009 03:25:58 AM

[b]For information only:[/b]
 
Dear all,
 
With the markets at key resistance levels and some of them broken / taken –out to the upside, many now increasingly wonder: 
 
[b]Cash is Really King?  or are we missing out on a potentially bigger rally ?[/b]
 
 
 As always, greed and fear rule financial markets but sometimes FEAR or more precisely the 2nd derivate of Fear namely” the fear of losing out” is over-powering the “Fear of losing” money.
 
 
·         Investment managers are showing an appetite for more risk, moving cash from money-market funds into equities on expectations economic recoveries will gain traction.
 
 
·         Global equities as measured by the MSCI World Index rose +46% from a more than 13-year low in March. Since
then, money-market fund holdings sank -6.6%  through March 15 from near a 20-year high, data compiled by Bloomberg show.

Quote of the day:
 
     “There is still a lot of money sitting on the sidelines waiting to be invested as the global economic situation stabilizes,”    Pauline Dan, chief investment officer at Samsung Investment Trust Management
 
 
[b]Is the fear of losing money in stocks now being over-powered by the fear of losing out?[/b]
 
 
Mass psychology and your portfolio valuation at the end of 2009 might tell. In the meantime, risk is in the eye of the beholder and this business is about probabilities in an environment of uncertainty.