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Thread: Speculator vs investor

  1. #1
    Site Caretaker Dave A's Avatar
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    Speculator vs investor

    Here is an amazing story within a story.

    First, there is the story of Porsche gaining a 50% shareholding in Volkswagen.
    Frankfurt - The German luxury sports-car maker Porsche has taken over Volkswagen, the biggest European car manufacturer, after purchasing more than 50 percent of VW shares, Porsche said late on Monday.

    Porsche said in a brief statement that by buying new VW shares, it "will thus increase its participation to 50.76 percent" of the group's capital, compared with 42 percent before.

    Porsche had initially planned to acquire more than 50 percent of VW's stock last year but was forced to delay the operation after the value of the shares soared amid frantic stock market speculation.

    At one point, they traded for more than €1,000 per share, making VW briefly the biggest company in the world by stock market valuation.

    On Monday, VW shares closed at €254.74, close to the range Porsche had set for itself of between €200-€250.
    full story from Business Report here
    And then there is this story.
    German billionaire Adolf Merckle, assailed by financial turmoil and struggling to salvage his business empire, has killed himself, his family said on Tuesday.

    "The desperate situation of his companies caused by the financial crisis, the uncertainties of the last few weeks and his powerlessness to act, have broken the passionate family entrepreneur and he took his own life," a family statement said.
    Tragic victim of the credit crunch? Perhaps not.
    Merckle was ranked as the world's 94th richest person in 2008 according to Forbes magazine and his family controls a number of German companies including cement maker HeidelbergCement and generic drug company Ratiopharm, but its empire was rocked last year by wrong-way bets made on shares in carmaker Volkswagen.

    Banking sources had told Reuters the family lost hundreds of millions of euros on investments, with losses of about €400-million ($539,4-million) on Volkswagen shares alone.
    full story from M&G here
    With a drop from €1000 to about €250, it takes no rocket science to guess some scalpers must have fried their fingers to a crisp. And Porsche, the true investor, had the patience to wait for the speculators to burn out.

    To me the story illustrates the difference between the investor and speculator rather well.
    The trouble with opportunity is it normally comes dressed up as work.

  2. Thank given for this post:

    Graeme (07-Jan-09), IanF (07-Jan-09)

  3. #2
    Moderator IanF's Avatar
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    Dave
    Thanks for this and now is probably the time to start investing.
    Only stress when you can change the outcome!

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    Silver Member Graeme's Avatar
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    Ian,

    I've started already!

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    Gold Member daveob's Avatar
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    Personally, I would wait for a general trend reversal.

    You won't catch the very bottom of the trough ( so you make a few % less ) but at least you're not caught with exposure at a point only half way down a horrible slide.

    Remember one of the first rules of investing : the Trend is your Friend.
    Watching the ships passing by.

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    Site Caretaker Dave A's Avatar
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    Funny thing to note here - Graeme is the one who taught me that there is a rather serious difference between an investor and a speculator in the first place.
    The trouble with opportunity is it normally comes dressed up as work.

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    Moderator IanF's Avatar
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    Quote Originally Posted by daveob View Post
    Personally, I would wait for a general trend reversal.

    You won't catch the very bottom of the trough
    Dave and Graeme,
    As the resident investment gurus what do you make of SATRIX?
    I see from their graphs the SATRIX 40 is at a 3 year low. I like this as I don't have the time and patience to invest in the market through a broker. (also the ready R1 million) to do it. This seems like a less risky way to do it and you can do a debit order to invest with a minimum of R300 per month.
    Which SATRIX fund would you recommend?
    Last edited by IanF; 08-Jan-09 at 08:39 AM. Reason: Indentified more gurus
    Only stress when you can change the outcome!

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    Site Caretaker Dave A's Avatar
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    Make no mistake, I'm no investment guru. My particular angle on the issue is that investors add value - speculators are feeding off the productive parts of the share trading merrygoround.

    All I'm occasionally good at is recognising sectors that might be in a good spot from time to time.
    The trouble with opportunity is it normally comes dressed up as work.

  9. #8
    Silver Member Graeme's Avatar
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    Ian, the SATRIX 40 is rather heavy in resources shares and I am not convinced that resources are the flavour of the month again, yet. I would wait a while there, but don't come back and haunt me if I am wrong! I have been having a long hard look at SA Banks (yes, banks!)

  10. #9
    Moderator IanF's Avatar
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    Graeme
    You can also get the SWIX SATRIX, which is weighted towards SA shareholding in the top 40, thus less mining holdings . But the concept appeals to me with low cost and generally better returns than other funds. Also the RAFI which reinvests dividends received straight away and ranks the share according to fundamental factors.
    Only stress when you can change the outcome!

  11. #10
    Silver Member Graeme's Avatar
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    Ian, go for it if you are confident - try to avoid putting all your eggs in one basket. Make a note of Standard Bank's share price now and look at it again in 12 months time.

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