Johannesburg: 10 May 2022: Predicting and anticipating the future can be profitable if you get it right. This is what great investors try to do each day, using the information that is before them about the economy, and the business environment and trying to understand how these moving variables will affect and determine the state of industries and businesses in the future.
However, the knowledge and skills required to invest in the stock exchange such as the Johannesburg Stock Exchange (JSE) can be acquired. These skills cannot be acquired by trial and error, but through a deliberate strategic approach. Traders study the market, analyse broad macroeconomic trends and the specific attributes of various businesses to determine if the businesses they wish to invest in will make a good or a bad investment in the long run, notes Ralph Speirs, JSE’s spokesperson and CSI officer.
This is exactly what the all-female, two-member team of mechanical and mechatronics engineering students from the University of Cape Town did. Their approach to investment was to look at the prevailing environment and use that information to foresee possible future scenarios. Megan Greggor and Shreya Gopaulsingh of team “Queen of Mechanics” are winners in the university’s speculator portfolio in the JSE Investment Challenge for the month of March 2022.
“Our investment strategy was based on anticipating the impact of Covid-19 on the economy and effectively took a ‘bet’ against the market, and it worked,” says Greggor. “We predicted that Covid 19 will negatively affect the economy as well as financial markets and then decided to use financial instruments that would benefit us under such circumstances. Instead of trading shares, we bought derivatives (futures) instead.”
‘Futures’ are a type of financial product that fall within the broad category financial instruments called derivatives. A futures contract effectively binds two parties, buyer and seller, to transact at a predetermined future date and price.
Greggor says the real brains behind their strategy was her partner Gopaulsingh who introduced her to the stock market and persuaded her to sign-up for the Investment Challenge competition. But it was not difficult to convince Greggor to take part in the competition as she sees a lot of commonalities between what she is studying and the competition. “I like solving real-life problems and the competition appeals to me at that level,” says Greggor. She says she also joined the competition because she wants to acquire a skill that will make her money work for her in future.
“The Investment Challenge is the JSE’s flagship CSI initiative. It is a competition amongst youth in schools and at tertiary institutions, established for the primary purpose of furthering financial literacy in South Africa,” says Speirs. He says the Investment Challenge competition offers participants the opportunity to learn about investing on the JSE and then test their skills against each other via a virtual trading account of R1 million. Participants are rewarded with monthly prizes awarded to the winning schools and university team members, as well as their respective teachers or mentors.
Winners for the March 2022 monthly Investment Challenge competition include:
Imhotep-ACCP from ACUDEO College Crystal Park in Gauteng
PEPI I MERYRE - ACCP from ACUDEO College Crystal Park in Gauteng
Speculator portfolio for schools:
Sesostris III- ACCP from ACUDEO College Crystal Park in Gauteng
Speculator portfolio for universities:
Queen of Mechanics from the University of Cape Town, Western Cape.
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