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The Time is Stock O Clock

Piggy recently attended a Breakfast Forum that was meant to discuss implications of the new currency in Zimbabwe. Piggy is still concerned about the impact these developments would have on household incomes. From the forum, Piggy noted that the monetary authorities were upbeat that the new currency reforms would bring about a level of stability. Here are some of the expected outcomes that were highlighted by the officials;

  • More foreign currency is expected to be sold through formal banking channels;
  • A reduction in the trade of foreign currency on the parallel market given that there is a stronger demand for local currency for transaction purposes;
  • A complete end of a re-dollarization process in the economy;
  • Improved monetary policy effectiveness; and
  • A restoration of confidence as measures yield positive results.

While the monetary authorities are confident that the reforms will yield results, recent economic numbers such as the trade deficit figures are not encouraging. Inflation is also expected to remain high while forex shortages continue. This definitely calls for individuals to pursue value preservation strategies.

Piggy likes the stock market given that it offers a feasible option to hedge against value destruction over the long term. Stocks on the ZSE and FINSEC are looking cheap, especially after the movement in the exchange rate. Timing is everything on the stock market and NOW could be the best time to BUY.

In his book, Stock Market Intelligence, Investing Made Easy” (also available on Piggy’s Online Store), Jeff Luke proposes the PALMS Filtering System as a technique for stock picking. Investors should answer the following question before buying a stock;

  • Profitable – Is the company profitable?
  • Adaptable– Is the company adapting to changing technology?
  • Loyal Customers– Are customers devoted to the company’s brand?
  • Moat– Does the company possess a durable competitive advantage?
  • Sensible Price- Is the stock selling at a price that makes sense?

The PALMS technique is useful for identifying good stocks to BUY. Remember the key is BUYING Low and SELLING High. On the ZSE, Piggy likes companies with regional operations, that are well managed or are net exporters as they provide value preservation opportunities to investors with a long-term perspective. 

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