01 September 2021

Trading JSE CFDs in Turbulent Times

Reflections of My Life Trading CFDs in Turbolent Times Copyright Vernon Chalmers Photography
“Trading doesn't just reveal your character, it also builds it if you stay in the game long enough.” ― Yvan Byeajee

I've been a stock market investor and share trader on the Johannesburg Stock Exchange (JSE) for the past 30 years. I became interested in share trading as a junior lecturer in Economics and Business Economics during the early 1990's. The first JSE listed company I invested in was Rainbow Chicken.

This was just before electronic share trading became available to individual investors / traders and for a while I still had to phone through my orders and drive to the broker with a cheque to settle my share transactions. 

When online trading became mainstream I could access, purchase and sell shares directly via the Standard Bank Online Share Trading website. I increased the frequency of buying and selling of shares and steadily developed my JSE share portfolio (and my knowledge). My trading objectives at that stage was not long-term investment and / or a growth portfolio, but rather the buying and selling of shares for cash flow and for learning stock market fundamentals, applications and associated risks.

Through the Standard Bank trading platform I quickly became aware of a range of financial derivates offered to their online share trading clients. For a few years I mainly traded a selection of shares from the JSE-listed Top 40 Companies and financial instruments such as Single Stock Futures (SSFs) and Contract For Difference (CFDs) derivatives. Over the last five years I've only traded CFDs due to my trading / cash flow objectives, associated leverage and a more in-depth understanding of CFD trading risks.

JSE Shares / Derivatives  (SFFs and CFDs) / ETFs Traded up to 2019
Absa / Advtech / Afrox / Anglo American / Aspen / BHP / Capitec / City Lodge Hotels / Clicks / Dis-Chem / Distillers / Gold Fields / Harmony Gold / MTN Group / MR Price / Merafe / MultiChoice Group / Naspers / Old Mutual / PPC Cement / Pick & Pay / Purple Group /  Rainbow Chicken / Remgro / Richemont / Sasol / SA Breweries  / Sappi / Sanlam / Spar / Sun International /  Sygnia / Standard Bank / Spur Holdings / Vodacom / Woolworths / Currency Futures / Satrix ETFs (various) / Standard Bank Copper ETF / Standard Bank Platinum ETF / Sygnia ETFs (various)

Off and Back on The JSE
In late 2019 I took a break from my Standard Bank Online Share Trading due to other business and personal commitments. This was a time with no daily trading stress and it provided an opportunity for reflecting on my share trading system, trading strategies and for possible re-entering the stock market at a later stage.

When COVID-19 arrived in South Africa (April / May 2020) and we were forced into Lockdown 5 I suddenly found myself without any income. My photography training and my accommodation renting business dried up immediately and I had to make a sustainable plan for generating income and cash flow for these uncertain times. I immediately turned my attention (and time) to the JSE and started my market and company research for purchasing CFDs.

With the sudden drop in global commodity and oil prices Sasol's (JSE Code: SOL) share price was hard hit and dropped significantly in a very short period it definitely peaked my interest. I started buying SOL CFDs at +- R26 per share (currently trading at +- R215 per share) and very quickly with the upward bounce started buying additional SOL CFDs and slowly but surely developed a CFD portfolio as I gained more market knowledge of the COVID pandemic impact (as a possible Black Swan event) on the local and global financial markets. 

Vernon Chalmers 2020 / 2021 CFD Portfolio 
Over the next few months I generated substantial income and cash flow from the SOL CFDs and added many other CFDs to my portfolio (with local and global market exposure). Through meticulous Fundamental and Technical Analysis during 2020 / 2021 I developed a diversified CFD portfolio from 16 JSE Sectors with at least one company in each Sector (with JSE Share Code):  
  • Apparel Retailers: Mr Price (MRP)
  • Asset Managers and Custodians: Zeder (ZED)
  • Banks: Capitec (CPI) / FirstRand (FSR)
  • Cement: PPC (PPC)
  • Chemicals Diversified: Sasol (SOL)
  • Consumer Digital Services: Naspers (NPN) / Prosus (PRX)
  • Diversified Financial Services: Remgro (REM)
  • Drug Retailers: Dis-Chem (DCP)
  • Food Retailers and Wholesalers: Spar (SPP)
  • General Mining: Anglo American (AGL)
  • Hotels and Motels: City Lodge (CLH)
  • Luxury Items: Richemont (CFR)
  • Pharmaceuticals: Aspen (APN)
  • Real Estate Holding and Development: Rand Merchant Holdings (RMH)
  • Telecommunications Services: MTN Holdings (MTN) / Vodacom (VOD)
  • Transportation Services: Grindrod (GND)

13 of the above CFDs (the listed companies) are constituents of the SATRIX TOP 40 ETF (which tracks the performance of the FTSE/JSE Top 40 Index).

CFD Profit / Loss Performance Table (Since Acquisition) Last Updated: 24/08/2021

Top 5 CFDs (JSE Code) Portfolio % % Profit Bottom 5 CFDs (JSE Code) Portfolio % % Profit / Loss
PPC Cement (PPC) 8 370 Vodacom (VOD) 8 13
MTN Group (MTN) 10 168 Zeder ZED) 3 10
Sasol (SOL) 15 129 Remgro (REM) 4 6
Capitec (CPI) 7 93 Prosus (PRX) 7 -7
MR Price (MRP) 5 90 Naspers (NPN) 4 -10
AVG Profit % 170 AVG Profit % 2,4

All listed companies in my CFD portfolio: Investor Information / Relations Website URLs

Overall / Combined CFD Portfolio Performance
I am reasonably satisfied with the current 35 - 45% overall portfolio profit performance (and the sectors / industries it represent for diversification). The portfolio is self-managed as two separate sub-portfolios which I refer to as Portfolio 1 and Portfolio 2. Portfolio 1 is the larger higher risk CFD portfolio with Portfolio 2 as the testing ground for new CFD additions.

CFD Portfolio Profit (Since Acquisition) Last Updated: 31/08/2021

CFD Portfolio % Profit
Portfolio 1 46
Portfolio 2 30,7
AVG % 38,3

Naspers / Prosus and some International Exposure (via Tencent)
Naspers and Prosus (some of the largest listed companies on the JSE by market capitalisation) were added to Portfolio 2 / Prosus to Portfolio 1 during August 2021. I have done this just before their Share Swop and also with the drop in both share prices due to the +- 30% Prosus stake in Tencent (China) that is currently under regulatory scrutiny by the Chinese government.  

With a 45% drop in Tencent shares (since February 2021) I assessed it as a good opportunity for adding Prosus CFDs to both my sub-portfolios. Prosus has a primary listing on Euronext Amsterdam Stock Exchange (AEX:PRX) and with its substantial stake in Tencent - which in turn owns large stakes in non-Chinese companies i.e. Activision Blizzard / Tesla / Spotify / Snap / Sea Limited (listed on the New York Stock Exchange (NYSE) - provides for exposure in high-growth international companies. Reference

Latest CFD Acquisitions - AGL CFDs
After adding both Naspers (NPN) and Prosus (PRX) to both CFD Portfolios during early August 2021, I also added Anglo American (AGL) to Portfolio 2. As a constituent of the General Mining JSE Sector / Basic Materials of the SATRIX TOP 40 ETF composition, Anglo American provides good (global) diversification exposure in coal (metallurgical / thermal), copper, diamonds, iron ore, nickel, manganese, platinum and polyhalite. Reference

That first share... Rainbow Chicken
I still hold Rainbow Chicken indirectly in my portfolio. Today they are incorporated into JSE-listed RCL Foods. Although I don't own shares in RCL Foods, I trade and own CFDs in Remgro. As one of South Africa's top Diversified Financial Services companies, Remgro owns 77% of RCL Foods.

CFD Trading Risk
CFD trading is a high risk derivative trading decision and / or strategy. CFDs are geared financial instruments that could have a significant profit and / or loss impact on a daily basis. Anybody trading CFDs should have substantial stock market / stock trading knowledge and experience with preferably an in-depth understanding of the impact of daily price fluctuations and any volatility affecting the share / sector / economy / global markets. It is extremely high risk trading and it not uncommon for entire CFD portfolios to be wiped out within a couple of days. 

Developing an Investment / Trading System
As long as I have been investing and trading I've been developing and fine-tuning a system in which I am comfortable with the individual shares, derivatives, leverage, margins and risks. I've learned not just to look at the overall portfolio, but also to each and every share / derivative in my portfolio. Proper analises, research and decision-making is time-consuming, but its important to assess various criteria via both fundamental and technical analysis. Having an in-depth understanding of the trading / investment platform (in my case - Standard Bank Online Share Trading) is paramount to a successful strategy, operational efficiency and risk management practices.
 
Although I have a much larger portfolio currently, I'm trading more risk-averse than 30 years ago - mainly due to more trading experience, improved risk management skills, patience, availability of more real-time data and an overall better understanding / interpretation of specific market and economic conditions. Over the years I also traded towards a larger JSE-sector diversification (with global exposure) and selecting companies with relatively large market capitalisations that should provide improved balance, leverage and return on trading capital to my CFD portfolio(s).

🎓Current book I am Reading: September 2021

         The Black Swan : The Impact of the Highly Improbable
          Nassim Nicholas Taleb

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25 August 2021

One Year After Leaving an Abusive / Toxic Relationship

Wild Flowers Kirstenbosch - One Year After Leaving An Abusive Relationship Copyright Vernon Chalmers Photography
"Remove yourself from people who treat you like your time doesn’t matter, like your feelings are worthless, or like your soul is replaceable" — s.mcnutt

25 August 2021 marked my one year anniversary after leaving an abusive and overall toxic relationship. It was an emotionally charged and challenging year, especially the first couple of months. I had to come to terms with getting out of the FOG (Fear | Obligation | Guilt) for letting go and walking away from somebody that I thought (at the time) I have fallen in love with.
 
I have written extensively here on Reflections of My Life about some of my ex girlfriend's unacceptable behaviour that I have experienced during the relationship. I will therefore not repeat the well-documented encounters of her Abusive Behaviour towards me, her chronic Lack of Gratitude, my paradoxical Cognitive Dissonance and / or my interpretation of Love vs Fear.

25 August was my late mother's birthday. Celebrating this special day with her was one of the highlights of every year while she was alive. It is ironic that 25 August is now also associated with reminiscing the most challenging relationship of my life. It was not in any way scripted like this, but rather the unfortunate unfolding of events after some unjustified abusive behaviour towards me. I don't mind sharing this day between one of the best and probably the most disappointing relationships of my life - it places my mother's sincere character and sense of gratitude into such a healthy perspective (and reminder) in my own interactions with others.

A year ago I reluctantly, but sensibly removed myself from a toxic relationship with an intelligent and charming woman (although very abrasive and self-centered at times). After a few months of various unprovoked physical and verbal attacks I faced the daunting realisation of being close to the edge of clinical exhaustion as a result of a perpetual trauma bond with an emotionally unstable partner.

I isolated myself for weeks in trying to come to terms with her abusive behaviour and overall unhealthy relationship. Consumed with disappointment and grief I mourned the loss of the relationship and I spent months in not only researching the psychological 'cause and effect' of abusive relationship behaviour, but also analysing (and understanding) my own codependent behaviour shortcomings for staying in an abusive relationship. 

🎓 What I have Learned from an Abusive / Toxic Relationship
  • I cannot take responsibility for someone else's antisocial behaviour, I did not cause the inherent propensity towards aggressive tendencies and I do not have to be in the 'firing line' of any abusive and antisocial behaviour towards me. I can only control my own behaviour towards other people and that I should be more mindful in terms of my own judgement, decision-making and social behaviour towards the actions and reactions of other people (in an intimate relationship and / or otherwise).
  • That I should be more vigilant towards pathological behaviour patterns and obvious 'red flags' during any stage of an intimate relationship. I've read, researched and listened to an extensive range of world-class intimate relationship abuse recovery and Psychology Resources. Not only for the identification / understanding of psychopathy and related (spectrum) personality disorder traits, but also for assisting me with reference to responsible (re)actions towards any antisocial behaviour.
  • That there are indeed people who cannot say 'thank you' with absolutely no regard for expressing any gratitude whatsoever. It was the first time in my life that I have experienced such a profound sense of self entitlement (for any received goodwill) and / or deliberate rejection of thankfulness. It took me a while to understand and except that I should not just assume someone will say 'thank you'.
  • To address and improve my own relationship codependency behaviour in terms of setting healthy boundaries by not accepting any destructive behaviour tendencies towards me, not trying to please other people and not to feel / be responsible as a 'caregiver' when a more mature disposition is required.
  • That processing, letting go and healing from an abusive / toxic relationship is a challenging process, especially without (proper) closure. It required a conscientious effort of personal introspection, own behaviour modification, forgiveness and acceptance to move beyond the realms of just accepting someone else's (false) sense of entitlement, lack of respect and incessant aggressive behaviour tendencies. 
  • Recovery and healing time from an abusive relationship is a different journey for anyone going through the challenge(s) of detaching from an unfortunate trauma bond. Its easy (in hindsight) to say it took me a year. A year ago I had no idea how long it would take - some days It felt it would never happen. 

🎓 What I have Achieved from an Abusive / Toxic Relationship
  • Apart from gaining an extensive body of additional psychological reference knowledge I have had many opportunities for discussing the abusive relationship with family members, friends and professional contacts. I did not (at any stage) consider professional counseling, but rather through no further contact, self-determination, honest reflection and informal psychodynamic talk therapy (with my professional contacts) pursued improved control over my own cognitive dissonance, emotional conditioning and relevant behaviour modification.
  • During the relationship I lost some of my creativity, sense of self and my Photography was severely compromised for focusing almost exclusively on someone else's omnipresent needs and wants. It took me a few months for regaining my normal confident self, my interest in my own photography, photography training and the daily management of my CFD Trading Portfolio.
  • Spending less time reading and researching about the 'cause and effect' of pathological behaviour / personality disorders. I spend more time lately with my own photography and the daily reading / researching about trading and investment opportunities / threats.
  • The ability to once again engage with a variety of people with trust, effective communication and the setting of assertive personal boundaries (when and where required). It has happened a few times recently where I had to set and enforce personal boundaries for protecting my privacy and personal space. 
  • I have always considered empathy and gratitude as important personal / relationship qualities - its only now that I truly understand the impact and consequences when these emotional values are completely absent from someone's Emotional Intelligence 'toolbox'. The words 'thank you' became the most important words in my vocabulary over the last year. 
  • Spending relatively long periods in solitude without anxiety (and worrying) about someone else's feelings, actions and reactions. Many hours were consumed with soul searching / self analysis to eventually emerge with a renewed sense of self, self enrichment and an ever increasing emotional intelligence.

Throughout the last year I have had invaluable conversations with many people about the toxic dynamics of this abusive relationship and the eroding effect on my emotional well being. I was brutally honest in describing the essence of every (physical) attack towards me, my integrity and the grandiose disdain for everything that I tirelessly offered during the relationship.

Letting Go of this transactional and toxic relationship was not an achievement as such, but rather the acceptance of ending a dramatic trauma bond with severe (and possibly long-term) negative consequences. I was unfortunatly enmeshed in an unhealthy relationship with someone that was emotionally stunted in the ability to trust, love and / or respect others as part of the reciprocal values required for an emotionally stable relationship.

 
Powerful Words of 'Letting Go'

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