I often get asked by my clients how you look at the whole market and know which shares to trade. So I decided to give some insights on how to keep an eye on the markets. Firstly I suggest start by compiling a good watchlist of shares that you want to follow and have done some research on.

I suggest do at least the following research in the shares you want to follow in your watchlist:

• Look for consistent earnings growth and cash flow (5 years of consistent growth)
• Avoid shares with excessive debt
• Look for shares with proven management (Aspen, bidvest, Shoprite etc)
• Look for shares with a competitive advantage if possible

When setting up a watchlist don’t have too many counters but try and cover all the sectors.

I have a list of shares I follow which I will share with you today. This list changes from time to time and changes are made when shares fall out of favour due to earnings misses or downgrades.

Keep in mind when trading a balanced equities portfolio or a short term trading portfolio your watchlist will be similar. With the short term trading however I suggest trading with trends and look for shares to buy with an upward trend and sell short the shares with a down trend.

Next time

We will have a look into a different aspect of the equities markets with a focus on the retail sector.

Our Equity Trading Mentorship gives practical, hands on guidance on how to use a tested investment strategy on the JSE, click here to learn more
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