Petri Redelinghuys, founder of Herenya Capital Advisors, provides his analysis of the software sector and the cryptocurrency market.
Software Companies
With the emergence of A.I. technologies and their ever-increasing prevalence, it’s easy to think that the writing is on the wall for software companies. The market seems to think so, as a cursory glance at most software company stocks shows a clear decline across the board, in favour of microchip manufacturers and A.I. developers. But the reality is that the software sector is still an important pillar of the economy, and the demand for their product has not changed.
We can point to Adobe (ADBE) as a clear case of a company’s share price not matching its earnings and profitability. We see this as a valuable opportunity to invest in undervalued stocks, which is likely to see a resurgence as hype fades and we see stabilisation in the supply chains and the global market, which will inevitably lead to individuals and fund managers re-investing in more reliable stocks that flew under the radar.
Trading Approach
It’s important to have a clear goal in regards to one’s time scope when investing. We mainly operate with the mid and long term in mind. As a result, we value stable stocks and investments that are stable. Our strategy centres around investing in reliable stocks and trimming them down for profit as they grow significantly larger than their allocation of the portfolio. It also helps with not becoming overly attached to one area of the economy, and allows a greater degree of flexibility when a new opportunity appears. To that end, exchange-traded funds -or ETFs- are a valuable tool to both beginner and seasoned traders, as, contrary to individual stocks, they deal with entire sectors of the economy.
Cryptocurrency
We also invest in Ethereum (ETH) and other currencies, in short and calculated bursts. Crypto in general is a volatile and more unpredictable market, and Ethereum is no different. Its value also fluctuates in somewhat predictable cycles that reward investors who buy in weakness, not unlike Bitcoin (BTC). With that in mind, we treat it like a calculated risk, as we believe that ETH is nearing the bottom of its weakness, and is likely to have a dramatic bounce as the global market stabilises and sentiments improve.
It’s important to note that our trade in Crypto is a very technical trade that makes up a very small part of our portfolio, the loss of which we could absorb. Our views and speculations in regards to Ethereum are tightly intertwined with our knowledge and research of Bitcoin, and we will attach a file below that will hopefully shed some light on the matter for those who are interested in researching the topic.
Watch the episode here:
Introductory Paper On Bitcoin And Crypto
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*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.
