In this sponsored podcast, BizNews editor Jackie Cameron speaks to CM Trading CEO Daniel Kibel – who shares his insights on the global financial markets. Kibel speaks about how to start trading, what CM Trading has to offer, and how it compares with the competition. The trading expert also shares his thoughts on which countries, companies and industries to invest in and which ones to avoid. – Jarryd Neves
This podcast is brought to you by CM Trading, a global trading and investment broker.Â
I’m Jackie Cameron for BizNews. With me today is Daniel Kibel, the Chief Executive Officer of CM Trading. Daniel, it’s been exciting times for stock market traders. We’ve seen the S&P 500 hit highs and stocks like Tesla making their shareholders richer. How has all this activity played into your business? Are you seeing more people start trading for the first time?
Good morning, Jackie. It’s lovely to join you today. I think these are very interesting times in the stock market because we’ve got two opposing forces. On one level, we’ve got Covid-19 and the economies around the world which are decimated. I don’t think there’s any other term to describe it. On the other hand, what we’re seeing is the stock markets flying through the roof. You specifically mentioned Tesla. Amazon, Google, Apple and a few other ones are really leading the market. What we’re seeing, is that people are very interested in trading.
People come on board because they want to trade. It could be some of those stocks or currencies. Gold has flown through the roof. It reached all time highs of 2,050 and now it’s down to about 1,950. There has been a huge interest in gold. We’ve had oil prices go quite crazy, even if we’re looking at the South African rand, that hit all time highs about a month or two ago. Of course, it’s come right back down now. But certainly what we see is when there’s volatility in the market – as we’re seeing today – people are very interested in investing.Â
Where to start?
Daniel, many people start by entrusting a financial adviser with their investments on the basis that it seems to be quite complex and risky to invest in shares. But we are seeing a growing appetite amongst our audience for investing in shares globally. So how does a first time trader and global stocks, you know, somebody sitting in Johannesburg get started?
As with everything, there are positives and negatives with every point. I think going with a financial adviser with some of your money is 100% the way to go. On the other hand, I think everyone needs to be responsible for their own financial situation. Everyone should be able to invest in what they want to invest in – on stuff they understand. Now, whether that be in stocks such as Amazon or Google (as we mentioned earlier), whether it’s gold, whether it be dollar/rand, whether it be just the general indices like the Nasdaq or the S&P that you also mentioned earlier.Â
The way to do it is to get interested. You can go to cmtrading.com. We have numerous webinars taken by – amongst other people – Fred Razak, our chief market analyst. People can learn and understand what’s going on. On our website we have a full education pack, with videos teaching people how to use the market. On top of that, every client that comes on board receives a trading specialist, who can give them information about what’s going on in the market.Â
Now, of course, the final decision at CM Trading is up to the person who’s investing the money. But certainly the environment – the trading environment – where we can help you and give you information, can be provided by us. I would also recommend your person – someone sitting in Johannesburg – go online or find someone who can teach you to trade.Â
There are numerous high quality companies out there who offer online trading. I highly recommend that you do your reading. Don’t go to some fly by night offering you a quick fix or two day course because it really doesn’t exist. Go to someone who’s got history and who’s trained people. Go online, learn about it. This is very much a time to learn how to trade.
From beginners to the experienced
So it sounds like this isn’t an area for rank beginners then. It sounds like you’re advising people to get familiar with the terminology, markets and maybe even doing a course?Â
I’d say the opposite – despite what I’ve just said. As with everything, you’ve got to have a basic understanding of what’s going on. But at the end of the day, some people just get it with trading and others don’t. And there are people who have never done a course in their lives, but they’ve understood the basics, how to buy and how to sell. They feel the market and it’s natural to them. You give Lionel Messi a football; he’ll run with it and go with it. On the other hand, there are people who’ve done numerous courses who just don’t seem to get it right.Â
My recommendation is to give it a try. Don’t take too much risk. Always understand the basics. Invest just a little bit of time in understanding the basics, as I’ve said on our website. Certainly a course will help you better. At the end of the day, the right way to trade is something you need to learn for yourself. There are people who, as I say, have done no training at all. Yet, they understand the basics and are making huge amounts of money.Â
Be wary of ‘guaranteed returns’
Sounds very exciting. What are the risks?Â
As with every investment, there is a risk. Let’s be clear on this. Fortunately, in South Africa, the situation has changed a bit. Five or six years ago, there were people who were guaranteeing returns. Anyone who’s guaranteeing returns – and this is really important for everyone listening – if someone is guaranteeing you returns, I guarantee you one thing: you will never see your money again.
There’s no such thing as guaranteed returns. Because if they were, we’d all be on our yachts in the Bahamas. No one would be working. Investing comes with risk. The high the potential profits, the higher the potential risk. People need to be aware of that. When you open up a restaurant or a shop, you have to invest huge amounts of money just to open up that restaurant or shop. You can get up to R1-million or R2-million just to do something up nicely. With trading you could start with U$250. There’s not that huge amount of risk. When you invest in trading, you are risking the money you’re putting in and people need to be aware of that. But the potential profits are huge.
Minimising investment risks
What about the other risks? The risks associated with the organisations to which you entrust your money? How do South Africans know when they open an account with you that they’re dealing with a reputable provider?
First of all, people need to make sure that they are trading with an FSCA regulated company. The FCSA is South Africa’s regulator. They are the ones that are looking after the company. They are the ones that are making sure that we are behaving in the right way. If we’re not, they bring us to court or whatever it might be. I think on top of that, you need to read what people are saying about the company. Is your money safe? Is your trading going the right way? Are people doing things with the system? I think it’s very important. There’s a mummy and daddy, you know where you can go.Â
Read also: Gold price hits record high – The commodity that weathered the Covid-19 storm
For instance, CM Trading has an office in Sandton and we’ve got another office in Cape Town. If you’ve got issues, you can always go to that office. You want to know where your money is. With CM Trading, your money remains in South Africa. It doesn’t go offshore. You want to make sure that the company is FSCA regulated, that your funds remain in South Africa and that there’s somewhere for you to go if you need to. Most importantly, if someone is guaranteeing you returns, run like the wind from them.Â
Accessible funds
This issue of the money remaining in South Africa is quite an interesting one, because a lot of South Africans want to invest offshore. How are they going to invest offshore if their money remains in South Africa? Could you perhaps take us through the practical steps of how the money moves into the shares and then back into the account when they’re ready to cash in?
With CM Trading – you go to cmtrading.com – You open an account, you fill in the details. Then you send in your FICA documents – which is a proof of address and identity, such as your passport – then you deposit funds. You’ve got a number of ways of depositing funds. Most of our clients deposit into a local bank account. After they’ve done that, we then transfer those funds into US dollars.Â
The money itself remains in rands in our account, in South Africa. Then people can trade in whatever market they wish, whether that be American shares, UK shares, gold, currencies or whatever it is. But their money remains in South Africa. So they’ve got dollars and when they want to withdraw their money, those dollars are transferred back into Rand and they receive rands back to their accounts.Â
So do South Africans have to use their foreign currency allowance?Â
No, the money is not leaving South Africa. It remains there. Remember, they’re depositing in rands and it remains in rands.
So they’re getting the benefit of the global returns, but they’re not having to go through the regulatory hoops with the foreign currency allowance?
Absolutely.
Are there any limits to the amount of money that they can invest in shares this way?
No. It’s the same as with anything you can deposit. You can put R50-million or R1,000 into a bank account. No one’s going to ask questions, as long as the money comes from you and it comes from a verified source. So for clients that are putting in bigger amounts, there’s no issue. It’s simply moving funds from one bank to another. So that’s not a problem. There’s no limit.
No commission
What are the costs in terms of your fees and then the currency conversion at the back end when you’re buying and selling shares. Roughly how much extra do people have to think about when they’re factoring in whether they’re making a good return or not?Â
When you’re trading with us, there are no commissions. There’s a buy price and a sell price and you work on that. So people need to come on board, have a look and see what we’re doing to understand. It’s commission free trading.
So you would be making your money in the spread between the buy and sell price, is that right?
Correct. As with every financial institution.
What kind of spread is that?
It depends on what you’re trading. We offer hundreds of different trading products from individual stocks, to commodities such as gold, silver and oil. Indices such as S&P, Nasdaq, the FTSE, the DAX of Germany. You’ve got the currencies, such as euro/dollar, the dollar against the rand, pound against the dollar, etc. If people want to know specific things, they can go to CMtrading.com and they can see the specific spread on our website.Â
Comparing costs
Investors are quite cost conscious, so how would they be able to compare your costs with another similar provider?Â
I don’t claim to be the cheapest. I’m not trying to be the cheapest. With quality comes a price. We are certainly within the bounds of most of our competitors. There are always people that are offering less. That’s not the market we’re going for. We provide a very good service to our clients – a service that I don’t believe anyone in South Africa can offer. There’s a reason that CM Trading is South Africa’s largest broker. There’s a reason that on HelloPeter we are the highest-rated financial services provider.
The reason is because of the service we give, and that comes at a specific cost. Now, that cost isn’t ridiculous. We are certainly not more expensive than any of our major competitors, but there are always people who will offer cheaper. I would recommend people think twice before they go to the cheapest option, because cheapest – as we know in life – is rarely the best. So go for something that is normal, that is market regular, but provides a service. Checkout who’s providing that service.
Can you elaborate on what your service offers compared to what your competitors aren’t offering?
Okay, first of all, we are FSCA regulated. Secondly, we have a local bank account. Thirdly, our withdrawals are immediate. Fourthly, every client gets their own trading specialist. We also work with trading specialists. We have the webinars that we provide. Anyone who has listened to the Fred Razak webinar will fully understand the level of the service that he provides.Â
We have – as I’ve said – online education on our website and our support levels are very good. You’ve got questions? You get answers immediately. You want your money? You’ll get that immediately. I think it’s something we can be proud of. As I’ve said, there is a reason why we are number one on HelloPeter as the highest rate financial service provider in our industry.
What is the purpose of the trading specialist?
Having a bespoke trading specialist sounds quite exciting. What does this person do for the client?
It’s not what he does for the client, but rather the information that the trading specialist provides. Remember, we’re not allowed to tell you to buy or to sell. The final decision is always yours, but a trading specialist can be on the phone to clients and can explain what’s going on. So they can explain the American election, something Trump has said, an interest rate decision, unemployment reports, issues with – for instance in South Africa – Telkom or whatever it might be. Basically to explain why things are happening.Â
When you’ve got that information, it’s much easier for you to make a decision on the market. That’s part of the services we provide. We do offer one other service to our clients – called Trading Central – which is a European regulated signals provider, which gives a lot of information on the market. Why things are happening etc. We also provide signals, for clients who wish to take those signals and use them in their trading.
What kind of measures do you put in place to help your clients limit their investment or risks?
Unfortunately that really is up to the client. We can recommend not to go mad, but at the end of the day – because the decision is always that of the client – it’s the client who decides. We highly recommend not to over leverage. At the end of the day, it’s the client that decides. What is absolutely sure his clients cannot lose more than they put in. On top of that, we also have what we call a margin call, whereby our systems will cut people out in order to protect their accounts before they reach zero money as well.
So there’s no way you can lose more than you put in with CM Trading?
No, say you put in U$1,000. Your maximum loss on that account is a U$1,000 whereby you could easily make U$100,000 on that money. When I say easily – it’s obviously not easy to do – but there are people who are doing it. So your maximum loss is what you put in. Your maximum gain is really unlimited.
What to invest in
What about the new areas of investment? Are there any new and interesting avenues, new cryptocurrencies, new exchange traded funds that you think are worth looking at?
I’m not a fan of cryptocurrencies. There’s nothing behind them. They can go up, they can go down. We see this with Bitcoin all the time. By the way – CM Trading does offer Bitcoin and other cryptocurrencies – simply because there’s a demand. If you’re asking me, I’m not a fan of them. They can go up 20-25% in a day. That’s not normal. The reason they can go up or down 20-25% is simply because there’s no underlying market there. I just think the market isn’t ready for cryptocurrencies. People either make or lose a fortune on them. I’m not a big fan because I prefer something more solid. I think it’s going to be a few years before we see real cryptocurrencies. But again, there are a lot of people who disagree with me.
Read also: Kokkie Kooyman: SA banks and how they compare globally
One of our commentators – Kokkie Kooyman – said a few months ago that he’d never seen such a good opportunity to buy stocks. Then, of course, the markets went up. He says there are still some opportunities. Do you see any opportunities right now and if so, where?
That’s the million dollar question or really these days, the billion dollar question. We have a dissonance, as I’ve said. You’ve got economies all over the place, economies being decimated. Unemployment rates are reaching 25 to 50% in most countries. Yet, the stock markets are flying high. The reason they are flying high is simply because of four or five shares: Tesla, Amazon, Google, Apple and one or two others.Â
All the other shares are in trouble, but what you’re seeing is that these shares are flying high and they’re taking with them the stock markets. I would suggest – and this is just an opinion – that there has to be a pullback at certain points. I think we need to look at the American election to see which way it goes. My opinion is that a Biden win might cause a pullback on their stock markets. But again, we’ll have to wait and see on that.
There are always opportunities in the markets. I’m not sure that we’re going to carry on going higher for so long – but that’s only an opinion. I think that what we’re seeing at the moment is not natural, but I think a lot of people have said something similar because it makes no sense when you’re in the middle of a world pandemic – where economies are collapsing – for the stock markets to continue to fly through the roof. At some point, there needs to be some kind of equilibrium. When it’s going to happen, I don’t know.Â
Interesting. Do you think that we should be steering clear of those shares that you mentioned?
It’s a tough one. When something has gone up so high, it’s a tough one to enter now. I’m always looking at currencies, gold, oil and individual stocks that maybe could be taking us higher. Personally, I think going long – I can see Amazon going much higher – I can see it, but I really wouldn’t get in now. Again, that’s an opinion.Â
You mentioned gold. Gold is really sort of a hot topic at the moment. How did people trade in gold? There are a number of different options. Perhaps you could sketch them out?
Well, you could go to CMtrading.com and open an account. Then you can trade gold. If you buy it and it goes up, you’ll make money. It’s leveraged trading. In other words, you only need to put in 1% of the money to trade. That’s something we can explain at another time. Trading in gold is one of our most popular trading products, especially in the last couple of months where it’s flowing through the roof. People have made a lot of money through it. It’s similar to trading anything else on the CM Trading platform.
Local investing
A lot of value investors are looking at South Africa and saying it looks like an investment graveyard. Do you think it’s a good time to start picking up some South African stocks now?
In a word, no. There are always going to be people in economic downturns who are going to invest in economies that are in more trouble. Your standard investor will look at everything and say “We’re in the middle of a pandemic. the world economy is on a huge downturn.”
The economies that are going to make up quickest will be the strongest economies. So you’ll be looking at America. You’ll be looking at Germany. You might even be looking at the UK. The last economies that you’ll be looking at to invest in are those such as South Africa and Brazil.
Those are just examples because of the underlying issues in those economies that exist. Having said that, high risk investors – those that make the big money – those are the guys that take the biggest chances and risks. As I said earlier – biggest risk – normally equates to the biggest returns as well. There are going to be people who are going to look at South Africa today and they’re going to say “You know what, I’m going to invest big time in South Africa because it’s such a mess that it has to go up and I’m going to make a fortune.”
That is a high risk strategy. It’s not for the faint hearted. It’s not for those that don’t have money. For those that want something more solid, they should be looking at things such as gold or the stocks we’ve spoken about or the or the currencies. Those who are very high risk – those who are willing to take the chance – then it’s possible that South Africa could be an amazing investment for them. I certainly wouldn’t be investing my money in South Africa. Not at this stage. I’m sure – as I said – some people are going to make a killing out of this in South Africa.
Investing abroad
What about Asia and exposure to China? What’s your view on that?Â
China’s a problematic area to invest in because it’s a communist state and you never quite know what’s going to happen to your money. You can invest in Chinese stocks, but there are problems there. There’s also the issue between America and China. There’s a trade war going on. I would be very careful before investing in anything in China. Obviously, you’ve got other Asian stocks. You’ve got the Japanese, Taiwanese, South Korean economies, which are strong. It may be worth looking there, definitely, but I’m not sure now is the time to invest in China at all.
What about the Chinese stocks listed on US stock markets? Would you be looking there at all?
No, absolutely not. Remember what Donald Trump has said. He has basically said that he intends to shut down Chinese stocks in America. I think that there’s a big issue there. He’s basically forced through the sale of TikTok to an American company – otherwise it would have been shut down in America. I think it would really not be the time to invest in Chinese stocks in America. I think that’s possibly one of the worst investments one can make right now.
Just before we finish off, the big question on everybody’s lips is, when are we going to get a Covid-19 vaccine? Along with that, there will be some companies who make a lot of money once this vaccine is rolled out. Are there any stocks that you think South Africans should be looking at, or indexes that you think might give the opportunity to take advantage of that development when it comes? Â
I think when the vaccine arrives, stock markets are likely to go up, because it means we can return to normal life. The question is – and it’s a logical question – is that we don’t know what a vaccine will bring us. Firstly, we don’t know how many people will be able to use that vaccine. We don’t know how much mass production will be needed. Remember, there’s how many billion people in the world? In order to put out those numbers of vaccines, it needs to be enormous. We also don’t know how Covid-19 will react to a vaccine.Â
A lot of diseases are able to self-develop, and we know that Covid-19 is a very advanced and very clever disease. Now, we don’t know how Covid will react to a vaccine. It’s very possible that a vaccine will come out, it will be put on mass production, they’ll be able to vaccinate 10% of the world and then Covid-19 will change itself. Now, we don’t know any of this. We don’t know how long it’s going to take. There are lots of companies who are in a race to provide that vaccine for Covid-19. This isn’t a story that’s going to go away.Â
You can look online and find all the companies that are attempting to find the vaccine. Obviously – most of them – their share price has gone through the roof already. Whether they’ll be able to get there and whether they’ll be able to mass produce and whether it will be able to deal with Covid-19 is another other question. It’s something that none of us know. We’re entering new territory here. It’s a new world, where we haven’t got any clue where we’ll be in a year’s time. So, unfortunately, the crystal ball isn’t working today.Â
A final tip
So, what is your final tip for South African investors or people who want to trade in this very uncertain environment?
I think now is the time to invest. I think it’s an opportunity. The markets are very volatile. There’s a lot of money to be made. You can invest in pretty much anything at CM Trading that you would like – there are other companies as well – I’m not just talking about CM Trading. Make sure when you do invest, that you know what you’re letting yourself in for. Understand that trading has risks and only do it with an FSCA regulated company.
There are huge opportunities out there. We’re seeing people making a lot of money in uncertain times. That’s the time when people make most of their money. Also, people are losing money and let’s be aware of that. But now is the time for those that really are sick of putting money in the bank or those looking for a second income. Now is the time to start investing because that’s the way you’re going to make money today.