Using data insights to invest

It is more than just numbers; it’s a tool that guides in making good decisions.

- Maboko Seabi

Imagine two investors, Sipho and Thandi. They both live in Johannesburg and each have R500 000 to invest in the South African equity market. However, there's one crucial difference: Sipho relies on intuition and market chatter, while Thandi makes her investment decisions based on data.

Let's see how their approaches unfold over time.

Sipho's approach: The intuition investor Sipho has always been drawn to the idea of buying low and selling high. He listens closely to what family, social media, friends, and colleagues are talking about. Lately, everyone has been buzzing about a tech company that has shown a sharp rise in its share price. Feeling the fear of missing out (FOMO), Sipho quickly buys R200 000 worth of equity in this company without much research.

At first, the share price continues to rise, and Sipho is excited. However, within a few months, the company releases a disappointing earnings report. The share price dives, wiping out most of his initial gains. As discouraged as Sipho is, he decides to hold on, hoping the price will rebound. Unfortunately, the share price continues to underperform, leaving Sipho anxious and uncertain.