To market, to market to buy a fat pig. Up and away again yesterday, the first trading day of the second quarter of the year 2013 had begun. The Americans had of course been working already, you have to admire that nation, they might have everything convenience, but they sure do work hard. Overall in Jozi stocks ended positive, the resource stocks however did not, generally being a drag. Anglo American was trading near the worst levels in an age, the 52 week low is 23311, the low yesterday was 23350. I think Mark Cutifani's first day is today, yes, according to the original release that I read, that is the case. The stock closed down two and a quarter percent here in Jozi. Perhaps it was on the news that (surprise) the company will no longer proceed with a coal project in Mozambique, but also thrashing out the port terminal agreement with none other than Eike Batista in Brazil.
Batista, who once touted himself as the next richest man in the world, has been crushed, his business empire that is has lost value over the last twelve months at an alarming rate. The oil and gas ADR price of OGX is down 86 percent in one year, MMX is down 76 percent in New York, LLX is down only 45 percent over the same time frames. Batista has been forced to eat a mountain of humble pie. So much for being the richest, his net worth (on paper) went down a whopping 25 billion Dollars last year. He is now only the fourth richest person in Brazil. On the Twitter thingie he said that people betting against him will be caught with their pants down. Perhaps he is right, you can translate Batista's twitter stream from Portuguese to English (thanks Google) and make up your own mind. Arrogant or not, he has huge plans.
Across the seas and far away the S&P 500 touched another record intraday high, the Dow Jones Industrial Average too. The NASDAQ needs to add another 70 odd percent to eclipse the previous record set in March 2000, 13 years ago. I suspect that inside of the next decade we might reach that point. The criteria to be inside of the NASDAQ hardly looks too onerous, perhaps the biggest one is that the company must be a non financial company. Whilst technology companies still dominate the NASDAQ 100 constituents, there are Consumer cyclicals and Healthcare stocks in there too.
As of last evening, the market cap of the NASDAQ is nearly 5.4 trillion Dollars (5,388,554,872,282.80 to be exact), of which the top ten, Apple through to Comcast make up 1.737 trillion of that. 32.2 percent of the NASDAQ's nearly 2700 companies are made up of the top ten. The top 100 stocks make up nearly 68 percent of the entire market cap. In fact, the top ten stocks are the only ones that have market capitalisations of over 100 billion Dollars, anything below place 84 has less than a 10 billion Dollar market cap, below place 588 all stocks have a market cap of less than 1 billion Dollars. Google, in second place stands out as the only business listed in this current millennia and century. A few biotech heavyweights appear a little lower down the list, Amgen, Gilead fill places 11 and 12. But it is amazing to think that there are over 2000 listed companies on the NASDAQ that are worth less than 1 billion Dollars each. Amazing hey, imagine sifting through that lot.
I also found that announcement apologizing to the Chinese consumers a little laughable, because surely the most critical consumer in the world still has to be the one in the US? The government in China strong arming Apple to apologize for their warranty policy in that country. Arrogant company? Yes, probably, but the same warranty applies in the US, as it does in China. Tim Cook went a long way to dispel the notion that he didn't care about the consumer in China. Paul had some choice words in a tweet that said, until your air is fit to breathe and there aren't any dead pigs floating in your rivers, you basically should be directing your rage elsewhere about Apple and KFC.
Apple results will be on the 23rd of April, for the quarter just past. FY estimates suggest that the stock is trading on less than ten times earnings. Goldman Sachs pulled in their 12 month stock price to 575 Dollars and lowered their earnings estimates. Still, the stock looks cheap, there are rumours of a new phone, a cheaper version with cheaper casing, the WSJ reports: Apple to Begin iPhone Production This Quarter. Who knows, the stock holders might feel like they need a break, but as ever it depends how long you have been holding the company.
My word. Those nut jobs in North Korea continue to be on the war path. I can't even begin to understand how it all works over there. But a 30 year old dictator (with the true power apparently his aunt, the sister of the last emperor) has decided for better or for worse that the country must embark on the nuclear bomb option. Because it is them against everyone seemingly. The Korean peoples army is the fifth largest in the world, but everyone does training at some stage or other. North Korea has an army that is ten times more on a per capita basis than the Americans, and 26 times more than their only real ally, the Chinese. Although in a war I doubt the Chinese would support them. On a per capita basis the North Koreans have the biggest active army in the world. Also, roughly 4 out of every ten citizens are ready and able to fight. Wow.
Ironically, one of the smallest armies in the world relative to their population is our Eastern neighbours, Mozambique at 0.5 per 1000 folks. Ironically because they fought a brutal and lengthy civil war. All violenced out. Now, it seems that South Korea want to build a bomb of their own, according to a WSJ alert early this morning, the US are of course against that idea. Oh dear. I guess angst about Cyprus will spread to this real threat and tension once again. Although, do you see the fellow (young one) actually believing that he could win anything? If there ever was a candidate for the Nobel Peace Prize, he could change the course of the nation in the blink of an eye. It would require immense political will. I tell you, if it happens in our lives I might just shed a tear. For the time being it is going in the wrong direction and rising tensions in the region.
Why is this image, captured in a screenshot from Bloomberg by Cullen Roche from Pragmatic Capitalism very, very important? Take a while to stare at it, and suck in what it means:
There are according to the New York Stock Exchange in the Holidays & Hours segment, 252 trading days this year. In total, out of the 365 days in a year. That means that if you were to not miss a single day of work this year as a participant in the markets, you would still have 113 days off. So roughly two days on, and then one day off. Seems perfectly treasonable to me. However, we all have families and enjoy going away, but imagine if you were solely a day trader. And you closed out your book each and every day. You would then face this tough ask, if you missed these good five days a year for four years in a row, effectively your performance is terrible than if you are rather just all in. I am not too sure that this is very scientific, but the reason why it resonated well with us here is that you should always just be invested fully and ride out the tough times. Because if you try and time it this way and that, you are bound to miss out. Keep calm and carry on.
Crow's nest. Something small but very significant happened last evening. The SEC announced that provided everyone was given the notice of where to look, in other words who to follow, twitter was as good a channel as any to release company information. Wow. SEC Embraces Social Media. See that? Joe from the Business Insider made a wonderful point a couple of weeks ago: Twitter Just Crushed Wall Street After The Cyprus Bailout. Of course, it happened on a weekend. But there you go, the traditional channels just got their exclusivity yanked from underneath them. Time to sign up I guess for the Twitter thingie.
Markets across the globe are all lower, I suppose the North Korean drama continues to unfold. Equally here the commodity stocks are getting sat on by the sellers. Phew, gold stocks are down 22 and a half percent year to date. Yech.
Sasha Naryshkine
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