Dr. Copper has a dicky ticker

"Copper prices are down nearly 10 percent in a week, the commodity stocks are taking pain again, no thanks to the marginally lower World Bank report. Lowering of global growth has led to Dr. Copper (a supposed proxy for global growth) being absolutely hammered this morning, down seven percent when I checked early this morning."

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To market, to market to buy a fat pig. Oh. The world bank this morning has cut global growth rates, this might be quite familiar and something that no doubt we have seen over the last few years. Lowering of global growth has led to Dr. Copper (a supposed proxy for global growth) being absolutely hammered this morning, down seven percent when I checked early this morning. Sigh. As a research note that I read points out, the copper price hardly budged as oil prices (also a proxy for global growth) came plunging down. The implications of lower oil prices both as a result of lower inflation and extra cash in consumers pockets have not been fully factored into too many models, is my best guess, the World Bank has of course locked this into their models, read the WSJ piece: World Bank Lowers Outlook for Global Economic Growth. As much as a prediction is something important, it really does not change our minds about specific companies.

I liked this post on oil prices from our friend Cullen Roche, who points that whilst history rhymes, it does not necessarily repeat -> It's Always Different This Time - Oil Edition. The deep caveman in us is great at pattern recognition, which explains why we love charts so much. Pattern recognition is great when seeing a Black Rhino and learning to avoid it next time it charges 1 in 2 times (thanks for that info Byron), it is not so useful when overlaying a 2014 stock market graph with one from 1929.

In 1929 they listened to radios, that was all the rage, nowadays there is Netflix (see below) and YouTube. There was no iPhone to watch your YouTube on in 1929, let alone air-conditioned offices and motor vehicles (that you did not have to wind up). There was no TV with global news readily available on multiple channels, no Wikipedia, no internet. No microwave ovens. No convenience. Yes, the good old days. Mr. Roche points out that falling oil prices is attributed to rising supply and consumption being lower than before. Yesterday he said something interesting, a bet on commodities is a bet against human innovation and technology, it makes sense if you entertain the thought for a little.

Here goes the report summary, we are right at the bottom and South Africa gets a mention (not positive): Global Economic Prospects to Improve in 2015, But Divergent Trends Pose Downside Risks, Says WB, for the full report -> Having fiscal space and using it. No thanks, I shall rather read annual reports than that whole report, it is a better utilisation of time!

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Company corner snippets

I am not really one for watching the awards, the question, what are you wearing should one day be answered, can you not see that it is a dress? I know what they mean, an entire channel devoted to what actors and in particular actresses are wearing, really? I suppose, as investors in Richemont and L'Oreal, we should be so happy that this happens, Johan Rupert once said something along the lines (I kid you not) as long as women want to look beautiful and men want to get lucky on Saturday nights, we will always have a business. Phew.

The thing that interested me the most at the last Golden Globes awards presented on the weekend was not the way every acceptance speech gushes with amazement at their fellow acting cast, directors, writers and so on, rather that Amazon (2) and Netflix (1) shows won awards. I think that it marks more than just a subtle shift, see this article -> Big Wins For 'Transparent' Make It Clear: TV's Undergoing A Revolution. And I see in the FT today -> Amazon signs Woody Allen for his first television series. This is a big shift, no wonder Koos Bekker calls his growing satellite TV business an old business, luckily for Naspers (Multichoice/DSTV would no doubt be pioneers - already are), broadband is terrible in this country, comparable of course. The winners in this? Google, Netflix, Amazon, the losers with their multi decade empire under threat, no doubt the networks. Content is still king however, he/she who can own that, will win greater audiences in time.

Did you see the Truworths business update yesterday afternoon? Truworths coincidently is 100 years old at the same time as Anglo American, according to their website they opened for business in Cape Town as the Alliance Trading Company in 1917, the name change to Truworths (and 2nd store opening) happening around 15 years later. There are those of you, who are experienced and wise, who will remember and recall the Wooltru group, from which Truworths was unbundled in 2002. The precursor to that was a 20 year relationship with Woolies, in which the two were one company from 1981 to 2002, under the listed entity Wooltru. In a stodgy consumer environment that we currently find ourselves in, it was not really surprising that Truworths had a poor update yesterday. Here goes quickly, group retail sales set to be 5.2 percent better at 6.2 billion Rand for the 26 weeks to end 28 December, like for like sales declined by 0.8 percent. 19 February is a date to stick in your calendar, more clarity on credit sales (71 percent of total sales) and how Joe consumer is looking. Not good.

Sometimes it is what other people do that impacts on your business, a copy of some sorts. Apple is a great finisher of products, not in the raw style of Lance Klusener, rather more like the pure clean hitting of David Miller. That six over the Golf Course end stand on Sunday was the biggest that I have ever seen, it is a pity that we lost that match. Anyhow cricket aside, another chance pending today, Apple Inc. yesterday according to iPhonehacks earned a patent for a GoPro-like camera. GoPro stock sank 12 percent. The stock is down over 40 percent in the northern hemisphere winter, since the beginning of October. With a market cap of just 7.24 billion Dollars, relative to the Apple cash pile 20 times that size, Apple obviously want their users to have the ability to use a similar product. Time will tell, sometimes you have to watch what others do, and not what you do.

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Things we are reading, we think that you should read them too

The Zuck is turning Facebook into an internet investment company - Exclusive: Facebook, Xiaomi discussed possible investment in the Chinese smartphone maker. This deal didn't go through but the intent is clear that Facebook is still looking for companies to buy/ invest in.

Oil price falling means that green technology gets less attention again - 'Wind trees' could replace controversial giant turbines in race for sustainable energy. I don't agree with the journalists conclusion that these could replace giant turbines, I do think they could be popular for a retail market wanting to go off the grid with solar and wind.

Active v Passive, one of the major talking points in our industry at the moment. This article gives a longer dated performance of active managers relative to the index and finds that there is a correlation between rising interest rates and market out performance - Return of the Stockpickers. "While the Standard & Poor's 500 returned 13.7% for the year, stockpickers struggled to keep up. Just 19.9% of U.S. equity fund managers bested their benchmarks, according to Morningstar", I'm glad to say that our clients fall in the category of those who outperformed last year. Here is a look at how the active managers at Berkshire did last year - Warren Buffett's investing successors blew it in 2014

One of our favourite market bloggers talks about Google - How Much Is Google Worth?. We are still fans of Google, it looks attractive at current levels.

China may be slowing but their building industry is not - In a Record Year for Skyscrapers, China is Miles Above Everyone Else. Skyscrapers take years from start to finish, so they are a lagging indicator of the Chinese economy. The article does mention that smaller regions lead the way in the number of skyscrapers built, which to me is a good thing because then the economic activity is not concentrated in one area. Another huge number is that in 2015 China by itself is expected to complete more skyscrapers than the world did in 2014.

Strong jobs numbers is good for everyone - Job Openings Rise Near 14-Year High In November.

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Home again, home again, jiggety-jog. Copper prices are down nearly 10 percent in a week, the commodity stocks are taking pain again, no thanks to the marginally lower World Bank report. As Paul said, the IMF report is also a separate one, look out for their projections too. As we say around here, it is about the companies, spend more time thinking about those and studying up on them.

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Sasha Naryshkine, Byron Lotter and Michael Treherne

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