Money with a dash of Funny: March 2015

Tuesday 31 March 2015

Online Luxury

"The upshot is that Yoox is up another 8 percent today, following a 12 percent gain yesterday. This is pretty small, by way of news for Richemont, they are down around 0.4 percent in Zurich, about the same here. Simple math, if Yoox doubles the number of shares in issue (as per above), Richemont's stake will be worth 1.6 billion Euros. Which is around 4 percent of the current Richemont market cap. Small and on a very demanding multiple. A nice to have."

To market, to market to buy a fat pig. The third quarter is not quite finished, one more day remains. What a ripper yesterday, it certainly made up for some pretty ordinary markets (as far as the bulls are concerned), the local market ended the day a percent and a quarter higher. Pretty much gains across the board, I honestly could not find a single reason for the gains, there were some stories about Chinese government stimulus pending, that sent the Chinese market to 7 year highs. Shanghai, those markets will celebrate one quarter of a century in their current format next year in January. Nobody wanted to talk about that yesterday though, they only wanted to talk about this, from the Rolling Stone: Why Hiring Trevor Noah to Host 'The Daily Show' Is a Great Idea. Good work, and definitely a wow from all of us. Work hard, work smart, get rewarded, I am pretty sure that is how the model works and will continue to work all along.

Last evening in New York markets roared away, blue chips, the Dow Jones added nearly one and a half percent. The broader market S&P 500 added a percent and a quarter, as it stands now at this moment the S&P 500 is up only 1.33 percent for the year. The nerds of NASDAQ are up nearly 4.5 percent year to date, meaning that tech stocks have definitely been the companies that have attracted more attention. Apple of course has been added to the Dow Jones in the interim, 18 March was the first day it traded in the oldest blue chip index. I think that is right, can you think of any others that attract as much attention as the Dow Jones? Even though in size and scale there are markets that are far bigger, "where did the Dow close" becomes a question frequently asked, even by market insiders.

The fall in the oil price might be great for the general consumer, it turns out that it is not great for everyone, check this BusinessInsider piece on the lone star state: Texas hasn't been this bad in 2 years. And then of course, something to keep an eye on, also via the same channel: Here's the 'ugly scenario' that's about to happen if Greece doesn't get a bailout deal. I suspect that Greece will get the money, they will get it late and they will have to make more concessions. And if there is a soft default of any sort, I suspect that it will not be on the IMF repayment. i.e. They might spite Brussels, that is a dangerous thing to do. The Greeks are also trying to get more friendly with the Russians. They share equally long Easter services, Greek and Russian Orthodox church attendees. Stories that evolve all the time.

Company corner snippets

A couple more stories about NET-A-PORTER, this time the Yoox story, the NYT is following that -> Yoox Group in Talks With Luxury Online Seller Net-a-Porter. As you can see, when Richemont purchased the business and valued the whole thing at 520 million Dollars in 2010, the company was not altogether sure where all of this was going.

To try and find revenues for NET-A-PORTER specifically, or profits is too difficult. The business is listed in the "other" segments of Richemont's businesses, listed alongside Shanghai Tang, Mont Blanc, Purdey and Peter Millar. Those businesses collectively make a loss, there is however turnover of nearly 1.5 billion Euros collectively last year (see the annual report). Under "clothing and other" (where Mont Blanc is excluded) at the half year stage this division had sales of 795 million Euros. That is relative to group sale sales in the first half of 5.430 billion Euros. So, we can presume that whilst this is relatively small (14.6 percent of revenues), it is growing quickly.

It is also the most exciting space right now, for investors looking for newer technologies and platforms. It trades on two and a half times sales, if this business is anywhere near that, I would say that either Richemont should, as the Mo Down (a luxury blog I subscribe to) suggests: Net-a-Porter to launch IPO? or fetch a high price.

Of course they, being Richemont, do not need the money. It is just interesting to see that other people are willing to pay more. And more for, let us face it, not the people that manufacture the goods, rather the lower margin platform. I suppose the conundrum for Gary Saage (the co group CFO), who is possibly the next driver of this business (as Bernard Fornas and Richard Lepeu retire) is whether or not it is their core business. It certainly fits and ticks all the boxes, let me leave you with the groups strategic objectives -> Strategy. Until something actually happens, it won't of course. We watch.

And guess what. This newsletter evolves with the market news. I had written all of this before the news arrived this morning at around 7:45 local time. Here is the official announcement from Richemont -> RICHEMONT SIGNS AGREEMENT TO MERGE THE NET-A-PORTER GROUP WITH YOOX GROUP. Under the deal, each side, Richemont and YOOX will own half of the combined entity. Richemont will only have 25 percent of the voting rights however. Here goes: "Richemont will receive, in aggregate, on a fully diluted basis 50 % of the share capital of the combined entity's listed parent company. In order to preserve the independence of YOOX Net-A-Porter Group, Richemont's voting rights will be limited to 25%. Richemont has committed to a lockup period of three years in respect of shares equivalent to 25% of the total share capital of the combined entity."

The upshot is that Yoox is up another 8 percent today, following a 12 percent gain yesterday. This is pretty small, by way of news for Richemont, they are down around 0.4 percent in Zurich, about the same here. Simple math, if Yoox doubles the number of shares in issue (as per above), Richemont's stake will be worth 1.6 billion Euros. Which is around 4 percent of the current Richemont market cap. Small and on a very demanding multiple. A nice to have.

And then another South African born chap who continues to make huge progress in his adopted country, Elon Musk, caused excitement last evening with another simple tweet.

So what could it be? What could Tesla be releasing that is not a car? Some people are suggesting a home battery. A few months ago Elon Musk was quoted as saying that was something that they were working on, if they crack that, making a cheap and elegant battery. In fact, here is the exact quote (funny that one word is indiscernible), from SeekingAlpha, who have the Tesla Motors' (TSLA) CEO Elon Musk on Q4 2014 Results - Earnings Call Transcript. Musk was adding on to a piece about storage capacity:

Yes, but we're going to do -- we're going to unveil the Tesla home battery [indiscernible] consumer battery that will be for use in people's houses or businesses, fairly soon. We have the design done and it should start going into production probably about six months or so. We probably got a date to have sort of product unveiling, it's probably in the next month or two. It's really great. I'm really excited about it.

I guess then it has to be that. And ironically if they are available here, they could actually be better technology than the one that exists right now. In other words, the electricity problems that we are currently experiencing might ironically be solved by a chap that actually used to live around these parts, and was educated at Pretoria Boys High. Nice.

Things we are reading

The trends of US credit markets have a significant impact on the broader economy and to a lesser effect the global economy - It's getting easier for Americans to rack up credit card debt, but harder to get a mortgage. I suspect that with the FED not buying mortgage backed securities, the cost (interest) of buying a house has gone up.

How do you feel about under performing? What is an appropriate benchmark to gauge your performance? - Someone is Always Outperforming Your Portfolio.

Renewable energy is increasingly getting attention as technology improves, costs drop and generating ability rises. It is not difficult to imagine a world only using renewable energy - Costa Rica is now running completely on renewable energy.

Home again, home again, jiggety-jog. Markets are lower, the Rand is weaker today here, on account of Euro weakness really. Guess what this week is sports lovers, it is jobs week. It will however be on a Friday, this Friday is a public holiday, government employees will still be releasing the results. Good for them.

Sasha Naryshkine, Byron Lotter and Michael Treherne

Email us Follow Sasha, Byron and Michael on Twitter 087 985 0939

Monday 30 March 2015

Generational Wealth

"There are stories in a South African context which show second generations that take over the reins and are just as hungry as the prior one. Punch Barlow is an obvious one, so is Johann Rupert. Although as time passed the comparison to Anton Rupert (Johann's father) got less. Anton has been gone since January 2006, Punch Barlow has been gone for years, yet he is still associated with the company. Admittedly the company was far larger on a relative scale back then, perhaps the "glory years" were then."

To market, to market to buy a fat pig. Aussie, Aussie, Aussie, whether you like it or not. It turns out that a huge place with a small population, far away, has now won 4 out of the last 5 world cups. Missing out on the 2011 one where they did not make the final. Sadly we have only won a single knock out match. Is it about the money? Probably, the better the resources, the better the chances of making progress in life. That counts for almost everything in life, if you are born in a developed country today, your chances are far better than someone being born in a developing country with limited resources.

That is why I am an advocate for democracy, as I believe the greater the influence of the majority, the greater the chances of economic progress. I almost always use the examples of North and South Korea. Ironically in the long official name, the only country to have mention of people in their country are the people who experience oppression. The North where the man with a funny haircut and ruthless manner styles themselves as being for the people. No. The people are shorter when compared to their Southern brothers and sisters as a result of malnutrition and freedoms which are non existent. I have read extensively on North Korean society and escapes, in short that is all you need to know, people want to flee their own country as a result of the iron fisted government of the people. Yeah right. All I know about communism is that people want to flee. They left East Germany and North Korea, they defected from Eastern Europe, the USSR to get to friendlier places with more personal freedoms.

Capitalism might not be utopia (generational money comes with its own "problems"), it is however the best system known thus far. Unless of course you live in a tiny country (population wise), like Denmark or Norway. Hong Kong and Singapore score at the top of Economic Freedom indices. At the bottom of that list is, from bottom up is North Korea, Cuba, Venezuela and Zimbabwe. The criteria for economic freedoms, as per the Wikipedia entry, cites a piece in Adam Smith's The Wealth of Nations: "basic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society."

I think the starting point is always the problem, i.e. the victor writes history, dispossessed people have no resources to make progress. My grandfather and his family were dispossessed after the Russian revolution and he was left without any riches (as well as no parents), admittedly those riches were to be inherited. Societies that encourage competition, reward hard work, opportunism and creativity have a better chance of levelling the field. The victor is then based on what skills they initially inherit and secondly, what you make of that.

There are stories in a South African context which show second generations that take over the reins and are just as hungry as the prior one. Punch Barlow is an obvious one, so is Johann Rupert. Although as time passed the comparison to Anton Rupert (Johann's father) got less. Anton has been gone since January 2006, Punch Barlow has been gone for years, yet he is still associated with the company. Admittedly the company was far larger on a relative scale back then, perhaps the "glory years" were then. What I want to know about the recent South African successes, what base did they have to work with? For instance, Brian Joffe and Phuthuma Nhleko, Stephen Saad, what did their informative years look like relative to their peers? I would love to know.

Greece! Lightning speed needed, less Hydramatic. Hydramatic might sound Greek, in fact it is an automatic transmission system developed by General Motors, the first mass produced automatic transmission system. Reading between the lines, the Greeks have to submit a reforms list, another one and that might not meet the high standards, see the WSJ -> Greek Bailout Proposals Lack Necessary Detail, Officials Say. So they may have to wait a few more weeks for their money. Not really their money, if the long term intention is to pay it back, then yes. I suppose that, as per another WSJ article, it is harder than it initially seemed to the elected officials: Greece's Fate Lies in Athens' Hands, Not Berlin's.

Ignore any person who says that Greece should leave and default. That is far more catastrophic than making cuts again. Your investments would more than half. You might have no debt (and no ability to borrow in the short term), your wealth would also be half of what it is before. A rerating of the Greek economy and their prospects might be awesome for tourists, not so much for the locals purchasing power. I will let you in on a secret here, I am going to Greece in the middle of the year, I shall be sure to do extensive questioning of locals. As you and I know however, there is a difference between our lives reality and that of everyone else. For instance, to pay personal income tax here in South Africa means that you earn a lot more money than a lot of other people, surely that is a better outcome than not paying any. Separate the use thereof from the earnings potential.

Company corner snippets

Discovery Nil paid letters (the rights) are un-tradable as of Friday. What does that mean? It means that you cannot transact in the shares, you either have indicated that you are following your rights, or they will expire worthless. We have gone through all our clients and as usual, they are all accounted for. What to do now? Nothing. Wait for next Tuesday, where the shares will flow in and the cash will flow out, on the same day. We will look at the average price paid and adjust accordingly. All you need to do is to know that we are on top of it, OK? You have done your bit, we will do our bit. Which is not hard really, as the systems are all automated at a STRATE level, the JSE leg in all of this, shares delivery versus cash payments systems.

Net-a-Porter rumours have been swirling around over the last few days, mostly as a result of the Natalie Massenet (the founder) finalising her 100 million Euro payout with Richemont. Not really, mostly due to the fact that Net-a-Porter could be for sale. Huh? Natalie Massenet founded the company, Richemont initially bought 93 percent 5 years ago -> Richemont acquires shares in NET-A-PORTER. 18 odd months ago, Richemont stated that: Net-A-Porter group (was) not for sale. Seems that Amazon might have expressed interest according to Forbes (although Amazon denied this), this morning there is news that Italian listed business Yoox was ready to suggest an around 1.3 billion Pounds tie up. That is equal to their market cap, I guess this would be a real merger of equals. Yoox is up 8 percent, I guess this would be good for them.

Richemont, up a fraction, no comment from them on either an Amazon or Yoox bid. I would think that this could be an opportune moment for Richemont to offload a business that does not quite fit with the rest, it is not exactly core to their Businesses. Most of the products that you are going to spend a fair amount on, fine watches for instance, you try them on. You think about it deeply. It is a once in a lifetime decision, more or less. I mean, if you are going to buy a watch for 25 thousand Euros -> PATRIMONY CONTEMPORAINE COLLECTION EXCELLENCE PLATINE, you are going to try it on. I guess that this would be pretty good news for Richemont, as Michael pointed out however, Richemont hardly need the money. In other words, if the price is high enough, then they may say yes. If not, then, errr .... no.

Things we are reading

A creative way of supplying power to countries that really need it - Karpowership's electricity-generating vessels Maybe South Africa could buy a few and have them off our East coast using natural gas from Mozambique?

What is real? - Facebook used these optical illusions to explain why virtual reality is really just reality Here is a line from the Matrix and the article, "If real is what you can feel, smell, taste, and see, then 'real' is simply electrical signals interpreted by your brain."

How would you feel having a robot cut you open? I suppose the answer is the same as how you feel about self driving cars? - Google and Johnson & Johnson are teaming up to make robots that perform surgery

Home again, home again, jiggety-jog. Markets are mostly sharply higher, other than precious metals and single commodity stocks. The recent softer Chinese economy and the stronger Dollar has been cause for many concerns. Hey, Ben Bernanke has just started blogging, now that he can. His first blog post is aptly titled: Why are interest rates so low? Good work, something else to read, see this: "The state of the economy, not the Fed, is the ultimate determinant of the sustainable level of real returns." Why are markets sharply higher today? Well, Chinese stimulus, US pushing rate hikes out further, better than expected European data, choose all three for the win!

Sasha Naryshkine, Byron Lotter and Michael Treherne

Email us Follow Sasha, Byron and Michael on Twitter 087 985 0939

Friday 27 March 2015

Connection Costs

"The company have invested 30 billion Rand in their networks to improve the quality, why shouldn't people pay more? I am sure that if they are all peeved when the contract ends, they can go look elsewhere for a better deal, 30-40 Rand extra a month is hardly a kings ransom for contracted customers. More especially if your service has improved relative to the fixed line competition."

To market, to market to buy a fat pig. I was quite interested in the Crossing Wall Street email from overnight to see that over the course of this month there has not been a single day (on the S&P 500) of back to back gains. It is the single longest period, says Eddy Elfenbein, for nearly twenty years. Whilst markets have not really been that volatile over the time period, you certainly get the sense that this is a fair amount of yes-wait-no. Running between the wickets. I was once runout without facing a ball (I was ball watching), as the batsman facing shouted go. Go sounds like no. So perhaps Eddy should have titled this piece go-no-yes-wait-slow. Over the last one month the S&P 500 is down over two and a half percent, locally the market has had a pretty torrid two weeks, in part the Rand strengthening. The Dollar has weakened, not too much to do with the domestic economy.

One of the finest exports of the Eastern Cape, from a little dairy farming town called Alexandria, not too far from Kenton-on-sea, is our reserve bank governor, Lesetja Kganyago. He delivered the MPC statement and then took the Q&A afterwards yesterday afternoon. Remembering that the governor has only been on the job since October last year, it has been a volatile time for the currency, equally inflation has eased as a result of both lower demand and a lower oil price. You can download the statement of the MPC and have a read through if you want.

The Bank thinks that the hurrah from lower petrol prices is likely to be short lived, remembering that the Basic Fuel Price consists of what the stuff actually costs, and then all the other associated costs, including the Road Accident Fund (RAF) levy and the fuel levy. The basic fuel price, as per last month, is less than half of the total price, here in Gauteng. The RAF levy is being hiked 50 percent, if we didn't drive like idiots and equally if the fund was managed better, we would be not be forced to pay so much. So, if minister Rob Davies was really genuine, he would work harder at reducing the taxes on citizens, making sure they pay less and less fuel tax. Let us face it, from a government point of view, it is the very easiest way to collect taxes.

You cannot manufacture your own fuel (you can, it is hard) in your every day life, you can't own an electric car unless you have serious storage capability. i.e. you are off the grid. I saw the pricing for the i3 BMW and i8, it is nuts, bearing in mind that you have to replace the battery in 7 odd years time, that costs around 150 odd thousand Rand. The i8 is priced at a whopping 1.755 million Rand. You read right. You still need to make sure it is charged! The i3 with a range extender? 595 thousand Rand. Yowsers. You can of course own a Nissan leaf for a mere 480 thousand Rand, a range of 195 km. If you want to go green sports-lovers, I suspect that riding your bicycle is a better way to go about it. Specifically in a (local) world of load shedding. To go off the grid entirely? It is going to cost you in the region of 150 to 250 thousand Rand. The inverters and the batteries are wildly expensive.

Back to markets, briefly, the S&P 500 managed to turn losses into gains, and then modest losses at the end of the session. Yemen, the bombing thereof and worries around the oil market (how crude and cruel are us humans?) saw the price spike and then come back. Why? Yemen are not a particularly big producer of oil. I remember a friend of my mums school days spent some time with us in Mozambique, he was a French chap who worked for the UN and had just come from Yemen, working on the unification. I remember him describing it to me, it seemed quite weird, notwithstanding the fact that I was living in a civil war country myself.

Sheltered life you see. It seemed like a crazy place then, sadly for the 24 million odd inhabitants of that country (who I am pretty sure do not want a war) it seems like a crazy place now. The Saudi's next door object, there are deep religious differences, you must appreciate and understand them deeply before wondering why the bombing is happening. Most people I know all want the same things, better education for their kids, safety and security and improved medical care. Yes. Force is not my favourite thing, it scares all and sundry.

Company corner snippets

Vodacom have hiked their contract prices. I think it is about time. Come one. People want a 4G/LTE network, an amazing handset (the new iPhone is fabulous) and on an inflation adjusted basis they have been paying less. Yet the Rand has weakened and the handsets and services have improved. If you stand with your handset anywhere in the urban areas and get a fantastic LTE connection, well then I am sorry, there is a price associated with that. I think that this is a very important point in the cell phone pricing wars, if your best customers demand the best services, then I am afraid that there is an associated cost with that.

The company have invested 30 billion Rand in their networks to improve the quality, why shouldn't people pay more? I am sure that if they are all peeved when the contract ends, they can go look elsewhere for a better deal, 30-40 Rand extra a month is hardly a kings ransom for contracted customers. More especially if your service has improved relative to the fixed line competition. I suspect that MTN will follow. Cell C, who fought the battle for lower prices (and are now sucking wind) might have to concede on this one. I want to know of personal stories of someone who has used all three networks, which one was best for you, and why?

It is not all about the money. In fact for many rich people the desire to give back by way of money and teaching exists. Many smart and rich people give a lot back, you might well say that they can afford to, they certainly do not have to. Here is the story that I am talking about: Apple's Tim Cook will give away all his money: Fortune. He is going to pay for his nephew's college education, and then he will have no more obligations. So, expect the funds to flow to the The Giving Pledge. As per the website: "The Giving Pledge is an effort to help address society's most pressing problems by inviting the world's wealthiest individuals and families to commit to giving more than half of their wealth to philanthropy or charitable causes either during their lifetime or in their will."

Now Charlie Munger, Buffett's right hand man and friend said that Costco did more for society than any philanthropic cause. The website makes it clear that this is not Bill and Melinda Gates Foundation money, that is separate. Signatories can decide who to donate to, the fact of the matter is that they got rich, they chose to give half or more of their wealth away. My argument is that there would be NO money to give away if people were not incentivised to get rich in the first place. If you do not allow captains of industry to get rich, there would be less and less charity. Mark Zuckerberg looks like the youngest giver on that pledge, reinforcing my thoughts that it is not about the money.

Things we are reading

The term bubble in the asset management community is a scary one (also a very over used term) - A Bond "Bubble" is Very Different From a Stock "Bubble"

Internet is becoming essential in the modern world, Facebook are one of the companies pushing to get internet to remote areas - Facebook tests solar-powered Internet drones

Keeping a finger on the pulse of science - The world's largest science experiment is about to be restarted

Home again, home again, jiggety-jog. Holy smokes, the stocks that have roared recently (like the Lions rugby team?), the gold and platinum shares are getting drilled today. As is the rest of the resource market, dragging the rest of the market lower too. Not helping either are financials and banks, I guess the prospect of higher interest rates (as the SARB governor alluded to) is not exactly wonderful for their customers. US futures are lower, the data looks average. Oh, and the Greeks are really out of cash. Deposits in Greece have fallen to a ten year low. Yech.

Sasha Naryshkine, Byron Lotter and Michael Treherne

Email us Follow Sasha, Byron and Michael on Twitter 087 985 0939

Thursday 26 March 2015

Hero to Zero

"Impala have produced less platinum than anticipated and their costs have nearly doubled in the last five years. Per ounce of production in 2010, the number was 10,078 Rand per ounce, in 2014 it was 19,430 Rand. For the last six months it was 22,952 Rand per ounce. A reminder, if you needed one, before you get a single ounce of platinum out the ground, the Rand selling price is 1158 USD per ounce multiplied by 11.87 Rand to the USD = 13,745 Rand"

To market, to market to buy a fat pig. Before yesterday I hadn't heard a single One Direction song and had never watched a single episode of Top Gear. Fair Dinkum, as they say in Australia. Yet those two things, Jeremy Clarkson and Zayn Malik, became so important on social media. Malik was born in 1993, Clarkson reignited the show and was host from 2002 to err ... yesterday. According to the Wikipedia page, for Top Gear, the show is viewed 350 million times a week in 170 different countries around the world. It must have been a real money spinner for the BBC. @BBC_TopGear has 1.84 million Twitter followers.

That absolutely pales into insignificance against the @onedirection followers, a whopping 23 million. Success of that magnitude in less than 5 years, simply astonishing and absolutely amazing what can be accomplished in that short a time frame. Well done to the X Factor and Simon Cowell, this band was thrown together in ten minutes apparently. Wow.

That earth shattering news was met alongside equally earth shattering news, markets sank sharply, stocks down a lot. Why? The US economy was seen to be slowing a little, as the story from Bloomberg points out, this is the worst miss in expectations: Dollar Poised to Decline Amid Worst Data Misses in Six Years. Well I guess that means interest rates are not going to go up any time soon, right?

All that matters is that you stay invested in the companies that have better prospects than their peer grouping, or that are in industries that are poised to grow faster than the global counterparts. Easier said than done of course, they (being the companies you are looking for) are either too expensive for the balance of the market or too small with too many risks. As much as their are MANY success stories in the equities markets, there are many disappointments too. The trick is to find balance.

In the end the local market had lost over a percent, the industrial stocks dragging us lower. Over the seas and far away, the nerds of NASDAQ was over two and one-third of a percent lower. Wow. Those are pretty sharp sell offs, we are here again. I think that with single family home sales being at a 7 year high sounds like a good thing. Company earnings guiding lower, not thanks to the US economy being much stronger than the rest of the world. Bizarre, not so? I guess that is just the way that the cookie crumbles.

Indices, or loosely "the market" is made up of different companies, their different share prices based on the their respective prospects as per the broader participation in the market. It was yesterday that I was looking at some fallen angels, the only reason was simple, to illustrate that whilst the broader market goes up over time, not all companies manage to make progress. The two that I looked at were Impala Platinum and Murray & Roberts. Different businesses completely, you could argue that Impala has a large element of construction attached to it. To sink a shaft and maintain a shaft and mining infrastructure takes an enormous amount of engineering skills, long before you can even get the ore out of the ground.

Impala have produced less platinum than anticipated and their costs have nearly doubled in the last five years. Per ounce of production in 2010, the number was 10,078 Rand per ounce, in 2014 it was 19,430 Rand. For the last six months it was 22,952 Rand per ounce. A reminder, if you needed one, before you get a single ounce of platinum out the ground, the Rand selling price is 1158 USD per ounce multiplied by 11.87 Rand to the USD = 13,745 Rand. Look, it doesn't mean that Impala are operating in an environment that is consistent with yesteryear, meaning that their costs should reduce over time. Having said that, what are the chances of their biggest fixed costs reducing in a hurry? About zero. They are going to have to pay a productive workforce more, they are definitely going to have to pay Eskom more, from what we can tell.

From the 2014 annual report: Impala's unit costs were adversely affected by the strike and resulted in the R22 036 per refined platinum ounce reported, a 27.8% increase on 2013's R17 241. The strike, above inflation wage increases, lower productivities and above inflation power costs (in conjunction with lower volumes) all affected unit costs.

You could argue that, based on the factors from the strategic review document from February, you would think that the price should be higher. The platinum price, based on all these factors, should be higher, yet the stronger Dollar has probably prevented that in the short term. I wonder whether or not the motor vehicle manufacturers have been loading up, with the cheaper prices. The thing that worries me the most, is that all the above ground stock, in the form of the autocats that have been manufactured already, those can be recycled. The ones built today are more efficient than the ones built even a decade ago, a motor vehicle is a durable product, in other words not designed to last forever. The future for the jewellery market looks better.

Yet. The market has a valuation of 37 billion Rand, or a mere 3.3 billion Dollars, for the second largest producer of the precious metal. The five year Dollar return on the ADR (in New York) sees the stock down 81 percent. The S&P 500 is up 77.7 percent in that time. Locally, it has hardly been much better, the stock in Rands is down 70 percent, the rest of the market is up 83 percent. You could argue that it could not possibly be worse, the stock in Rands is at a more than ten year low, surely this is a buying opportunity. Perhaps. I would argue that there are far better sectors, less regulated, immovable assets, unfriendly operating environment that leads me to believe that the company might struggle in the short term. The platinum price needs a serious uplift, something that is puzzling many in the industry. We continue to avoid.

Murray & Roberts was equally unstoppable, all the government infrastructural work associated with the football World Cup meant that the market was willing to rate the company on 25 times plus earnings. The share price went to 110 Rand, around seven a half years ago, before the world cup. By the time the tournament arrived, the share price was below 40 Rand. Today the stock trades at a level last seen in October of 2004. It trades around 14.1 Rand, and has a market cap of a mere 6.36 billion Rand, about the same size as Caxton, the knock and drop newspaper people. Netcare are ten times the size of Murrays. Collusion, the prospects of very little local government infrastructural development, their Australian (and local) business not seeing the same type of mining spend, it just seems like it cannot get much worse. The expectations are almost identical to Impala, earnings to go sideways for three odd years. Or that is what the investment community tells you.

Perhaps Bill Miller, the legendary Legg Mason fund manager was right. Ignore sectors that are way too cyclical to call the bottom and top of, you might seemingly miss big opportunities in commodities and construction, energy and most other consumer related investments that rally or fall as a result of interest rates, those would be a big ignore, for Bill Miller at least.

Company corner snippets

Well, well. You can't keep a good man down, this time the former CEO of Massmart, Grant Pattison has been appointed the executive chairman of a US business, NRG Energy. Double energy. It is not a drink laced with sugar and caffeine, rather a provider of energy, alternative and all types. Pattison is an electrical engineer by trade, he has basically been without a job for a year. What I saw from his LinkedIn profile (what a snoop) is that he went to school in one of rural Zimbabwe's finest, Falcon College. Those who know, will know, if you know what I mean. Too many knows. NRG has a market cap of 8.54 billion Dollars, Expectations see the stock trade forward on 25 times earnings, hardly cheap. I suspect however Pattison will hit the ground running.

Whilst the story itself was released yesterday, the same snoop on the LinkedIn profile says that Pattison has been there since December. I do see him from time to time, if I do, I will be excited to engage him on what the company has to offer here in South Africa. The business of supplying power to "other people" will no doubt become more and more important. I suspect as many more people get their newer bills from Eskom, or the city, they will be thinking about alternative power sources, in the end it is the economics that will dictate how you react as a consumer. I suspect that we are very, very close in that regard. Meanwhile, "things" at Eskom are going badly, at least the load shedding has been short lived. It is going to be a long, cold winter if we can't meet the increased capacity.

Things we are reading

The big news yesterday is that Buffett and 3G Capital are buying Kraft and merging it with Heinz - Warren Buffett Quadrupled His Ketchup Investment. Having the a balance sheet the size of Berkshires defiantly has its advantages, coupled with the operational efficiencies that 3G Capital bring - Here's what happens when 3G Capital buys your company

Crop yields in the developing world, particularly Africa lag the developed world - Scientists have engineered the food that will help save a starving, warming planet. Through innovations like this and better farming techniques, foundations will be laid that will allow an explosion of economic growth.

Another feature from Facebook - Facebook officially launches nostalgia-inducing 'On This Day' feature

A new study looks at a potential outcome of changing the minimum smoking age - Raise the smoking age to 21

Home again, home again, jiggety-jog. Stocks are off a percent here at the start, other than the resource stocks, it has been an electric comeback from them as the Dollar continues to drift lower against all the major currencies. I guess that weaker US economic news needs to be "verified" by the data flow in the coming weeks, and then company results from the middle of April. An expected record buyback from collective companies is expected in the next quarter. I cannot say whether I think that is good or bad, I think that reducing the number of shares in issue has a wonderful compound effect for long term shareholders, provided of course that they are not used for excessive remuneration. Balance? Yes, always balance.

Sasha Naryshkine, Byron Lotter and Michael Treherne

Email us Follow Sasha, Byron and Michael on Twitter 087 985 0939

Wednesday 25 March 2015

Imagine that

"My point is that the business has evolved to the point where it is a lot more mature, Google have the ability to take someone from a nearly three decade career with one of the finest financial institutions on the planet, and entice her to join a company she would not have heard of two decades ago. As one of the links in what we are reading once pointed out, the jobs that your children and grandchildren are going to be working professionally may not have been invented yet."

To market, to market to buy a fat pig. Oh dear, the cricket gods were not quite with us yesterday. Having a better side on paper in sport perhaps does not always equal the outcome. Better luck next time, no disgrace in being within a ball or two (catch or runout or two) away from the World Cup final. Such is life, you have to wait for a very long time to taste the sweetness. To make this feel a little better, know that since August of 2012, we have basically held onto the ICC test match mace, and I am pretty sure that if you ask any cricketer which form of cricket is the pinnacle, it would be test cricket. It doesn't fell better I am afraid, I feel upset. Ah well, there is always 2019.

On to matters different, market related, we saw European PMI numbers indicating that manufacturing is in its best shape for around four years. The weaker Euro helps exports and therefore makes the zone a little more competitive, relative to their international peers. Meanwhile in Athens, government authorities are scrounging for cash ahead of a potential technical default in the coming weeks. If Athens cannot pay the IMF back any of the outstanding amount, due in April, it will not have access to that portion of theirs in the fresh bailout funds.

All rather touch and go, moving at tectonic pace I guess for the Greek liking. Their new proposals are expected to be tabled on Monday, perhaps this will please the Troika a little more and they may be a little more forthcoming with the funds. Ironically whilst Greece flounders around and there is a much weaker common currency, that is not all bad news for the big exporters. Perhaps there is little irony in the pace of granting the Greeks a reprieve, although that hardly seems like a good idea for business confidence across the Eurozone. I cannot imagine that the best possible outcome for Germans is to have a Greek cloud hanging over their heads. It just looks and feels bad, it feels like a no win situation, I am sure that the Greeks do not feel that way. Ironically the only way that you can get to the point of the labour and other reforms is with the prospect of withholding money. Watch it and pay attention, do not let it consume you at all.

It is a mystery to me that so much attention is placed on airline disasters, whereas motor vehicle accidents are seen as things that just happen. I suspect that is exactly why these are sensationalised, the very fact that airplanes are NOT supposed to crash, us humans are conditioned to the idea that the one is fine and the other is not. And I guess from an air safety point of view, that is the point. I guess also the size and magnitude is something that captures people's imagination.

The WSJ has a story titled: 'Highly Unusual' Germanwings Crash Blots Period of Unprecedented Safety. If you look at the article and the associated Aviation Safety Network picture, you can see that in the 1970's, not so long ago, that there were 50 to 80 incidents per annum, or roughly one a week. Even through the 80's and 90's, there were many accidents. The casualties part I guess may have fallen further.

Yet, 2014 was the safest year on record for commercial jet aviation, in the history (around 112 years worth). You might not have thought so with two very high profile Malaysian airlines disasters, one ironically in a war zone that was recovered, the other one a year on, nowhere to be found. Perception is everything, you think it is safe to get into your motor vehicle and drive to work each and every day, yet 45 odd souls lose their lives each and every day on our roads.

In-between yesterday, when the Germanwings flight tragically crashed, and tomorrow, the same number of people would have lost their lives. Yet there is no wall to wall coverage of the time those vehicles left, when they were serviced, whether or not the drivers were capable, who the passengers were. I feel deeply for all victims of all crashes, this one is absolutely no different, my heart bleeds the same. I just think that perspective is needed, it is still far safer to step into a commercial airplane than your motor vehicle, I wish that people had the same fear of driving, perhaps the roads would be safer.

At the end of 2013 (according to the IATA safety report) there were 22500 jets and over 2000 Turboprop aircraft, that carried over 3.5 billion people. According to IATA: Every day about 100,000 flights bring people and goods to their destination. Flying is safe They are right. That does not make us feel human however, flesh and blood is what we all are.

A separate part of the conversation around technology and transport are driverless cars, whether or not as a human you would cede control to a machine to drive you around? Would you do that? I would do that immediately, Paul said he was not too sure whether, in the transition phase that it would work here in Joburg. Or in places where people were less obedient in terms of the traffic rules. How would you driverless car act at the intersection when the traffic lights are out, for instance? In Joburg there is no your turn-my turn, it is go-go-go. I am pretty sure that the driverless cars could and would adapt to all situations, it is the future. I for one would prefer to be driven home.

Company corner snippets

Oh! That is interesting, the fact that Google have managed to drag a Wall Street type across the country from New York to the Googleplex, which is in Santa Clara County for any of you that have ever been close to that part of the world. Well, do you know the way to San Jose? Ruth Porat better know the way, she has landed the job of CFO at Google, leaving the same job at Morgan Stanley. Check out the Google release: Ruth Porat to Join Google as Chief Financial Officer. The only thing that sticks out for me is that when Porat joined Morgan Stanley in 1987 (an interesting year for equity markets) Larry Page and Sergey Brin were 14. They were going through their geeky years at high school, we all remember those.

My point is that the business has evolved to the point where it is a lot more mature, Google have the ability to take someone from a nearly three decade career with one of the finest financial institutions on the planet, and entice her to join a company she would not have heard of two decades ago. As one of the links in what we are reading once pointed out, the jobs that your children and grandchildren are going to be working professionally may not have been invented yet. In fact, in all likelihood they have not been invented, it is evolving on a daily basis. It signals a clear sign that the jobs with more excitement for financial types are in technology, businesses that are evolving. I am however pretty sure that Wall Street will never lose the mojo, the allure of riches. It may not be fair in her specific case, this is as Porat describes it "a return to her roots". Her father taught in Palo Alto for 26 years. See? Good work Google, your gain is the loss of Wall Street.

Things we are reading

The underlying real economy is only now gaining some momentum, so definitely not over heated. Stock prices, I would say are fairly valued and priced for continued GDP growth - Old Age Doesn't Kill Bull Markets

What will the impact of large-scale ETF's be? Vanguard is the EFT that Buffett mentions in his will - What Happens When Vanguard Owns Everything?

Here is a look at how Apple TV could evolve in the coming years - ALL THE WAYS A NEW APPLE TV COULD DOMINATE YOUR LIVING ROOM.

One of our favorite market bloggers, Josh Brown is not convinced with some of the valuations of tech start ups - Main Street Gains Startup Bubble Exposure. Know where your money is being invested and make sure that you can sleep at night knowing that you own asset X, Y or Z.

This is contentious, worth reading however, a WSJ piece weighing in on whether or not small loans improve the lives of their users: Calls Grow for a New Microloans Model.

Home again, home again, jiggety-jog. Markets are off here after a Wall Street sell off in the second half of the session there. Resources falling, the Rand has strengthened as the US Dollar has been losing some heat against the rest of the basket. The Dollar Index, after having topped 100 nine sessions ago, is now below 97, which is a three percent plus swing in a short period of time. For the last year however it has been basically one way traffic. Here is a year graph via Marketwatch from the last year, so far it has looked like one way traffic:

Amazing, if you speak to all the Brazilians they will tell you how it has everything to do with their government and blame the incumbent. The same could be said here, the blame of the Rand weakness is squarely placed at the foot of the politicians, whereas in truth the stronger US economy has translated through to Dollar strength. Does it make sense? It does not mean that we cannot try a whole lot harder and make sure that our economy can fire on all cylinders, the way I view it is that we are stuck in this ideological time warp, where ideas and informative years were spent in places where it was coming to an end, communism that is. We have a wonderful country with hard working people, we need to channel that anger into productivity, not so? In the end humans make decisions for humans.

Sasha Naryshkine, Byron Lotter and Michael Treherne

Email us Follow Sasha, Byron and Michael on Twitter 087 985 0939

Tuesday 24 March 2015

Instantgramming

"For those of you who use Facebook exclusively, Instagram is more about photos, images, letting the picture tell 1000 words. If you want to know how it works, follow the link to the Instagram blog: Introducing Layout from Instagram. Again, there is a link to a help section on the Instagram blog which enables you to see how to use the new app, you can use up to 9 photos and then post them all together, via Instagram. Whilst there are many applications that allow you to do this, this is specifically for integration with Instagram, to allow you to do something different."

To market, to market to buy a fat pig. Resource stocks collectively had another stunning day again yesterday, again the market closed lower, the Rand continued to power ahead, once again though, it is all the Dollar. That made the commodity surge even stranger however, in the face of a weaker US Dollar it was to be expected. The relationship is a strange one, weak Dollar equals strong commodity prices, the opposite is true too, strong Dollar, weak commodities prices. The relationship is fleshed out a little via a blogpost that I found (via the BusinessInsider) by Jodie Gunzberg: A Strong U.S. Dollar Isn't Bad For All Commodities.

The thinking is pretty simple, all commodities are priced in Dollars right? The weaker the US Dollar, the greater the purchasing power of the rest of the world, including their insatiable demand for all commodities, therefore that translates to stronger prices. The stronger the US Dollar, the weaker most of the commodity prices, as a result of significantly reduced purchasing power of Brazilians all the way through to Vietnamese consumers.

It seems to work, from a demand point of view, the change here is that significant supply in some key commodities has come on stream, oil and gas, that we know, bulk commodities like iron ore specifically have certainly come on stream, gold, well that market is just different I guess. Platinum supply has been very tight, mostly as a result of huge pressures on the producers. Phew, the Chinese PMI numbers that came in now was another read below 50, expectations were for above 50.

The Greek drama continues to unfold, there was a meeting between Angela Merkel and her Greek counterpart yesterday, the FT reports: Merkel and Tsipras in bid to defuse tensions as cash fears rise. When it comes to the crunch of cash, the Greeks do not have a very strong hand. As we have thought all along, the Greek people (who have pulled significant amount of Euros from Greek banks) want to stay in the Eurozone. The Spanish economic minister has had some harsh words for them (the Greeks) suggesting that they cannot talk without the walk, i.e. going through with all of the painful changes. In other words, all the reforms that are needed. The story continues to evolve, the Germans have the upper hand and will negotiate hard.

Company corner snippets

Facebook announced a new Instagram app last evening: Introducing Layout from Instagram. For those of you who use Facebook exclusively, Instagram is more about photos, images, letting the picture tell 1000 words. If you want to know how it works, follow the link to the Instagram blog: Introducing Layout from Instagram. Again, there is a link to a help section on the Instagram blog which enables you to see how to use the new app, you can use up to 9 photos and then post them all together, via Instagram. Whilst there are many applications that allow you to do this, this is specifically for integration with Instagram, to allow you to do something different.

Why get excited about Instagram? Two reasons, one, it is one of the fastest growing social media platforms, check at December 2014 -> Instagram Hits 300 Million Monthly Users To Surpass Twitter, Keeps It Real With Verified Badges. From 200 to 300 million in just nine months. That user growth could slow, remember that Twitter struggles with this problem? This is for me a much bigger growth opportunity: RESEARCH: LESS THAN ONE-QUARTER OF BRANDS UTILIZE INSTAGRAM, DESPITE IT BEING THE FASTEST GROWING SOCIAL PLATFORM.

That is incredibly interesting, the fact that the most visual of all the platforms has the smallest corporate following. Many suggest that the ARPU's (average revenue per user) could be much higher on this platform. We continue to recommend Facebook as a conviction buy, they are of course the owners of the fastest growing platform, this is just another bolt on. What I learnt today is that Instagram is only for Android and iPhone, no other platform. If you thought that any other platform was important, this proves that there are only two. For me anyhow.

Apple got their first 1 trillion Dollar call last night. By that I mean that Cantor Fitzgerald stuck a target price of 180 Dollars on it, meaning with the current number of shares in issue, 5.82 billion, that equates to 1 trillion bucks. Got it? See the FT story associated with that 180 Dollar price target: Apple climbs after $1tn valuation call. There you go, someone called it.

Discovery rights issue. You might be wondering why you do not have the shares yet? The time frames are that the cash will flow against the shares coming in on Tuesday the 7th of April. The shares flow in and the cash flows out on that specific date. So why did we want the cash so early? The folks running the process need to know long before the time that the funds are available. So those are your time frames sports lovers.

Capitec Bank had their full year results come out this morning. The results are solid considering that the African Bank saga took place in the middle of the year.

EPS are up 26% and so is the dividend, making the full year dividend R8.36. Their client base grew 856 000 to 6.2 million people and they grew their retail deposits by R6.4 billion to R 30 billion. The strikes last year had some impact on their loans, gross loans impairments increased 5% but due to them issuing 8% more loans last year their impairment ratios decreased. All in all, a good set of results with EPS up, deposits up and clients up. The share is up 5% today.

We're reading this, you should too.

Based on these numbers, 5 years is still considered short term! The large amount of volatility in the market is the definition of risk when it comes to investing. The best way to get around the volatility would be to continually add to your portfolio. This takes out the need to ‘time the market' and allows you to average your entry price, with a bias to the lower prices because you buy more stock when prices are lower. - What Constitutes Long-Term in the Stock Market?

Something that could help slow the over use of antibiotics, I don't think that this will do much but research is heading in the right direction - Rapid blood test to 'cut antibiotic use'

Luxury goods is a big investment theme of ours here is a look at where the different brands feature - Here's the hierarchy of luxury brands around the world. Interesting line this, "Louis Vuitton, for instance, is considered a "brand for secretaries" by many wealthy Chinese."

Home again, home again, jiggety-jog. Stocks are up marginally again, the silence in the office is completely offensive. Ha ha, sorry chaps, we tried and failed to make the final of the World Cup cricket, that is the nature of sport. We have other winners in the form of our business giants, at least they get to show their talents and skills each and every day. You do not need to wait every four years for that to happen. Sigh, this is very familiar territory, at least we can say that a Joburg born and bred fellow (who is now a New Zealander) hit the winning runs. That feels even worse. Righto, the market is up around half a percent, the Dollar continues to lose steam, you are getting the sense that the one way trade on the Dollar is unwinding a little. The really good thing about that is it puts a lid on inflation.

Sasha Naryshkine, Byron Lotter and Michael Treherne

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Monday 23 March 2015

Competition Rules

"The real market then works, why it is called the black market or a place where illicit trade takes place is only because the law makers have no say. Free markets in everything work in the end, that is the long and the short of it all, if you impose too many restrictions on ordinary people, they find a way"

To market, to market to buy a fat pig. Notwithstanding a heroic performance from the resource companies on Friday, their collective share prices did not lift the overall market. Many moons ago it was a forgone conclusion, other than that brief period in which tech stocks were completely overvalued, when resource stocks went up or down, the market followed suit. With huge contributions from industrial businesses, technology, financials and even global retail businesses, the reliance of the local bourse has shifted away from the over reliance of the major drivers of our economy in years gone by. I suppose that is a very good thing, an economy that is not like Russia, or Venezuela. Too much reliance on businesses that are linked to a price you do not control.

In truth the consumer of goods and services always sets the price, if governments intervene (like the aforementioned Venezuela) there are no goods or services to be seen. The real market then works, why it is called the black market or a place where illicit trade takes place is only because the law makers have no say. Free markets in everything work in the end, that is the long and the short of it all, if you impose too many restrictions on ordinary people, they find a way. I recall living in a communist state, Mozambique, in the 1980's, queueing with rank and file to "change money". In other words, the official exchange rate of the Rand and US Dollar to the Metical was ridiculous, compared to the "black market" rate.

Some currency folks saw a gap, a risky gap at that, I cannot imagine what the punishment in a communist state must have been for trading unlawfully in currencies. Yet it worked, everyone knew the rate and the privileged circles that our family mixed in talked about the rate, who you could squeeze for a few extra Metical here and there. That was the free market, which existed inside of a system that had failed. Now you know where my views are formed on what system is the best for everyone and why I think it is the free market. I saw with my own eyes how socialism in its most extreme form impoverished the very people that were supposed to be all equal. It also set the stage for corruption in all forms, paying this and that to jump queues, to get out of tricky situations, and as such excluded the people and advanced the elites.

Enough of that. Over the hills (seas) and far away (very far) the markets in New York closed much better on the day, boosted by a weakening Dollar and superb earnings from Nike, we wrote about that on Friday. Stunning results, quite clearly "things" in North America would or could not be so dire if the company was able to sell 11-13 percent more (in sales) in the comparable 9 months period. With future orders at about the same rate, the future is clearly in the very short term, bright for this business. And make no mistake, the goods are NOT cheap, they are quality however. You get what you pay for in life, as ever. What is also apparent about Nike is that they are not really a huge company, by global standards, selling only 7.46 billion Dollars of equipment per quarter, roughly 1 Dollar per person on the planet, per quarter. If you look at it that way, it seems a little more reasonable, not so? Or possibly not, I guess as ever it depends if the glass is half full or half empty.

It is not just the NASDAQ that broke through to another 15 year high on Friday, it is the Nikkei this morning that has also pressed through new 15 year highs. Back in April of 2000, the Japanese index was comfortably above the 20 thousand mark, there is a long way however to go to reach the December 1989 highs, that was a proper bubble. When? With low growth rates, inflation non existent and an ageing population, what are the chances in the next decade of that market doubling? I am not sure, clearly proximity to China and the Chinese consumer is a wonderful thing, as Chinese consumers get richer and the costs associated with manufacturing their goods increases substantially, Japan will benefit. In-between now and then, surely immigration must be seen as a solution on the labour front, I am not too sure how easy or hard it is to live in Japan (or any other place) as rank and file labour, I mean that in the best possible way. Trying to assimilate and be part of someone else's society must be difficult, unless of course you are adaptable to change.

Company corner snippets

Strange. Advtech had delayed their results and have released them this morning, it looks like a week later than anticipated, nothing terribly bad about that. However, what is strange and fishy, is that Leslie Maasdorp is out. Here is the official line: "ADvTECH and the Group CEO Mr Leslie Maasdorp have reached a mutual agreement to part ways. The terms are confidential to the two parties." Well. And ex CEO Frank Thompson has been appointed interim CEO. Out and back in, whilst the company are looking for someone who is full time. Maasdorp has only been in the CEO role for a little over six months (less, full time), talk about a very short time there. And when does he leave? 23 March. Which is today. Confidential? Wikipedia has a sentence in the Corporate Governance segment that says: "Corporate governance practices are affected by attempts to align the interests of stakeholders."

I suspect that Coronation, who own just a little over 26 percent of the business have been enlightened (on behalf of their investors) as to what is going on there, you would think that nearly 1 billion Rand of investments (26% of 3.8 billion Rand), you should know. Or perhaps all shareholders are being fed the same news, I know that their PR agency was in damage control this morning. Paul got a call from Brunswick saying if he was discussing it on Hot Stocks, or if we had investments in this one, they would make time to fill him in. Paul said, no holdings, no discussion any time soon. I guess that in time all parties will reveal their sides of the story. The PIC have increased their stake this year to around 5 and one quarter of a percent.

At the same time the company stuck out numbers, average, good enough to meet the markets expectations, the stock is up one third of a percent after digesting the initial shock of the Maasdorp exit, it was down over three percent at the beginning. The stock is neither cheap nor expensive, it has rallied over the last 12 months as they point towards growth strategies, not without its pitfalls however. Since the beginning of 2013, the stock is up 50 percent. Here are the growth prospects, as per how the board sees it: "All three trading Divisions are showing positive performance trends that augur well for further growth in 2015. It is clear that growth prospects have been considerably strengthened and with a strong foundation in place and further investments to come, Group shareholders can look forward to higher growth rates in the coming years as we implement ambitious yet well considered strategies." I am not too sure that this is the best vehicle to take advantage of a swing by middle income South Africa to private education, it certainly is not a bad entry point. Advtech makes three times the profits Curro makes, Curro is constantly swinging for the fences and connecting each and every time.

We're reading this, you should too.

Are active managers better during market turn downs? - Which Active Funds Outperform During Bear Markets?. The general rule still holds, don't try time the market and add to your investments as regular as possible.

Some stats on helping you grow your investments - Dine out less, but indulge your Starbucks coffee addiction.. The important note, is to buy Starbucks (the coffee and the shares!)

Competition is what makes Capitalism work - Competition works: the case of fund expenses. Due to competition we are finding ways to do more with less.

Home again, home again, jiggety-jog. Grrr .... our bleeding phones are on the blink, we are trying to get out of a contract that does not work for us, at all. We are busy sorting that out. For good this time.

Sasha Naryshkine, Byron Lotter and Michael Treherne

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Follow Sasha, Byron and Michael on Twitter

087 985 0939