"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
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