Money with a dash of Funny: August 2015

Monday 31 August 2015

Melrose Arch magician magnifies

"Whilst a few years ago many were talking about a successor for Brian Joffe, that thinking has been proven old school in modern times. As long as the Magician of Melrose Arch continues to be given their stamp of approval by the board of Bidvest, I think he has the energy and gumption to continue to allocate capital prudently and in the interests of long term shareholders. I also think that there are many quality people who could run that business, we are blessed with the brilliance of Brian Joffe currently."

To market to market to buy a fat pig. Last week was horrible at the beginning and much better towards the end. A much better than anticipated US GDP number Thursday did a lot to settle things, I guess. I was a little bemused by two stories that essentially are the same thing at face value, worlds apart for many other people who are equally observers of the markets. One, the Chinese attending to their market slump by actively buying securities, lowering rates in order to again be settling frayed nerves. I saw many on Twitter (or is that, The Twitter thingie?) suggest that Chinese government intervention in markets was absurd and this will end in tears.

At the same time I saw an un-newsworthy report that said that the Norwegian sovereign wealth fund was down 5 percent for the month. Yes, and? So were many money managers I bet, from those supposedly hedged to those who are long only. The idea that Norway can own stocks on behalf of their citizens (third time lucky it seems), China however cannot, is something I find strange and very old school (olde worlde) in thinking. I will concede that the 5 odd million people in Norway are far richer on a per citizen basis (per person the fund is around 170 thousand Dollars), aren't the objectives the same for the state? The richer your citizens are, the more resources you can raise in order to maintain the high levels of medical standards, educational standards, the infrastructure and so on. I know that Norway is not China and equally China is not Norway to borrow a line from Spanish Prime Minister Rajoy, the state owning assets on behalf of citizens trying to achieve the same objectives, is that not the same thing? Or am I missing something?

A quick wrap of markets from Friday, New York, New York, the S&P 500 closed marginally higher in a choppy session, the nerds of NASDAQ ended up one-third of a percent, whilst the Dow Jones lost just over a handful of points to close up shop nearly 10 percent adrift of the year highs. The S&P 500 is still 3.4 percent down for the year, notwithstanding the heroic second half of the week, last week. Chinese stocks, a worry about the slowdown of Chinese growth, off admittedly a much higher base and of course worries about emerging markets are all mixed in with a pending rate hike in the US, will the Fed raise in two and a bit weeks or will they raise towards the end of the year. Or raise at all this year. Will they stand pat? Who knows, you should not let it impact on your decisions to own stocks, what the Fed does.

Jozi, Jozi. The overall market roared ahead and into the green for the year Friday, the Jozi all share added over 1.7 percent to end 33 points short of 50 thousand. We are ten percent off our highs for the year, resource stocks may have had a better second half to the week, for the year as a collective the commodity index is down nearly 14 percent. Wish. Slim pickings. Anglo American stock in Johannesburg is down 30 percent for the year, BHP Billiton in Joburg (in Rands) is down 8.6 percent. I am guessing that is before about that same amount in South32 distributions (8 odd percent of the value), so I am guessing out loud that BHP is flat in Rand terms for the year. Glencore in Rand terms is down 44 percent. Yech. Sasol is flat for the year.

In London, in terms of their respective listings there and measured of course in Pound Sterling, Glencore is down 50 percent. What that means is that the companies share price has to double in order to get back to break even from where they started the year. BHP Billiton is down 18.4 percent in London, Anglo American is down 38 percent in London. It has been a torrid year for the global producers of commodities, from bulk commodities to the oil majors, projects aplenty have been shelved and billions of Dollars in exploration shelved as the current prices dictate that the purse strings are kept tightly shut. I guess that means that future supply will be impacted with less investment, that goes without saying. Whether or not we can utilise the same resources (or less) more effectively with technological advances I guess remains to be seen.

Amazingly Warren Buffett sold all of their Exxon Mobil stock in the fourth quarter last year. At an average price of somewhere in the region of 93 odd Dollars. Exxon Mobil trades at 75 Dollars, down 18 percent for the year. Well done Berkshire, Warren and Charlie and I am sure a whole host of other people when making this decision to sell. Of course one of the big holdings that Berkshire have been adding to, IBM, is down 7.77 percent year to date. This is however a longer dated investment call on oil, its abundance relatively to usage and current oversupply, the shift to alternatives and more importantly the ability for these businesses to operate at the same margins as before.

Exxon Mobil trades on a 13.3 multiple currently, with a yield (pre tax) of 3.9 percent. IBM trades on a 9.9 times multiple and has a yield of 3.5 percent, also pre-tax. For the time being, "old tech" companies are stuck in a funk, unable to grow revenues as they respond to the new world of tech. I am pretty sure that they will all adapt and evolve as they have before, and by they I mean SAP, Oracle, Microsoft, HP, Cisco and the like. I have however seen stories that Microsoft will have to borrow money in order to meet their dividend obligations. No worries, lots of cash there, most of it is offshore, that is somewhat of a problem. A nice problem to have. For the record, a growth business like Apple (at least I think so), trades on a multiple of 13 times and has a dividend yield of 1.9 percent. I still love that story that Warren Buffett read the annual report of IBM for 50 years in a row before he actually made a single investment in the company. That is what you call tenacity, investing like Gary Kirsten. Sometimes you don't have to look flashy to outperform.

Company corner

You know that I am not the biggest fan of quotes and that I believe that you should make your own, this is more a statement from Brian Joffe, the CEO of the Bidvest Group, who reported results for their full year this morning: "We strive to turn ordinary companies into extraordinary performers, delivering strong and consistent shareholder returns in the process. We understand that people create wealth and that companies only report it."

That sounds pretty simple, what it takes is extreme skill, patience and capital allocation second to none. Sweat each and every Rand. I did notice that Bidvest had taken down the sign in their foyer: "We refuse to participate in the Recession" and they had given it (the foyer) somewhat of a revamp. It looks nice, next time I go past I will take a picture and post it to Twitter. So here are the numbers, follow the link as per their website to get to the earnings number.

I agree, these were tough operating conditions and the group certainly has delivered. Bidvest Namibia a laggard, come on the Welwitschias, pull up your socks. I remember that company used to have the most incredible margins in that country. Small market, great operator, delivering, the fish in the sea are harder to fish (82 percent of profits in Namibia are derived from Bidfish, obviously their fishing operations). When you do a detailed read through the results you can see that it was not only the South African business that had troubles, the currency "wins" in the UK and more specifically European businesses mask how tough it is there. Some of the emerging market reporting segment (around 8 percent of group sales) tells you what you know already, China is shifting to a services based economy, Brazil is in a whole heap of you know what, the Middle East is moving forward notwithstanding the obvious problems (lower oil prices and regional violence).

Numbers, HEPS increased to 1882 cents per share, up 8.6 percent on last year, the dividend for the second half declared is 483 cents (after tax that equates to 410.55 cents), payable on the 28th of September. The interim dividend paid was 4.26 ZAR, add the two together you get to 9.09 ZAR. After 15 percent dividend tax, on a 305.02 ZAR share price (close Friday), the stock trades on a yield of 2.53 percent. The price to earnings multiple is 16.2 times. Is that expensive to pay that many years worth of current earnings for a company that has one of South Africa's best allocators of capital? Yes? No? I certainly think not, the company is well positioned to take advantage of a global upturn after a long period of muted growth.

The acquisitions are well thought out, "things" seem to be going better at Adcock, which I think has been overstated in the bigger context of the company. Although as the release points out: "the impact of the acquisition of Adcock has been a negative 2,7% on HEPS." That is not a lot, not nothing equally. The 37.7 percent stake in Adcock (current market cap of 8.86 billion Rand) equals 3.34 billion Rand, relative to the Bidvest market capitalisation of 102.23 billion Rand is 3.26 percent. Hardly worth talking about all the time in the context of this business, yes? I suppose that the products that Adcock produce are household names, like Panado, Compral, Corenza, Bioplus, Vita-thion and Citro-soda, it is no wonder we think it is a "big deal".

In the current financial year, two purchases were made in the UK and Italy, announced last year in July, remember we wrote about it: 2 not so small acquisitions. In aggregate the purchases were 95 million Pounds, or around 1.95 billion Rand at current prices. That is around 1.9 percent of the entire value of the Bidvest Group and yet, how many times do you hear about this one? Very few.

So what to do? Do you still carry on holding your Bidvest shares? I am going to go one further and say that they are still a buy on any weakness. Whilst a few years ago many were talking about a successor for Brian Joffe, that thinking has been proven old school in modern times. As long as the Magician of Melrose Arch continues to be given their stamp of approval by the board of Bidvest, I think he has the energy and gumption to continue to allocate capital prudently and in the interests of long term shareholders. I also think that there are many quality people who could run that business, we are blessed with the brilliance of Brian Joffe currently. As long as he stays in good health, no reason to believe contrary, we should continue to reap the rewards as shareholders.

Linkfest, lap it up

Some fun for a Monday morning - How Cartoonists Covered the Market Crash

If you drive really slowly and accelerate at a snails pace you can drive a Tesla around 500 miles (728 KM to be exact) - Two guys drove a Tesla almost 500 miles on a single charge

Textbooks don't follow the normal supple and demand model, your lecturer says "buy this one" and you have little choice but to get your hands on it some how - Are Savvy Students Sabotaging Big Textbook?

I always enjoy Josh Browns humour and insight. This time he is talking about how rigid systems have a tendency to blow up when markets don't act 'normal' - Computers are the new Dumb Money. The one quote he points out from Buffett is worth a reminder: "Paradoxically, when 'dumb' money acknowledges its limitations, it ceases to be dumb."

This was pretty amazing to see a very young Mark Zuckerberg talking about what Facebook is likely to be in years to come, this in 2004. Let us just say, that with the benefit of hindsight, he was very wrong in a very good way. CNBC video, July 2004.

Home again, home again, jiggety-jog. Markets is Asia are mixed to mostly lower, US futures are pointing lower for their start in the afternoon. In fact as a collective, this has been the worst month for stocks in Asia for over three years. Our market may be buffered a little bit by a weaker currency here.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Friday 28 August 2015

Leaning like Lehman

"When those with the pot of money, those who control the pursestrings, decide to push the big red buzzer and give you an X and send you into "South African stocks have no talent" oblivion, you know what happens next."

To market to market to buy a fat pig. Everything changed. Or nothing changed, take your pick. Resource stocks were on fire globally, and being a sort of dominated by resources index, it had a marked impact. There were some massive moves from the diversified miners, those were driving the show. Anglo up 7.8 percent, BHP Billiton up 7, Sasol up five and one quarter of a percent.

I flagged something very interesting, a tweet and a link (which is better than a wing and a prayer) from Joe Weisenthal, aka @TheStalwart who said: "This is stunning. On Monday, Emerging Markets had outflows at the same pace as the week Lehman went down." And the link to the story: Money Pours Out of Emerging Markets at Rate Unseen Since Lehman. You need an explanation as to why you woke up on Monday and saw the Rand, along with all the other emerging currencies of the world tanking (I think we nearly reached 14 to the Dollar) this is it.

When those with the pot of money, those who control the pursestrings, decide to push the big red buzzer and give you an X and send you into "South African stocks have no talent" oblivion, you know what happens next. My daughters love that show, Simon Cowell and Howard Stern (It is actually Mel B, Amanda Holden and Alesha Dixon) are now household names. The big four red X's came up on our screens at the beginning of the week. Of course in China too, I have not really checked India, Indonesia and South Korea, nor Russia, perhaps we should use this as an opportunity to do so. On Monday the Korean Kospi traded at a year low. Russia is slightly different, the currency has been very weak lately, their stock market did not trade near any lows.

Spare a thought for the Indonesians, the Jakarta stock exchange traded at a year low on Monday (since then it has bounced back 10 percent!!!!), their currency rout continued through Monday. Not only was their stock market feeling like Rocky Balboa after 25 rounds with Drago (those are movies that only 10 year old boys like), their market in Dollar terms was plumbing new lows. The Dollar has gained 55 percent to the Indonesia Rupiah in five years, reaching another multi decade low Monday. Over ten years it is 35 percent, it doesn't feel that bad. The Indian Rupee traded at its worst level ever to the US Dollar on Monday. Ever. As did the Rand. So, the point that I am trying to make is that emerging markets for the time being have been shunned by those with the money, and that ain't us. Oh sorry, Monday was also the lowest point for Indian equities in a year.

All these countries are tarred with the same brush, you may think that the reason is the poor GDP number earlier in the week, ironically that was released on a day when equity markets were recovering. The Rand was unchanged. I suppose the number was old and not exactly a shocker. The Chinese stock exchange for the record is up 4.7 percent this morning, following a heroic rally into the close yesterday. The S&P 500 is up 114 points from the lows on Monday at the open.

The week at face value has been unspectacular, with the four days to present returning 0.85 percent. Yet we have seen crazy moves. If you had no signal and got back Thursday evening, having left on Sunday evening, you would be none the wiser. OK, you would have seen futures in the toilet Sunday night, perhaps a week. Last evenings close in the US was no different, the S&P 500 fell two percent between two and three pm in the trading session, and then gained all of that back in the last hour.

Last point, again I learnt that the only fear gauge that there really is, is VIX, the volatility index. At some point in the last month it has been trading at 12, on Monday it spiked to above 50 and now trades at 26. Volatility is code for "this thing goes up a lot when stocks go down". The last time that the VIX got above 40 was when the Europeans were falling around in August and September of 2011. So forget gold, forget any other "safe have", the only index that tells you when there is great stress is the VIX. Access to those is available only in the options market in the US. A wild week ends a little better than where it started, the sun keeps coming up, people still have breakfast, lunch and supper (and cheat in-between). We are going to be OK.

Company corner

Monsanto dropped their bid for Syngenta a couple of days ago. On Wednesday, they suspended trade for a little while and then announced that they would be dropping their 46 billion Dollar bid for the Swiss company. These are very important companies both for humanity and farmers, at the core we are all hard coded with producing (or catching) food, right? It would have been a merger of equals at some scale, they have identical market caps at the time of the announcement. Syngenta is now lower, obviously as the floor, the bid price, has been removed.

Monsanto, the stock of the company, has woefully underperformed the market, year to date the stock is down 17.6 percent. That is poor. It is certainly not everyones favourite company, my take on it is simple, until everyone goes to sleep with a full tummy each and every evening and until we have eradicated hunger (something their products try hard at), then the high and mighty approach is not something I am interested in hearing. Sorry, I have a very strong opinion on hunger. If you are really committed to wanting to maximise resource, eat less meat, if you have to eat it, less resource intensive meat. I can't understand why people who love read meat do not eat more wild animals, we have many. Or eat less meat, utilise the existing resources better by eating none at all. Invest in companies that produce drought resistant and disease resistant crops with greater yields. Like Monsanto.

Linkfest, lap it up

The internet is levelling the playing field! This highlights why it is key that everyone has access to the internet, it is the best way to close the gap between haves and have nots - A Kenyan won the gold medal in javelin after learning how to throw on YouTube.

The poster child of why socialism doesn't work, has new problems - Venezuela Is Adding More Zeroes to Its Currency to Deal With Hyperinflation. The dropping oil price is just making things worse and is potentially speeding up the economic collapse of the country.

It amazes me how creative scientists are in coming up with new ways to push humanity forward - Scientists say that DNA could store 60,000 times more information than a computer. Looking inside of ourselves for the answers.

Home again, home again, jiggety-jog. It is Friday, we can leave you on a fun note. You may not find your name on the selection for the World Cup in three weeks time when the team is announced a little later. I am pretty sure that you realised a long time ago that you were not good enough. However, and perhaps observe from a distance before you interject this weekend with your friends and family (although after this strategy they are likely to be ex-friends), ask all the amazing selector experts and coaching staff, who are not the staff, "what level of rugby did you engage in at school?" Sometimes there is none whatsoever. X or Y or Z is not "useless", they get paid a lot of money to play their trade on the sports field, they did not just rock up and get chosen. I for one would love to put an ordinary person up against either a beefy back rower running at them, or a speedster and see how ridiculous it looks.

Download this form - > World Cup Outrage Timesaver, you may have seen it going around, stick it on your fridge as per the instructions. There is some "bad" language in there, I certainly didn't make the masterpiece.

US stock futures are lower, we are likely to see the tail end of the US rally. The Chinese market for what it is worth was up over four and a half percent. The Japanese markets were up strongly. Notwithstanding two days of that sort of movement, Chinese shares are down 8 percent over the last week, flat YTD. Stocks are up to start with.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Thursday 27 August 2015

The Ian Moir Effect

"The light brown is David Jones. That segment (David Jones) had a strong second half, sales up 10.7 percent (H2) in a weakish Australian consumer market. Inside of this period will be the deterioration of the Aussie Dollar (like the South African Rand, "commodity currencies" globally have been negatively impacted) and more importantly, the dilution by way of the rights issue done last year, when the company turned to their shareholders for 10 billion Rand. Remember that rights issue was done at 59.5 Rand a share, the stock closed last evening at 98.89 Rand. It was a good idea to follow your rights."

To market to market to buy a fat pig. I guess you must file that in the same drawer of dumbness. Stocks made an epic comeback last evening in the US session, enjoying the single best day for equity markets since 2011. Dumb. What changed? Did Starbucks sell more coffee to Stockbrokers (chief Howard Schultz told baristas in an email to be sensitive to Wall Streeters) or less, who knows?

I am not too sure that a market should go up 4 percent on any given day, bearing in mind that is around half a years worth of longer dated returns (sans dividends). Some reasons are attributed to a speech by a Fed member, Bill Dudley who suggested that a hike in September was "less compelling". Paul told me of a bunch of market nerds who have started a hashtag suggesting that the Fed just gets the first rate hike out of the way. In other words, to borrow the Nike line, just do it.

Much of the recent turmoil in global markets is attributed to the "weakness" seen in China, let us rather say that the rate of growth at which they are growing is slowing off a base that is now many, many times bigger. We spoke about the shift to consumption. Some reassuring comments from Andrew McKenzie, the BHP chief and Martin Sorrell, the WPP (largest advertising company by revenue globally) chief on China and the long term future.

Anyhow, we always find it amusing in the office that people speak of a country as one, "what is China going to do?" is a dumb question in itself. If we all needed reminding, the global population is around 7.36 billion, the population of China is 1.4 billion. Out of a room of 100 people, if represented by all the people of the world, 19 people would be Chinese. How is it possible to talk about so many different people as a collective? China this and that. In the same way that you and I get mad about people talking about "Africa", China is a country of many different individuals all looking to improve their lot in life after the disastrous impact of collective communism. There is a centralised and planned economy that everyone works in and around. Humans are great at generalising, it is far easier that way, less work required.

And whilst we are on the story of "Africa" my favourite question by financial commentators and financial journalists alike here in Johannesburg is to ask "What is your Africa strategy?" Last I checked, South Africa has an Africa in it, I woke up on this continent, I will go to sleep on it and eat the food it produces, the roads it built. Got it? Johannesburg, Cape Town, Durban might not feel like part of the continent that one associates with elsewhere, by the same token Detroit is not New York.

Locally the market fared less well with the sell off on Wall Street in the session prior starting us off badly. Everything was sold off, mostly banks and financials across the big caps. South32's average results catching up with them. They had made some interesting comments around certainty in South Africa in mining legislation, suggesting that they want to invest in coal here. Remember the fuel consumption graph that Michael had yesterday, in the US coal seemed to be waning quickly as a fuel source. Renewables, natural gas, those are the growth areas for energy globally I think.

After all was said and done on the local market, when the gong rang, the markets had shed over one and one quarter of a percent. The local market is trading at levels last seen in mid January, levels that were first breached in May 2014. So, if you had bought an index tracker back then, in May 2014, you would have wondered what this is all about. The trick and key is to continue to add over time, more importantly it is what you buy. We should start with a very decent lift today, Asian markets on balance up smartly.

There are stories starting to circulate that Chinese Premier Li Keqiang's job is on the line as he has failed to deal with "market volatility". So whilst I may sit here and poo-poo it, there are real implications for other people. High powered and high ranking officials. I think that again it falls into the dumb category, how is it possible that a politician can be more powerful than capital markets? Many a politician has found out the hard way. We have also seen news stories of half of the margin debt that existed in the Chinese equity markets have been unravelled. Wow, using borrowed money to buy shares, unless you are really sophisticated (and even then) is never a good idea.

The BusinessInsider reports that the Chinese market regulator is investigating top brokerage houses for share price manipulations, wait for it, as the BusinessInsider see it "suggesting the ruling Communist Party might be trying to deflect blame for the collapse, which angered small investors." I recall Pakistani retail investors beating the outside of the Karachi Stock Exchange with their sandals (in certain cultures shoes are seen as very dirty, associated with insults), the Chinese communist party is all big brother and looking out for stability in this grand long transition, the only good news is that the 20 odd percent sell off in five days (yes, really) has stabilised.

You and I cannot understand investing psyche in a country like China, with very few options. The state is not going to look after you. Your children and grandchildren are not going to look after you, the pyramid gets smaller, it is inverted for many urban families. Capital markets are immature and weak and very new. Whilst Chinese investors and traders alike are all working out how this "all works", the volatility as Larry Fink of Blackrock pointed out a number of weeks ago, is as a result of these factors. Ignore all this noise and remember that quality counts for everything.

Company corner

Woolworths have released results for the 52 weeks to end June, remembering that these numbers include 11 months of David Jones. Total revenue of 58 billion Rands is an increase of 45.4 percent on last year, including concession sales revenues grew by 54.9 percent (excluding David Jones it is 12 percent). Adjusted profit before tax grew 20.5 percent. The food business was the great standout, total sales there were up 13.5 percent with the supermarket model working well.

In the slide presentation to analysts (slide 8) the company says that food sales "Growth ahead of the market every month since September 2011". 4 years of solid outperformance, and as both you and I know, the consumer does not generally lie. Ever. This next chart is important for seeing where the profit and sales mix comes from:

The light brown is David Jones. That segment (David Jones) had a strong second half, sales up 10.7 percent (H2) in a weakish Australian consumer market. Inside of this period will be the deterioration of the Aussie Dollar (like the South African Rand, "commodity currencies" globally have been negatively impacted) and more importantly, the dilution by way of the rights issue done last year, when the company turned to their shareholders for 10 billion Rand. Remember that rights issue was done at 59.5 Rand a share, the stock closed last evening at 98.89 Rand. It was a good idea to follow your rights.

This is a big business, with a market cap close to 103 billion Rand, 1.04 billion shares in issue, it is always going to be pretty easy to work out! 167.8 million shares were issued in the rights process done last year. The dividend cover remains at a very handsome 1.4 times (invert it to get the dividend payout ratio), that has increased a little to 247 cents for the full year. Diluted headline earnings per share clocked 367.1 cents, the stock looks pricey at 27 times. We will get to that in a second.

The outlook is neither completely muted or tearaway: "We believe that economic conditions in South Africa & Australia will remain constrained, especially in the lower and middle-income segments of the market. The upper-income segments in which we operate continue to show some resilience. Trading for the first eight weeks of the new financial year has been positive. The transformation and integration of David Jones is progressing ahead of expectations."

OK, so as I said, the stock is pricey. In part the dilutionary impact of more shares in issue. I do know one thing however, this is a really good business with a really sharp management team. They are not aiming to be the biggest in size or the cheapest. They are however the best of the quality, you get what you pay for in life. As a consumer of all the major retailers in South Africa, I am very mindful that Woolworths are certainly not the cheapest, they are however the best quality, in my opinion. And you always get what you pay for. As with a company that is likely to grow their earnings in the mid teens for the next couple of years, we continue to be happy to pay up for the quality of the business, a strong dividend policy too, we continue to rate Woolworths shares as a buy.

Linkfest, lap it up

China has been sighted as one of the main reasons the market has been crushed. Here is a bit more perspective of why it is probably a weak reason for a sell off - What Investors Must Know About China. Like anything, context matters.

This is a great way of visualising our impact on the planet. As the saying goes, 'out of sight, out of mind' - This Danish power plant will poetically inform residents of how much carbon they're using

An interesting way of making custom metals - This startup can grow metal like a tree, and it's about to hit the big time

The US is busy shutting down its' Coal power plants. Less global demand for coal won't be good for the coal price or local mines that produce coal. The upside is that Eskom won't have to shell out as much for coal - As natural gas replaces coal, U.S. utilities invest big in the future. Can't help but feel that we are missing something, the rest of the world are closing down their coal and nuclear power stations. Surely given our access to natural gas, using it as a power source is the best long term play?

Home again, home again, jiggety-jog. Chinese stocks have had the wildest ride ever in their afternoon session. Down a bit and then ending the session up over four and a half percent. That is simply dumb, hey, who am I to suggest anything, what do I know? Our markets should start off on a rip roaring note, capturing the gains from the US session prior. US futures are looking modestly higher, which makes for a bit of a change from the wild swings too and fro.

Oh, and lest we forget, Wayde van Niekerk's (Grey Bloem's finest) performance yesterday, the 4th fastest of all time for the 400 meters and beating a real quality field. To think that LaShawn Merritt (Olympic champ in 2008 in the same stadium) ran the 5th fastest 400 metre time of all time and came second tells you something about Wayde's run. Epic, we should be talking about that one a little more. And he beat the 2012 Olympic champ, Kirani James. Silver Medalist in 2012 at the Olympics was Luguelin Santos, who set a National record (Dominican Republic) in this race yesterday (his best of all time), that was only good enough for 4th place. When 4th place is both your best and not good enough.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Wednesday 26 August 2015

Costs down, prices down further

"What has changed a lot in the BHP iron ore business is their costs, production costs have been driven down to 17 Dollars per ton, an astonishing figure. To think that it didn't matter when the elevated iron ore price meant that cost cutting initiatives were something to happen later. Cost cutting had a massive positive impact of 3.8 billion Dollars, a negative impact of 15.2 billion Dollars as a result of much lower commodity prices. That is the biggest problem, this is possibly the finest in quality of all the mining companies, yet, like everyone else, they cannot control the prices."

To market to market to buy a fat pig. Whoa, more dumbness. A panic close on Wall Street last evening. Stocks reversed a nearly three percent gain through the day to end over a percent down, touching the lowest closing levels for the year. It was really a sign that the jitters in equity markets never go away. I do not like to look at charts of equity markets and predict what is going to happen, that is even sillier. Drawing lines on a graph and suggesting x or y happens next is about as useful as predicting the weather in December based on today. Or (cheeky here) whether Chelsea FC are going to break into the top 10 of the BPL. Kidding, of course they are. We will get back to the markets in New York in a second, first it is time for Jozi, Jozi. Locally our markets roared yesterday, reports of the death of the global economy were greatly exaggerated. That was of course paraphrasing Mark Twain, where in fact his cousin was ill.

Expect to give up all those gains from yesterday in the early part of the trade. In the same breath as me saying I do not like charts, let me try and explain why this sell off feels so very bad, by using a uhhh ummmm, a chart. For most of this year the biggest market in the world, the S&P 500 has been stuck in a very narrow band. Very narrow in fact. I have circled in red (thanks CNNMoney for the graph) the period of great stability until just over two weeks ago.

Note the serious sell off in the last two weeks. By drawing any sort of line on that graph to the right is just as good as guessing. There is a story of Buffett being handed a graph and asked his opinion, he purportedly asked which way around he should hold the paper. I am not too sure about whether that is too true, it is however funny. Technical analysis is not for me, it is classic pattern recognition. I was on TV, Monday lunch time and was asked about the similarities between 1987 and now, there are similarities emerging said Lindsay Williams from CNBC Africa. I said to him, when I encounter people talking about two different periods in history I always answer with a facetious question, "how many iPhones did they sell back then?" The answer is obviously none.

I was rapped over the knuckles by Lindsay when he said I could not use the Benjamin Graham example of choosing your stocks like groceries and not perfume, he said to me that they sold no iPhones back then. We ran out of time when I tried to stick the boot back in I failed, we had run out of time. Darn, live TV.

I made a similar quip yesterday on live radio, using the legendary investor Peter Lynch's line: "I've always said if you spend 13 minutes a year on economics, you've wasted 10 minutes." I lost many points with Michael for bringing this up over and over again. He hates me for it. Anyhow, that statement became very evident yesterday when the local GDP number was released for the second quarter (we are nearly finished month two of the third quarter) and we were met by a contraction, in Rands too, down over a percent when measured against the first quarter of this year and then the figure is annualised. Perhaps the economy has improved a little between now and then. There was NO reaction from the equities markets, none whatsoever from the currency. Perhaps it was "priced in" or more likely equity markets and currencies are driven by the global flows.

Remember and recall each and every time there is an economic release, the stock market is not the economy and the economy is not the stock market. That is possibly what Peter Lynch meant, spend your time focusing on the companies and their prospects, their price relative to those same said prospects, rather than the economy.

Whilst the Chinese have cut rates for the fifth time since November (another cut after their market had closed yesterday, about midday locally) in order to shore up their economy, you should not worry about the health of that economy. BHP Billiton in their results yesterday had something interesting to say about the Chinese economy, the shift to consumption:

"In line with our expectations, the economy is growing more slowly, though off a higher base, as it matures over the medium term and the government's reform program promotes domestic consumption over investment. We expect near-term volatility to continue as the authorities press ahead with reform in a cautious but sustained manner as they seek to improve the efficiency of capital allocation in the economy while maintaining support for employment. However, our robust longer-term outlook for China remains intact as the economy transitions."

There is an associated graph of their expectations of the makeup of the Chinese economy, a slide that explains how the shift is unfolding over the next decade and a half. Of course this is just guessing, a very good guess, this was not just thumb sucked:

The most important "thing" to come out of the BHP Billiton results yesterday was their downgrading of peak Chinese steel production. Which is very important for their iron ore and metallurgical coal business. Of course this is very important for all iron ore producers globally. BHP reckons that, from their presentation: "we expect China's crude steel production to peak between 935-985 Mt in the mid 2020s". The previous guidance was at the high point 1100 Mt.

What has changed a lot in the BHP iron ore business is their costs, production costs have been driven down to 17 Dollars per ton, an astonishing figure. To think that it didn't matter when the elevated iron ore price meant that cost cutting initiatives were something to happen later. Cost cutting had a massive positive impact of 3.8 billion Dollars, a negative impact of 15.2 billion Dollars as a result of much lower commodity prices. That is the biggest problem, this is possibly the finest in quality of all the mining companies, yet, like everyone else, they cannot control the prices. And whilst the quality will remain, the focus will be on long term shareholder returns, the market remains oversupplied in some very key commodities. Oil and iron ore. The demand side looks lukewarm, another big infrastructural program from perhaps India needs to emerge for prices to get a serious lift.

The dividend was increased marginally, earnings were crushed as revenues fell nearly one quarter. We continue to lighten our commodity exposure across the board and have been doing so for some time now. No matter how good the management team, no matter how good the cost control, the price is controlled by the market. Which is not really fair, the price for all products is essentially set by the market. However, as we know, a longer dated bet on higher commodity consumption (which is expected as we continue to urbanise) is somewhat a bet against human innovation.

As production costs decrease as a result of innovation, the marginal miners will be flushed, it will be ugly and in the end the quality majors will prevail, BHP will still be top of the pile. The cycle may be very deep from peak to trough, and as people who were in commodity markets for thirty years will tell you, for the first twenty years basically nothing happened. I shall leave you with a 30 year graph from IndexMundi of the Iron Ore price, for you to see what I mean. Literally nothing happened for 20 years.

That is right, I recall a headline that I once posted which said something along the lines (when referring to rent resources tax globally on commodity companies being mooted by "smart" governments) "You did not make that iron ore price". Exactly, the market made the price.

Linkfest, lap it up

Perspective matters and so does knowing what your timeframes are - The Great Divide - Traders versus Investors. The biggest point I got out of the post was that GDP is probably underestimated using current methods. We also need to focus on stock gains over the last few years in connection with the underlying strength of the global economy.

Charlie Munger is one of the best investors out there and one of the smartest people around - 10 Underrated Charlie Munger Quotes

Things do change, maybe not at the speed that people want them to though - The evolution of American energy consumption since 1776. If we get most of our energy out of renewable sources in the next 100 years, it is essentially our globe doing a total '180' in a lifetime. Which is nothing in the grand scheme of things.

Imagine the possibilities from having a selected gene pass through generations. This has the potential to wipe out diseases that are transferred from parents to children - The most selfish genes

Home again, home again, jiggety-jog. Stocks are likely to be lower again today. Chinese shares are a little higher after a volatile session. Stay the course and buy the quality, the message from yesterday is clear, if you can get the same quality asset at a lower price, what is not to like about that? There are always long dated time frames, if however you are saving for retirement, you will want lower share prices in perpetuity, to lock in lower entry prices along the way. If you are older and reliant on the gains in the short prices to supplement your income, this is an unwelcome and nasty fall in your NAV, it leaves you reaching for the antacid. Worry not, the storm passes. The shouting voices and the chasing your tail strategy during a time like this proves to have once again been the wrong one. As in Braveheart when the horses are charging at you, you should hold ..... hold ....... hold!

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Monday 24 August 2015

Keep calm and add on

"If you have spare funds, cobble them together and immediately send them to your brokerage account, moments like these come around few times, you must be buying shares and not even thinking about selling them."

To market to market to buy a fat pig. People are dumb. Not you or I of course, never, other people. There are 7.36 billion of us (54 million extra so far this year) all with different emotions. Obviously there are far fewer participants in equity markets, the principals pretty much still stay the same for humanity, panic is something that we do. Not all of us of course, like the dumb, other people panic, right? Yesterday I was back from the Eastern Cape and KZN, Michael kept you in tune with these wild moves whilst I was away. Excellent work! Some of the "driving" that I saw exhibited classic investment behaviour. Ignoring common sense. Overtaking on blind rises with a view that of course nothing will come over the hill on the other side. Investing is about being cautious and staying the course, keep to the road.

When the US market opened yesterday we saw behaviour from equities market participants that we do not often see. Massive businesses like Apple sold off 10 percent at the start, the Dow Jones dropped over 1000 points, the only other time I have ever seen this was the flash crash, that time I was alone on my couch in my living room at home. This time we were all here in the office. The Intraday moves however also resembled something very strange. The S&P lost 100 points in early trade, something I think that I have also only seen once, in the flash crash. By lunchtime in New York, stocks were barely lower, there was accelerated selling into the close.

Some other moves were bizarre, I was scratching my head and wondering if I had seen them before. Starbucks was down 20 percent at the open, seven minutes later the stock was down 2 percent. In other words in the panic selling (and remember for every seller there is a buyer), someone was showing around 20 percent gains on Starbucks by the close last evening. Equally, Apple was 60 billion Dollars higher in market cap than at the lowest point in the day.

As Michael has pointed out over the days of keeping you calm and carrying on, the angst is mainly associated with worries in China. Part their stock market, which is now flat for the year, down actually around 4-5 percent with todays moves lower. Over 12 months however the Shanghai Stock Exchange is up 37 percent. Yes, true story. Of course it is the morbid human fascination with the things that could go wrong. Everyone focuses on the fact that the Chinese stocks are down 40 percent from their highs in mid June. That is a pretty heavy fall. And the average multiple of the market, the Shanghai Stock Exchange? Is it 35, 105, 25, or 15? Of course I know that you are all clever and have been paying attention and know that the average price to earnings multiple (the share price divided by the earnings per share) is 15.77 times.

Let us try and quantify the Chinese worries in numbers. The economy size in aggregate is 10 trillion Dollars, it is the second biggest standalone economy in the world. If the country has a growth rate of "around 7 percent" as per guidance from Beijing, that is an extra 700 billion Dollars, right? If, worst case scenario, it falls to 6 percent, that is an extra 600 billion Dollars. The entire size of the Chinese economy 20 years ago was about what they expect to add this year. Read that again carefully to understand it. If it is "only" 6 percent growth (whilst everyone else struggles with next to nothing), then additional growth is equal to the entire Chinese economy 21 years ago. It is again dumb to expect an ever increasing base to grow at the same rate, perhaps I am the one who is dumb, that should be the expectation.

If global assets shed trillions of Dollars from their highs over 100 billion Dollars of growth expectations, including a 60 billion Dollar swing from the biggest company in the world, Apple, doesn't that all sound a little strange? Maybe to me. For the record, Apple has a market cap of 603 billion Dollars and over 203 billion Dollars of cash. Over one-third of the entire market capitalisation is cash. Sounds like a business that you should be owning, not selling off ten percent?

I am sure that I made this point a while back, unless my memory fails me, Berkshire made their biggest ever acquisition when the S&P 500 was 200 points higher, that was all of 2 weeks ago. So, unless I am missing something, the greatest investor of our time (Warren Buffett) bought a business on a 22 earnings multiple and shelled out 37 billion Dollars a mere 2 weeks ago. If that guy, the man that has turned more ordinary people into Dollar millionaires is confident enough to be buying at higher levels then so should you at these lower levels.

What to do?

1) If you have spare funds, cobble them together and immediately send them to your brokerage account, moments like these come around few times, you must be buying shares and not even thinking about selling them.

2) This "story" has gone mainstream, the global equities market sell off over the last two weeks has now become part of the normal news. Keep a level head. The companies are the same as they were yesterday, the same as they will be next week.

3) The storm will pass, it always does. In a few weeks the screens will be interested with the Greek snap elections, Republican primaries, perhaps Joe Biden running against Hillary Clinton.

4) The Rand and the local equities markets do not escape the selling, these are NOT isolated as a result of any other reason you can think up today. The Malaysian Ringgit plumbs multi decade lows to the US Dollar, same thing, emerging market and commodities (soft and hard commodities).

Of course the selling might intensify again, you are never going to time the bottom perfectly. Get invested, take spare cash and commit it to the same companies that are growing earnings strongly. Most of all, never panic. Ignore the shouting voices, they possibly have nothing to gain or lose if the markets go one way or another. And as I said to several journalists yesterday and one this morning, I do not know one person personally who is invested in the Chinese mainland equities market, do you?

I shall leave you to read two pieces, one, the Ben Carlson piece from yesterday titled Crash Rules Everything Around Me. I like that part, and I really think that you should memorise it and tell it to people: "U.S. stocks were up nearly 400% in the 1980s. All anyone remembers is the 1987 crash."

And then another one that Paul sent yesterday evening, from FiveThirtyEight titled Worried About The Stock Market? Whatever You Do, Don't Sell. The chart in the middle is, as per the article: "two people who each invested $1,000 in the S&P 500 at the beginning of 1980. The first one buys once and never sells. The second one is slightly more cautious: He sells any time the market loses 5 percent in a week, and buys back in once it rebounds 3 percent from wherever it bottoms out." The difference is astonishing:

Home again, home again, jiggety-jog. US futures are sharply higher than they were yesterday. Chinese stocks are getting smoked again. We said that. Other markets across Asia are better this morning, we should recover through the day. Keep calm, add on.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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My China, Keep Calm

"Cheaper oil means more money in my pocket after a visit to the garage, cheaper iron ore means more infrastructure projects are viable and cheaper coal means cheaper electricity. The end result is that society has more surplus resources to spend on other things, the better that society is doing the better the companies that service society will do. Over the short run there will be volatility and some pain as things find a new equilibrium, which highlights the reason why you need to be a long term investor and avoid being rattled by short term shocks."

To market to market to buy a fat pig. Okay folks, I want you to think of your happy place. Mine is in the mountains somewhere with a great view of a green valley and river below. Moving on to the markets, globally it was a very red week. The Dow was down 3.1% and finished off the worst week since October 2008, it is now also down 10% from its highs. For the S&P 500 it was a similar day, down 3.2% to close the day below the phycological 2000 points level. The Asian markets this morning are following on from where last week left off, the Shanghai is down over 7%, the Nikkei is down over 4% and the Hang Seng is down 4.5%. These are huge numbers! Normally a 1 - 2 % move on a day for the market is a big day.

How has our market done? It closed Friday down 1.5% to be slightly above the 49 000 mark. Do you remember the huge sell off that occurred last year October? Most people have forgotten about that correction already, I would say most people forgot about that correction by the time that Christmas rolled around. Our market is still around 6% from the lows that were reached in October last year, would you say that we have some breathing room until we reach that a phycological number? Do you think now is a better time to be buying stocks than last year? What level do you think stocks will be next year this time? Many of the companies that you own and will buy going forward will still be growing and in some cases are growing by solid double digit numbers. Why are their share prices going down then? It comes down to the value which investors are willing to pay today, for tomorrows profits. When there are jitters in the market, people are willing to pay a lower multiple on tomorrows profits than they previously were willing to pay. The result is what we call a rerating and a share price drop, even though the company hasn't fundamentally changed and may even still be growing.

So why this huge sell off? Concerns over Chinese growth, which then has a ripple effect onto commodity prices, the companies that mine them and then a knock on effect on consumer numbers. Well that is the 'official' reason anyway. What normally happens is that markets drop, people then look for explanations why they dropped. Given that we now live in a global village, more so now than at any other time in our history, I can understand that China growth slowing will impact other countries and industries. I am not convinced that the sell off that we are seeing is justified though. I have seem many Tweets this morning basically describing the end of the world or saying that this sell off is way overdue. I think we have reached the selling out of fear stage, which is driven by the very powerful emotion of fear. This is the reason that when markets sell off, it happens very quickly but recovers at a slower rate. As the saying goes, "The bulls take the stairs but the bears takes the window".

Where will the market head over the next week or the next month? There is no way of knowing. If anyone knew where the market was going they would borrow as much as they could, plus more and then stick it all in the market and then go sip cocktails on some exotic beach somewhere. Over the next month you will hear of people who claim to have seen the dip coming but don't make any money out of this dip (talk is cheap) and then there will be people who do make money out of this dip but are still playing catch up from the bull market that we have seen over the last 5 years. Very, Very few people make consistent money out of shorting stocks because it is so hard to swim against the current of human innovation.

So what to do about markets being 'expensive' and China's slowing growth? Markets by historic standards are expensive but interest rates and inflation are very low by historical standards, so relatively speaking markets probably aren't expensive. Interest rates will climb going forward but at a slow rate, markets will probably grow slowly and then in 5 - 10 years time they will be closer to 'historical metrics' but at higher prices. The main casualty of China not growing at 10% or 7% are commodity prices. For the vast majority of people on the planet, low commodity prices are a good thing. Cheaper oil means more money in my pocket after a visit to the garage, cheaper iron ore means more infrastructure projects are viable and cheaper coal means cheaper electricity. The end result is that society has more surplus resources to spend on other things, the better that society is doing the better the companies that service society will do. Over the short run there will be volatility and some pain as things find a new equilibrium, which highlights the reason why you need to be a long term investor and avoid being rattled by short term shocks.

Company corner

The Mediclinic Rights issue has finally concluded. You would have seen that the Mediclinic rights had a zero value on your statement on Friday. Not to fear, all it means is that you will be following your rights. The cash has flowed out of your account and the new Mediclinic shares have come in. On your statements this Friday you will see that the transaction has gone through.

EOH put out a Trading Statement this morning. HEPS are expected to be up between 20 - 30%, this company has done really well over the last few years. The stock is down 8.9% which would indicate a miss on market expectations. Part of the drop would be part of the broader market drop, where higher multiple stocks like EOH are being hit the hardest.

Linkfest, lap it up

It is mind blowing what technology can do! Still hard for me to wrap my head around how electricity can be transferred without having a connection - Roads that can charge your electric car as you drive it? They may arrive sooner than you think. The roads probably won't become wide spread due to the cost of redoing roads and given that batteries are getting better by the day.

Some studies have shown that too much information makes us bad investors. Too much information triggers fears that are not worth worrying about, media has a way of focusing on the things that stir the most emotion even if it is an obscure side point - Don't Read this Post. Given our survival bias, when the market goes down we get into irrational territory, fear takes over and we make bad investment choices. Keep your eye on the big picture and dips like these become non-events.

This blog piece from the WSJ sums things up nicely - 5 Things Investors Shouldn't Do Now.

Here is something totally off the subject of markets but is cool anyway - World's 'Oldest' Message in a Bottle Found in Germany

Home again, home again, jiggety-jog. Our market is currently down 2.5% recovering a bit after being down over 3% shortly after the open. The only index in the green at the moment is gold, which is up 1.4%. The Rand last night apparently reached R/$ 14.00 (might have been a really small volume), the graphs that I use show the low/ high as R/$ 13.61. Currently we are sitting at R/$ 13.20, not great for our imports. The one bright side to the weaker Rand is that many of our big companies have operations offshore, so when they bring back those profits they will be inflated. In the short term though, our dual listed stocks have not sold off as badly because their prices are set in the overseas markets. Stay calm and carry on.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Friday 21 August 2015

Bottoms Up

"It would have served me better to sit on the cash for 4 years, earn interest and then when the market halved in value I could have bought it then and I would have tripled my money today instead of just doubling it. That sounds great in theory except that you have no idea when the next crisis will happen. Also how do you know where the low is?"

To market to market to buy a fat pig. Markets are making headlines for the wrong reasons at the moment. At the close of our market yesterday, we are officially down for the year. Our market was not alone though, the S&P 500 closed down 2.11% to also be in the red for the year and the Dow Jones Industrial Average closed at its lowest value for the year. Why is it that we always look at returns in terms of years? Is it a problem that the market (S&P 500) is down for this year but is up 90% over the last 5 years, if you were lucky and bought in March 2009 right when people felt the world was definitely ending, you would be up 200%.

What do you think the 10 year return has been considering the last two numbers given? If you bought an index tracker 10 years ago and then forgot about it you would be up 67% today. What! That works out to a whopping 5.4% return every year (there we go with the annual returns again). Most investors expect to double their money every 5 - 7 years if they put their money in the market. It is clear from the above numbers that when you invested makes a big difference to your long term performance.

Do we then just sit on cash and wait for the next, 'once in a generation' market pull back? No because what we are not including in the previous number is the impact that dividends make. Buying the index 10 years ago would result in you being up 109% today if we include dividends.

I am sure at least one person has had the following thought. Doubling your money in 10 years is not bad but not great. It would have served me better to sit on the cash for 4 years, earn interest and then when the market halved in value I could have bought it then and I would have tripled my money today instead of just doubling it. That sounds great in theory except that you have no idea when the next crisis will happen. Also how do you know where the low is? What will probably happen is that you will sit on the cash well past the bottom, regret that you missed the bottom and then continue to sit on cash for the next decade. Only buying at bottoms is a great investment strategy if we knew where the bottom is and if you were able to pull the trigger at the height of fear. What is the best way to buy at the bottom then? It is by adding regularly to your investments, that way some of your investments will be near or at the bottom. Also you are less concerned by the short term moves of the market, you are thinking long term, 20 - 30 years out where the effects of compounding really start to show. Think long term!

What is the current reason for all the selling in the markets at the moment? It would seem to be growth concerns from emerging markets, lead by China. The latest manufacturing numbers out of China showed the industry shrunk by more than people expected. So people have been concerned about the growth prospects for emerging markets, resulting in them selling assets situated in those regions and taking money out of them. The result is a weakening of EM currencies and a strengthening of the Dollar, in particular. A weak currency means that EM countries are suddenly more competitive globally because their products are now cheaper and imports are more expensive. Which going forward may boost EM growth levels again.

Company corner

We had numbers from Grindrod this morning, Announcement For The Six Months Ended 30 June 2015. Headline Earnings were up 2% but due to there being extra shares in issue the HEPS are down 16%. Revenues were also down 16% though. The lower oil price helped the liquid shipping division but lower commodity prices hurt the port and rail sides of the business.

Truworths released their Preliminary Report On The Audited Group Annual Results For The 52 Weeks Ended 28 June 2015. Comparable sales were up 1.3%, merchandise sales were up 8% and HEPS were up 3%. The market liked what it saw with the stock jumping 10%. Out of the retailers they are most exposed to interest rates going up given that 70% of sales are on credit. Having said that, over the last year their net bad debt to credit sales improved from 8% to 7.9%.

Yesterday we saw the Rand break the R/$ 13.00 level for the first time since 2008 and it is one of the main reasons that the Sasol share price has been fairly stable in the face of a dropping oil price. Brent crude is currently sitting at $46.33 a barrel and seems like it could go further down due to inventory levels being at record highs. If the Rand recovers from these levels it could get very ugly for the Sasol share price over the short run. Here is what the Demand and Supply situation looks like at the moment, courtesy of WSJ:

Linkfest, lap it up

As organisations ascribe more and more value to their employees and as employees want more work and life balance, we are seeing traditional working hours getting shaken up - Uniqlo says it will test out a four-day work week

Deez Nuts highlights the problem with stats in general, people lie! When being polled, people don't want to look stupid or they give you the answer that they think you want to hear. It probably also points to a problem with the current political system, where people vote for a party just because they always do. It doesn't matter what the persons credentials are - The success of Deez Nuts shows why you shouldn't trust US election polls

I wonder if you will get a sensation of flying while floating in the water looking down? I'm sure that there are many people who would not trust swimming in a pool with a glass bottom - A suspended, all-glass "sky pool" is coming to London-and it looks awesome.

A reminder that my reality is not your reality. Depending where you work and where you stay, your view of what the world looks like is very different. In South Africa we have a dual economy so my reality is definitely not the same as someone who works in the mines and lives in the rural areas of the platinum belt - Your view of the economy is coloured by where you live

Home again, home again, jiggety-jog. The downward direction set last week has continued today, the Top 40 is now down over 10% from its highs. The only sector that is absolutely flying at the moment is the Gold miners, up another 5.8% today. They are still down 8% for the year, so they will need another two days like this to break even.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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