Money with a dash of Funny: The Brain Drain

To market to market to buy a fat pig. The most exciting news yesterday was the solar eclipse that crossed over the US. One of the worries was how would the power grid hold up because of the increasing reliance on solar produced power. All went well (US power grid passes a test as eclipse reduces solar generation). Europe passed their 'solar eclipse' test back in 2015, which was probably more significant given that Germany, Italy, UK and France are the third, fifth, sixth and eighth biggest solar producers respectively.

Have you heard the story of how Christopher Columbus used the March 1504 lunar eclipse to get provisions for his men? My history teacher always told me that in the 16th-century people thought the earth was flat but if they were predicting a lunar eclipse, the flat-earth theory sounds misinformed to me.

"On 30 June 1503, Christopher Columbus beached his two last caravels and was stranded in Jamaica. The indigenous people of the island welcomed Columbus and his crew and fed them, but after six months, the natives halted the food supply. Columbus had on board an almanac authored by Abraham Zacuto of astronomical tables covering the years 1475–1506.Upon consulting the book, he noticed the date and the time of an upcoming lunar eclipse. He was able to use this information to his advantage. He requested a meeting for that day with the Cacique, the leader, and told him that his god was angry with the local people's treatment of Columbus and his men. Columbus said his god would provide a clear sign of his displeasure by making the rising full Moon appear "inflamed with wrath".

The lunar eclipse and the red Moon appeared on schedule, and the indigenous people were impressed and frightened. The son of Columbus, Ferdinand, wrote that the people:

"with great howling and lamentation they came running from every direction to the ships, laden with provisions, praying the Admiral to intercede by all means with God on their behalf; that he might not visit his wrath upon them .... "

Columbus went into his cabin to "pray" and timed the eclipse with his hourglass, and shortly before the totality ended after 48 minutes, he told the frightened indigenous people that they were going to be forgiven. When the Moon started to reappear from the shadow of the Earth, he told them that his god had pardoned them."

Markets globally, were mostly flat yesterday. The Dow was up 0.13%, the S&P 500 was up 0.12% and the Nasdaq was down 0.05%. Locally our All Share was up 0.26%, on a day where the market just bobbed along in positive territory. The main focus for this week seems to be on Friday where the annual economic policy meeting starts at Jackson Hole. Markets are eager to hear speeches from Mario Draghi and Janet Yellen to see if they give any hints about raising interest rates and scaling back their respective central bank balance sheets.

Company corner

Byron's Beats

Yesterday we received results from AdvTech, a stock we have recently recommended. There was a trading update a few weeks back which meant there were no real surprises in the numbers. The image below breaks down the revenue and profit splits for the 6 months ending 30 June 2017.

As you can see, the school's division was a bit of a laggard compared to the other 2 divisions. In the commentary section, they mentioned that people immigrating had a negative impact on the numbers. When families immigrate they pull their kids out of school during grades which are not easily replaceable. This caught a lot of media attention and reflects the negative political and economic situation we currently find ourselves in. Many parent's abilities to afford private schooling has also depleted somewhat.

Having said that, Roy Douglas the CEO, said applications at the entry levels were doing well. The demand is there for new entrants, however replacing kids who leave mid studies is tough.

The shining light was the tertiary division which continues to thrive. A few deals, especially in the culinary and hotel management sector has excited the team. Tourism has thrived amongst a struggling economy. Jobs in the sector are high in demand and are far better quality than mining or construction for example.

The resourcing division also surprised to the upside. Demand for the kind of graduates the tertiary division churns out is still strong. They are growing this business throughout the continent.

We still see plenty opportunities for this company. Although the economic conditions are not ideal, this is the kind of business that will thrive regardless. Especially if they adopt technological advances such as remote learning, which they are very excited about. We are pleased with the results and remain buy rated.

Linkfest, lap it up

One thing, from Paul

In my view, one shouldn't use the words "car" and "investment" in the same sentence. But I have heard plenty of stories over the years about people who have profitably bought and sold collectible motor vehicles, and this story caught my eye - 1956 Aston Martin DBR1 sells for record-setting $22.5M. Mind you, like fishing stories, you only hear about the trades that work. What about all the times that people lost money on some misguided motor car misadventure?

Michael's Musings

Sticking with the eclipse theme of today someone has gone back and checked how the stock market has performed in years where a solar eclipse has occurred in the US - Here's how stocks perform after a solar eclipse. Given that markets are green more years than not, it is not surprising to see the results.

Google has found another way to make the world just that little bit smaller - Google Earth created an eye-opening way to 'step inside' some of the world's most remarkable homes.

Bright's Banter

Elon Musk has joined Google's Mustafa Suleyman and 116 experts from 26 countries in signing a letter urging the United Nations to halt the lethal Artificial Intelligence arm race currently underway. I can understand why. You don't want fully autonomous weapons within reach of some world leaders - Elon Musk Calls For Global Ban On Killer Robots

Here's an interesting short piece on "anti-goals". Apparently identifying what you like least about your job, and deliberately avoiding those tasks can help you develop strategies for eliminating them from your life according to Andrew Wilkinson, a tech entrepreneur. Charlie Munger once said that "a lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc." Another quote comes from Warren Buffett "Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them" - The Power Of Anti-Goals

Seth Klarman, one of the most successful and influential investors you have probably never heard of. Some refer to him as the quiet giant of investing. Here's what Seth had to say in his most recent letter to investors and the message is strong! - Margin Of Safety - Trading Sardines vs Eating Sardines

Home again, home again, jiggety-jog. Asian markets are in the green this morning, along with our market. A good looking set of numbers out of Shoprite, currently trading up over 2%.

Sent to you by Team Vestact.

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