To market, to market to buy a fat pig. Back in the seat. Feels familiar and it is always good to sleep in your own bed, home is where the heart is, they say. I have also been in Johannesburg for the better part of 15 years now, by far the longest I have ever been in one place, if not one house. Hey, I went to 6 different primary schools as my parents moved around, one high school I am happy to say. And I cannot say that it ever felt interrupted.
We went to the Eastern Cape, crossed the Kei river on a ferry, a bit of a novelty for us. The roads were rubbish, the people were friendly, the life of the locals was one million miles away from the speed up here. South Africa certainly is a land of many different contrasts. So perhaps on reflection, the president should have said that Johannesburg is not Lilongwe, rather than this is not Malawi. Because some of the rural roads I drove on were not that great.
Being away and the start of a new calendar year is always a time for reflection, on what is good and bad, what remains unfinished and what is to be accomplished. I love my job, we are certainly lucky around here to do what we love. Because as it is said, do what you love and you will never work a day in your life. But back to that reflections part. You always need a scoreboard, you are judged on the performance that starts 1 January and that ends 31 December, otherwise there would be no measurement on your performance. And I do not have a problem with that at all. What I do have a problem with however is the expectations for a new year. I do not know what is going to happen this year. What I do know is that consumers are going to want more of the same. No, scrap that, more things than before and better things than before. That is what people want, their lives to be made easier by technology. And that differs by where you are and what you can afford. Technology and consumerism will continue to be huge themes that roll forward in emerging markets.
The international energy agency (the IEA) say this on their website:
Modern energy services are crucial to human well-being and to a country's economic development; and yet globally over 1.3 billion people are without access to electricity and 2.6 billion people are without clean cooking facilities. More than 95% of these people are either in sub-Saharan African or developing Asia and 84% are in rural areas.
18.5 percent of the population do not have electricity. That is simply mind-blowing. I am willing to bet that there are very few people reading this that have lived without electricity. But yet there are 2 out of every eleven people on the planet who do not know electricity. And all of those people are basically closer to us here in Sub Saharan Africa than anywhere else. Rural electrification (skipping the grid) is going to be a massive investment theme, which according to the IEA will require around 1 trillion Dollars worth of investments by 2030. Watch closely I guess.
The other point that I wanted to make is that when you are away, you are not sucked into thinking that every single economic release and earnings release is a matter of make or break. The jobs number was poor last week Friday, really poor, but life still went on. I could not find anybody who actually knew what it was, let alone what it meant. People make the world go around, and financial markets are most certainly part of that. I think the big difference is that in financial markets, everyone has the same objective (to make more money and be rewarded for their risks), but almost everyone has a completely different method and time frame. And as such it is like an egg and spoon race where people compete over a marathon type distance is many different methods. With the same outcome expected, to finish and not to drop the egg. Ever. You can of course start over, but in investing that is the worst possible outcome. Some people want to finish the race in two years, for others it is decades and in truth you never really finish. It is one of the few races that I suspect that if you do it right, you look far healthier as the time goes on.
I have been chatting to a lot of people about investments over the years, often people want to distance themselves from their hard earned money and retirement savings, our approach has always been to try and keep our clients on the straight and narrow. That does not change from one calendar year to another, and neither do consumer habits. Sure, some people want to be healthier and as such eat differently from 1 January (OK, the 2nd) until the middle of February, and then buy the clothes for their newly found passion. So those are consumer changes. But the peanut butter you buy on the 31st of December and 1st of January, that is the same. Tastes the same. That is the simple point I am trying to make is that much of companies performances depend on the consumers around them, and that does not really change from year to year. Also, if you keep making adjustments all the time, to suit from year to year, that sounds like chasing your own tail. That said, the energy you can feel from the beginning of the year should be bottled, for use slowly over the next few months.
Home again, home again, jiggety-jog. Markets are lower this morning, after a spectacular day yesterday. The jobs report anxiety, a day late. There will always be anxiety. There will always be people waiting for a pullback. And when it comes (it always does) they will say that they told you so. That could be 30 percent on from when they told you they were waiting for a pullback. But hey, like I said, there are lots of different ways to win the egg and spoon race.
Sasha Naryshkine
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