Money with a dash of Funny: March 2016

Thursday 31 March 2016

Lulu Sweet Lemon

"Sportswear apparel maker, Lululemon had a cracking session, the yoga pants manufacturer reported some really good numbers with prospects out in China looking pretty good."

To market to market to buy a fat pig Up, up and away for equity markets yesterday in the city founded on gold. Stocks as a collective closed up just over one and one-third of a percent, the all share index is around 52 and a half thousand points. The last 12 months has delivered exactly nothing to equity investors, of course if you had been buying in-between and getting the benefits of Rand cost averaging, well then you would have caught some better moments to buy. Compounding interest with regular deposits makes Jack a rich boy. Jack just needs to be desperately patient. Even in the economies that you would think that equity markets would struggle, stocks still do just OK. Constraints placed on companies force them to become even more innovative and to find better ways around regulatory hurdles, rather than focusing on innovations.

A headline that caught my eye yesterday was one suggesting that Argentina are going to return to debt markets after a 15 year struggle and hold out, an effective default. Yet over that time, with the socialist government eventually being removed and booted for a more market friendly one, the equities market actually went up. Byron recounts a trip to Argentina where cash literally was king, and by cash I mean greenbacks, real Benjamins, the Dollar. This may well be the biggest issuance by an "emerging market" for the last 20 years. The new market friendly president Mauricio Macri is shaking things up, I suspect that it may well be their time in the sun again. Hopefully there isn't a lurch to the leftist policies again that take the country back to the economic brink.

The point is simple, even though Argentina had defaulted, and by extension their credit rating wasn't just non-investment grade, it was rubbish (piling up on the streets), the stock market went up 6 fold in the last decade. In fairness, much of the moving was recent and expectations that market friendly individuals would restore confidence and openness (and drop controls) meant that equity investors would take a better view of how it all works there. I never actually realised how big the country is, it is the 8th largest by land mass in the world. A smaller population than us, around 43 million folks, an economy bigger than ours, around the same size as Belgium, and one superstar in Lionel Messi. It is difficult to believe that fellow is only 28.

Quickly, let us zoom in on the local equity market performance. It was pretty much a broad based rally, stocks were up across the board, the weaker Dollar = a stronger Rand, and that helped ease inflationary pressures for now, meaning that the local financials and banks enjoyed a decent enough day. Equally helping was the news that emerging market equity flows had been at their highest in 21 months. Yes, thanks for that people, the confidence has returned.

As such, forget the fact that the constitutional court is about to deliver news today that may or may not be very important for the country, about the president, the currency finds itself at 14.95 to the US Dollar. Admittedly, the day before Nhlanhla Nene was ~~redeployed to the New BRICS Development Bank~~ dismissed from his post, the Rand was at 14.60 to the US Dollar. As a matter of interest, the Brazilian Real has firmed by 4 percent to the Dollar since #Nenegate. So the different between where we are now, relative to some of our peers, can be attributed directly to nonsensical political motivations. Since the 11th of December, the Rand has done better against the US Dollar than the Russian Rouble, possibly as a result of their woes, having to deal with a weaker oil price.

In the losers column on the local front, Rand Hedge stocks such as SABMiller and AB InBev, as well as British American Tobacco, Steinhoff and Mediclinic were all in the red, their Rand share prices lower as a result of a stronger currency. The double edged sword. In the winners column Anglo American was at the top, along with some of the banks and insurance companies. SA inc. exposure will benefit from the emerging market inflows no doubt, one bigger benefactor there is almost always Naspers, it has a high weighting in those indices. And by those indices, I mean the South Africa only stocks, which often ignores the external listings. More recently the weighting and importance of the likes of Steinhoff and Mediclinic (with their offshore listings) would have diminished.

Over the seas and far away in New York, New York, stocks enjoyed another session of gains, they did as a collective close a little lower than the session highs. A good ADP employment read lent credence to the idea that the US economy continues to show signs of strength in the labour market. Yet America still needs to be made great again. Great again relative to what I ask? What was pretty encouraging was that there was some pretty sizeable job growth in construction, you won't build anything unless you had a positive view on the economy in the coming years, that is always a given.

Session end the Dow Jones, the S&P 500 and the nerds of NASDAQ all showed almost equal percentage gains, a rarity nowadays. Stock indices added nearly half a percent across the board. Apple was again the benefactor of continued optimism around their new product cycle, the stock is nearly back at 110 Dollars a share. The last 12 months have delivered a return of minus eleven percent, Mr. Market will never have the consensus in the short term that long term holders look for. If you want steady gains, go and plant flowers and water them every day, tend to them, ward off pests and make sure they get just the right amount of sunlight. Equity returns are always going to be harder. Energy stocks were also the benefactors of higher oil prices, hovering around the 40 Dollar a barrel mark for the time being.

Sportswear apparel maker, Lululemon had a cracking session, the yoga pants manufacturer reported some really good numbers with prospects out in China looking pretty good. Is yoga just as much an art form as it is designed to put you in touch with both yourself spiritually, as well as making you darn flexible? There are suggestions that the exercise form could be 5000 years old. Which is pretty old by most standards, bearing in mind that mainstream sports such as football do not have the same amount of history. Having said that though, FIFA (according to Wiki) recognises a Chinese version called Cuju as being the oldest form of football. Or soccer, if you will, for you Americans. Cuju is around 1500 years old.

Lululemon has great brand appeal, the company needs to deliver on earnings as their share price is highly rated by the market. The company has a market capitalisation of around 10 billion Dollars, it is really sizeable, although full year sales for 2015 was 2.1 billion Dollars, around 6-7 percent of the annual sales of Nike. I guess that you can still argue that is big. Revenues are on track to be around the same growth rates as Nike, which is why the company enjoys a similar market rating to Nike, a marginal premium. There is the pesky issue of the founder being a large shareholder, he is as an ex employee and CEO a bit of a handbrake. Otherwise, the company seems to be in the sweet spot, you cannot own everything however.

Linkfest, lap it up

Today is the big launch of the Tesla Model 3!. Is this bigger than when Steve Jobs launched the first iPhone? Tesla Model 3 Electric Car Seen Getting 225 Miles Per Charge. Here Bloomberg does an in depth preview.

With education and wealth comes a slow down in population growth. Japan is not the only country worried its population will go extinct. If you are concerned about overpopulation, education and wealth creation is key.

Apple for the Next 40 Years. This analyst certainly seems very bullish.

Home again, home again, jiggety-jog. Most of Asia is down slightly, we have followed in those foot steps. Commodities are taking a beating. Now that is a choppy ride.

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Tuesday 29 March 2016

Boring wins

"The spoils are not enjoyed and divided amongst shareholders in year one or even five of ownership. Ownership of equity requires powers of concentration akin to those of the cricketing kind of Amla and Kallis. It requires the cool head of the same kind that Roger Federer possesses. Whilst we may never have the cover drive or forehand of the aforementioned folks, we do have time on our side, and time can be the most important arrow in your quiver of investments."

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To market to market to buy a fat pig Thursday was so long ago. I can't think of any other four day weekends, unless Christmas and the day after fall on working days. In the US, stocks are open on the Monday, a friend of mine who lives in Mozambique was back at work yesterday and a large part of the world does not observe the christian holidays, so there were markets open. We had stories of the Nigerian parliament urging the full extent of the fine to be levied against MTN. The stock subsequently fell over ten percent and hardly recovered on the day, even as the company put out a press release: MTN notes reports out of Nigeria.

The statement says: "MTN has previously advised shareholders not to make decisions based on press reports and MTN again urges its shareholders to refrain from doing so." Well, then the statement continues: "MTN continues to engage with Nigerian authorities in an attempt to ensure an amicable resolution to this matter in the interests of MTN Nigeria, its stakeholders and the Nigerian authorities. To this end, we shall await clarity and further guidance on the fine from the Federal Government of Nigeria." So I guess the market reacts in the same old fashion, sell first and then ask questions later.

After all was said and done, stocks in Jozi, Jozi sank around half a percent by the close of business Thursday. Pre Easter eggs and pre hot cross buns. Post all of the festivities, the markets in New York, New York were mixed last evening, the Dow Jones closed a little in the green, the S&P just managed to squeak into positive territory, whilst the nerds of NASDAQ closed up shop down 0.14 percent. Today, the expectations are for markets globally to trade a little better. The recovery from early Feb still continues.

I was struggling to find a book to read, something that I would really enjoy, and then I remembered a book that Charlie Munger had recommended. And his old pal Warren Buffett too, who is quoted as saying something along the lines of "This is that rarity, a useful book". It is a book by Oaktree Capital Management founder Howard Marks. Not so much a book, rather than a collection of notes that he has published over time, it is called "The Most Important Thing: Uncommon Sense for the Thoughtful Investor". The firm, 21 years old, manages around 100 billion Dollars in client assets.

The most important thing (and I am by no means finished) is that if you are beating the market, then you are better than the pack. In other words, less than half the people out there beat the market, in single currency terms. For every dollar that beats the market, a dollar does not. Bright, our newest and keenest (and youngest employee) recommends this fellow highly, he has been watching him for a while. On a note of Bright, he completed his first Ultra, The Two Oceans Marathon over the weekend. Well done. Paul did a smashing time, just over four and a half hours, astonishing, well done.

I recommend these readings highly, it is common sense. Whilst Marks suggests that number crunching is important, over a longer dated period (i.e. trying to find a great investment today in the years to come) these numbers become less useful. It is insight into what you think is likely to happen that I think counts. I recall reading that the Dow Jones publications used to have a thirty year hence segment at the end of every year, some of the predictions came true, some of them were outrageous and outlandishly wrong.

I suspect that the right way to go about investing and making sure you understand that you have ownership over a business through a stockholding is to quantify what you are trying to achieve. In the end, it is pretty simple, you are trying to achieve consistent returns over time that are superior to the market, at the most acceptable risk you can take on. You can't own everything, you will equally own companies that will disappoint you, the stock price that is. Recency (and ownership) bias, pattern recognition, market gains (all boats being floated) are investors fools gold, you pat yourself on the back when things are going well. Equally, when stock prices fall, investors think that something is "wrong" with the company they own. Nobody likes seeing red in the P&L (Profit and Loss) column. You should however view your equities as you would ownership of a house, or a personal business. A long term commitment.

The reason why we write to clients day in and day out is not to try and deliver the secret apple sauce, we don't have it. The reason is to drum home the basics of equity investing, to be a partner in what is essentially a marriage of sorts. To be a voice, to be someone who guides, to be a shock absorber when the going is tough. The spoils are not enjoyed and divided amongst shareholders in year one or even five of ownership. Ownership of equity requires powers of concentration akin to those of the cricketing kind of Amla and Kallis. It requires the cool head of the same kind that Roger Federer possesses. Whilst we may never have the cover drive or forehand of the aforementioned folks, we do have time on our side, and time can be the most important arrow in your quiver of investments.

Company corner

Apple has been in the news engaged in a battle with the US authorities lately, seemingly someone has cracked the password of a phone that the FBI is trying to get info from. It is a very tricky and sensitive subject, on the one hand, there is the subject of national security, on the other hand there is a fear of big brother. i.e. Personal security. The FBI has "won" this round, perhaps even Apple users will feel OK with the fact that the FBI can crack it, it did take a long time. Here is an organisation with all the resources in the world, and it took that long to do. I guess that all ends pretty well for both sides. This piece is not about that however, this is actually about an article that I read from Horace Dediu, an American Romanian who lives in Helsinki. He has a blog called Asymco, a weird looking place really.

His recent post is titled, The Next 40, and it is about Apple as a PC maker. Apple have shipped more computers than almost any other manufacturer. You don't think of the company as a PC maker now, do you? The Mac and Macbook have actually been gaining market share, in a falling PC market. The paragraph that caught my eye was the one in which Horace tries to explain what Apple is, and that dovetails nicely into the thesis above.

"My simple proposal is to think of Apple (and actually any company) as a customer creator. It creates and maintains customers. The more it creates, the more it prospers. The more customers it preserves the more it's likely to persevere. This measure of performance for a company is not easy to obtain. It's not a line item in any financial report."

I suspect that if you look deeper into the services segment of Apple, you will see that it is a fast growing business. And the more people inside of the Apple ecosystem, the more people that will require extra services, apps and music/movies and so on, the more profitable the business will be. I just find it very interesting that Apple have sold more computers than any other computer manufacturer. Ever. We continue to accumulate what is a very attractive business. I suspect that a Virtual Reality product will come soon from the company, and I suspect it will be huge.

Linkfest, lap it up

One of the biggest cost components of Uber is the drivers salaries. When we get to a point of driverless cars, it will no longer make sense to own a car - This might be the only time it's cheaper to use Uber instead of owning your own car. The other advantage of using a driverless car will be that all the cars will be linked to a central traffic system with the result being that cars will take routes that result in the least amount of traffic jams on the roads.

We will probably start seeing this more and more from the mobile operators, were they to embrace making calls over the internet but levy a small charge for the convenience of not having to use an app like Skype or WhatsApp - AT&T launches international Wi-Fi Calling

Here is part of the cost of stabilising the Chinese stock market. For these brokerage firms it is important to have a stable market to keep customers confident enough to keep their money in stocks - China's biggest broker spent more on bailing out the stock market than it earned in 2015.

The headline is "no pressure", in a huge week for Tesla and Elon Musk: Model 3 launches this week, the world will know if Elon Musk called the electric-car future correctly.

Home again, home again, jiggety-jog. Another short week here for equity markets, the Rand is a little weaker, perhaps more Dollar strength on the basis that the Fed may actually raise rates in April. Who knows! I certainly don't.

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Yellen sparks rally

"When the most powerful woman in the world (Janet Yellen, in case you forgot) says that she thinks it is best to be cautious right now, given that the global outlook is uncertain, best we all listen. As Paul said in a tweet, that means rates are never going up, if everything is likely to always be uncertain. Speaking at the riveting location of the Economic Club of New York yesterday, the Fed chair didn't give any timing of the rates cycle movement, it was interpreted as on hold for now."

The new blunders video (if you missed it) is out: Blunders - Episode 7. To never miss an episode, subscribe to the Blunder Alert!, and get the mail delivered to your inbox. The new ones are delivered to your inbox Friday.

To market to market to buy a fat pig Caution, caution, chevron left and fly, fly, fly. I can imagine being a co-driver is painful for most of us, we like control as human beings. Strapped into the passenger seat in a modified sedan screaming down narrow dirt roads and studying our pace-notes (co-driver shorthand), whilst being in complete faith with the driver must be another interesting experience in itself. Trust takes many years to create and in some instances, minutes or days to erode. Or shorter. Control is something we crave. We are afraid of activities in which machinery is involved that we have zero control over, even though statistically speaking we may well be safer with innovation. Remember a time when people were scared of electronic banking. I guess people still write checks. Or cheques if you prefer.

When the most powerful woman in the world (Janet Yellen, in case you forgot) says that she thinks it is best to be cautious right now, given that the global outlook is uncertain, best we all listen. As Paul said in a tweet, that means rates are never going up, if everything is likely to always be uncertain. Speaking at the riveting location of the Economic Club of New York yesterday, the Fed chair didn't give any timing of the rates cycle movement, it was interpreted as on hold for now. You can read the speech here: The Outlook, Uncertainty, and Monetary Policy. There is some fellow who wrote in and said that it irked him when I wrote Jozi, Jozi. I am guessing that the sub header will drive him nuts: At the Economic Club of New York, New York, New York.

Jozi, Jozi comes from paraphrasing old blue eyes, Frank Sinatra in New York, New York. Start spreading the news and so on. I guess it is important to always know context. Stocks over on Wall Street were the blue eyed boy. The speech was interpreted as heavily dovish, and as such markets rallied like nobody's business. Not everything, financials and banks, which are reliant on ratcheting rates for higher interest income, didn't appreciate the news. Wells Fargo and JP Morgan Chase were amongst the losers on the day.

Most of the rest was comfortably in the green, stocks rallied hard, the blue chip Dow Jones Industrial average rallied just over half a percent, the broader market S&P 500 added 0.88 percent, whilst the nerds of NASDAQ added just over one and two-thirds of a percent. Apple, Microsoft and Alphabet (Google) were all comfortable winners on the day. Year to date the tech laden NASDAQ is still in the red. And with the quarter nearly out (today and tomorrow are the last two days), tech stocks are unlikely to have a positive quarter. Unless you are expecting a 3 percent plus gain in a couple of trading sessions, something similar to the session prior.

Over in Jozi, Jozi, local wasn't always lekker and we didn't have the benefit of a Yellen inspired rally. Of course by the time we closed up shop here, the Economist Club of New York (don't snore) shindig and main speaking attraction hadn't started yet. Stocks locally sank over a percent, the resource and in particular platinum stocks took some heat. South32, Glencore, Anglo and Amplats were amongst the losers in the big caps, Brait, Redefine and Mediclinic were at the other end of the spectrum. There is not too much on the companies front, as far as news is concerned.

I saw that Spar are raising 2 billion Rand via an accelerated bookbuild. The proceeds of the cash are being used to deleverage and used to fund the recently announced Spar Switzerland 60 percent purchase. Two billion Rand is not chump change, it is 6 percent of the current market capitalisation. Over the last 5 years the stock has doubled, some decent acquisitions abroad against the backdrop of an iffy local environment. The announcement this morning no doubt will confirm that South African institutional management will continue to invest in this business. The biggest shareholder for interest sake is the Government Employees pension fund, owning around 18 percent of the listed shares, I am guessing that they may have participated, we will see.

Linkfest, lap it up

When we hear people quote global stats we normally miss what the numbers represent. Breaking the numbers down to a level if there were only 100 people on the planet brings a free perspective - If the world were 100 people. Where do you fall in these 100 people?

I am not a smoker but I would imagine that being able to smoke a real cigarette beats that of vaping. A new form of e-cigarette uses real tobacco but doesn't get hot enough for the tobacco to combust, thus creating no smoke - Smoke without fire: Japan becomes test ground for real tobacco e-cigarette. We will have to see if there are any regulations placed on the new device.

It is amazing the lengths that people go to to master their trade. Who would have thought swimming 6 miles a day would be required to be a master engraver - Inside the studio of the "micro-engraver" who works between heartbeats to keep his hand steady.

It almost seems too futuristic this article - Top Robots for Farmers for 2016. Again, revolutions in farming techniques continue to push yields higher and higher, proving the Malthusian catastrophe theory wrong over and over again.

This ex Apple employee, from the early days when the stock price was way low (I hope she kept her stock) has some good life lessons in business for all of us - Three Lessons On Innovation I Learned During My 12 Years At Apple. Broken down, Consensus is not your friend, Don't run back and forth seeking interim feedback and lastly Be wary of received wisdom.

Good question from our pal over at a Wealth of Common Sense - Are European Stocks Cheap or is the U.S. Expensive? I think that the conclusion should be that they are both appropriately priced for the relative risks.

Home again, home again, jiggety-jog. Brazilian president Dilma Rousseff is likely to be impeached in May, succeeded by an older fellow, the current vice president. See the Bloomberg article: Rousseff's Likely Successor Has Legal Problems of His Own. He may well be more market friendly than her, which may well be exactly what the country needs. Although policies entrenched are not easily unwound, getting people to adjust to new ways is hard. In so much that earlier we discussed that people are control freaks, they are also set in their ways. Markets globally are rallying. Quit moaning, this is the Yellen!

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Thursday 24 March 2016

Eat meat

"The weaker currency and the drought are starting to feed through to Joe Consumer. Petrol prices, bread and cereal prices, oils and fats, fruit, as well as vegetables (up nearly 22 percent year on year) are all way more expensive in this environment. Food forms 14.2 percent of the inflation basket, transport forms 16.32 percent of the basket, the biggest input is housing and utilities at 24.52 percent. All of those segments collectively are comfortably outside of the band the central bank thinks is acceptable (3-6 percent)."

The new blunders video is up, you must watch it sports lovers: Blunders - Episode 7. It includes Donald Trump, a sports management business in East London with no events and big budgets, as well as Salmon ingesting bad stuff. In order to subscribe to the Blunder Alert!, follow the link to get the mail delivered to your inbox.

To market to market to buy a fat pig It was not a good day yesterday for equity markets, it has been a great recovery since early February. Over the last month the S&P 500 is up 6 percent, the Jozi all share is better by 4500 points, the high single digit gains. In fact, Bloomberg stuck up a chart of markets around the world back in a bull market. What kind of technical nonsense is that, measuring where you are from the highs and lows and then labelling it? One of the mostl widely owned trackers of markets globally is the code SPY in the US, there is nearly 180 billion Dollars in that one alone, which I guess is not THAT much, it is a lot. According to Wikipedia, index funds have only really been around for four decades, let us just say that investors are still working this out.

I think that Buffett's will leaving his surviving spouse 90 percent of his assets to be in an index tracker tells you a lot. It tells you that for folks who are not really interested in stocks, the better option over retirement savings is definitely an investment of this sort. If you have a friend, or family member that isn't in the interest of owning a spread bunch of equities in a stock portfolio, then low cost index tracking is definitely the way forward. Rather than complicated products. Of course I could argue that the meatier end of the market is owning single stocks. Legendary investor Peter Lynch always pointed out that you only really needed one ten bagger to guarantee outperformance.

Perhaps the index tracking fund space has become too crowded. I remember back when people still used to read newspapers (OK, they still do), I used to tell them to go and have a look at the Unit Trust segment, which took up many more lines than the actual listed equities. Why would there be tons and tons of mutual funds over listed equities, surely that is too many. Or are they money making machines for the institutions that collect savings month in and month out. According to the Investment Company Institue, as per their website: "As of December 2014, the total number of index-based and actively managed exchange-traded funds (ETFs), including commodity ETFs, domiciled in the United States stood at 1,411. Total net assets of these ETFs were $1.974 trillion and accounted for 13 percent of total net assets managed by long-term mutual funds, ETFs, closed-end funds, and unit investment trusts at the end of 2014."

Bear in mind that the number of listed companies in the US has actually been shrinking in this time too. In 2014 however, there was 33.4 trillion Dollars invested in mutual funds and ETFs. More than half of which was in the US, topping 18 trillion Dollars for the first time. By the end of 2014 (all the data that I could find, sorry), there was 15.8 trillion Dollars in mutual funds, 101 billion Dollars in unit trusts, 1.974 trillion Dollars in ETFs and 289 billion Dollars in closed end funds (the original), represented in a total of 16660 investment vehicles.

Unit trust numbers have halved over 20 years, there used to be nearly 12 thousand of those in the mid nineties, a total of 18 and a half thousand options rose (and possibly peaked) in 2000, at 19 thousand. ETFs have been the recent benefactors. There were (according to that data, follow link above) only 19 ETFs in 1997 in the US, there are now as you can see, nearly 1500. It makes life both easier and harder for retail investors. In the same way that there is an app for that, there is no doubt an ETF for that too.

In August last year, where we had another massive sell when stocks were sold off heavily, part of it was as a result of a lack of liquidity and a rush for the exits. It was Carl Icahn who said to Larry Fink that he thought the ETF community would spark a big sell off at some stage, blaming the ETF industry for the volatility mostly in the bond market, to be fair. Anyhow, it takes many to make a market, one bunch of investors rushing for the door are another set of investors opportunities. The rise of the ETF market is good, it attracts more entrants. With more entrants, there are more opportunities, more crowded trades. It is what it is, you can't stop the momentum. What I think is quite telling is the fact that a rise and fall of different investment options could come and go again, the underlying, being the equities that one holds, remains the same. Which is why we prefer the direct method.

Stocks locally sank over one and a half percent, mostly some selling amongst the resource stocks, and in particular the single precious metal producers. Gold and platinum stocks were hit hard, it has still been an incredible rally for those as a collective since the beginning of the year. The biggest concern in the local market however was no doubt the inflation read, which breached the upper end of the Reserve Bank's expectations and possibly puts in place more scope for raising rates sooner rather than later. Bear in mind that at the last meeting there were split views on raising rates, in the end the South African Monetary Policy Committee raised rates by 25 basis points.

Herewith the CPI data for February from StatsSA -> Consumer Price Index - February 2016. The weaker currency and the drought are starting to feed through to Joe Consumer. Petrol prices, bread and cereal prices, oils and fats, fruit, as well as vegetables (up nearly 22 percent year on year) are all way more expensive in this environment. Food forms 14.2 percent of the inflation basket, transport forms 16.32 percent of the basket, the biggest input is housing and utilities at 24.52 percent. All of those segments collectively are comfortably outside of the band the central bank thinks is acceptable (3-6 percent). Herewith a comment below that I stuck out on Twitter, seeing as meat inflation is low:

The upshot of it all meant that banks, financials, and retailers are likely to come under more pressure as Mr and Mrs. (and Ms and Master) consumer comes under pressure in the current higher rates environment. I suspect that the SARB is mindful that demand is low and weak. So perhaps a pause, and a wait and see would be advisable. Who wants to be a a central banker with tons of armchair critics and almost always a case of you are damned if you do, damned if you don't scenario. In the US, things are looking so much better that another rate hike may come sooner. Ah, how things can shift so very quickly.

Linkfest, lap it up

Josh Brown gives a quick look at how markets have responded in the past to crisis events. It would seem that markets were less rattled by the bombs in Brussels than previous terrorist events - The Market's Response to Crisis

The next big battle ground in business will take place in the cloud. As we shift toward a more digital world and as the Internet of Things (IOT) grows, the need to store data on the cloud becomes ever increasing - Google's cloud business nabs Home Depot as client.

Here is a look at the unbelievable growth that Facebook has had, even since listing their top line numbers have more than tripled - Facebook

Home again, home again, jiggety-jog. Stocks are off globally, there is of course the small matter of a four day weekend here. What? Again? Hong Kong stocks are down over a percent and one quarter, in Shanghai stocks are down half a percent, Japanese stocks are off two-thirds of a percent. Here, we should unfortunately expect another day of selling.

Sent to you by Sasha and Michael on behalf of team Vestact.

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Wednesday 23 March 2016

Nike spirits in China

"Andy Compion, the chap in charge of the Nike brand (the president) had this to say: 'I was just in China three weeks ago, and I can sum up my visit in one word, amazing. Our brand and business in China have never been stronger. And we continue to build momentum. That's not by accident.'"

To market to market to buy a fat pig Oh no. I guess we are living in a world one quarter of a century after the cold war has ended with a new conflict, one that holds no borders and targets citizens. The rise of fundamentalists is a worldwide phenomenon, I often think that the internet does more to demystify ourselves from one another, it seems technology has trodden on old ways and old norms, that is my opinion. Hence the pushback from militant groups, who have their own agendas.

It is real, it claims real lives on both sides, most of the time those who are not involved in active conflict. They just happen to be born at the wrong place at the wrong time. Imagine being born in present day Syria, you lost the ovarian lottery right there, to put a spin on the Buffett phrase. It can't be said that life won't improve, I am pretty sure that at the depths of the atrocities of the Second World War there is no way you would imagine Europe as it is today, one passport, one trading block, more people trying to get in, not out. There are tons of countries that provide direct military assistance and military aid, as well as intelligence in multiple hot spot countries. The optimist in me suggests that evil shall be overcome, there is too much good in the world. For the time being, these acts are a reminder that the world has changed, not necessarily for the good.

See the coverage from the New York Times -> Strikes Claimed by ISIS Shut Brussels and Shake European Security. And then the FT -> Brussels attacks: Police launch manhunt for suspected bomber. As well as the WSJ -> ISIS Claims Responsibility for Brussels Attacks; More Than 30 Dead. I am afraid that some of those are behind a paywall, they are some of the stuff that I read each and every day. I certainly believe that quality is always worth paying for.

The reaction from equity markets was not as severe as one would expect, unfortunately we have all been a little desensitised to acts of this nature. By the end of the UK session, that market was in the green. As hard as I try to always see the other side of the story, the methodology and modus operandi of the Daesh is not one I remotely subscribe to. I think that it is important to remember that this is a small minority of people globally, a tiny portion of the overall population. Education and conversation changes us all for the better, encourage learning and teach where you can. Education is the true leveller. Many times there is "stuff" that you can't wrap your head around, the senseless deaths of ordinary people globally at the hands of other peoples agenda is one of those things. Be it in North Korea, or be it at the hands of fundamentalists.

Back home, where local is lekker, it wasn't the case for the scoreboard over at Jozi All Share central, the index was down 0.8 percent on the day. i.e. Not lekker. We were however comfortably off the worst levels of the day, it was a mixed bag. Amplats and Nedbank were at the top of the winners board, Richemont and BHP Billiton at the bottom of the leaderboard, perhaps missing the cut! There were some majors making new 12 month highs, that included Vodacom. The stock is up nearly 20 percent over the last year, and has crushed their peer in the listed space, MTN. We haven't covered ourselves in glory in that one, we continue to hold the stock however, the shift to data is still afoot, and MTN customers continue to work off a lower base.

Over the seas and far away in New York, New York, stocks were mixed by the close. They were comfortably off the worst levels, the S&P 500 closed down less than one-tenth of a percent, the Dow Jones Industrial Average was down just shy of one-quarter of a percent, whilst the nerds of NASDAQ were buoyed by continued buying of Apple stock (up 0.76 percent), that tech heavy index closing out up 0.27 percent. Reminder, the NASDAQ is still down 3.7 percent for the year. Noticeable losers were amongst the travel and travel services companies, TripAdvisor, Expedia and Priceline fell, over in Europe the airline stocks took some heat. Lufthansa, Air France-KLM, as well as EasyJet sold off heavily. Ryanair and Air Berlin also took some pain. As expected I guess, if people are spooked to travel (which is ultimately what the perpetrators want), the impact is noticeable. Of those, the only one that we own at the fringes is Priceline.

Company corner

Nike did it last night. Nike have been doing it since January 1964. That is over 50 years of doing it. The name change from Blue Ribbon Sports to the name we know today took place in 1971. Bill Bowerman (co-founder) was Phil Knight's coach. Phil Knight had a personal best of 4 minutes and ten seconds for a mile, that is no mean feat! Bowerman was a spectacular coach, and according to Wikipedia, trained 31 Olympic athletes. As well as 16 folks that managed to go under 4 minutes for the mile, the holy grail of middle distance. As Wiki points out, if you do the math, under 4 minutes for a mile means that you are moving at 24.14 km per hour, or 14.91 seconds per 100 metres. The current record for that distance, the mile, belongs to legendary athlete Hicham El Guerrouj of Morocco, who ran 3.43.13 for that distance in 1999.

We digress, it was supposed to be third quarter numbers for the 2016 financial year -> Q3 2016. Revenues were light, up 8 percent to 8 billion Dollars (expectations were 8.2 billion), excluding the stronger greenback, revenues were 14 percent higher. Diluted EPS clocked 55 cents, up 22 percent and a comfortable beat relative to expectations. 2 percent fewer shares in issue to report on, thanks to some strong buybacks recently. Future orders, i.e. those placed already, grew 17 percent globally, excluding the currency. Including the currency, which you have to, future orders grew 12 percent. Gross margins were flat at 45.9 percent, their tax rate fell, as a result of increased sales outside of the US.

Herewith their EBIT breakdown in the table below, as you can clearly see the massive growth in China, it is now their second biggest territory after North America. With future orders from greater China up 28 percent in Dollar terms, this is fast becoming a bigger and bigger part of the Nike stable.

There I thought China was finished. Perhaps all the people are buying shoes in order to run away from there? For interests sake, revenues in Europe are 50 percent higher than the Greater China region, Chinese profits are better, just a touch. Cheaper rent, cheaper staff, proximity to manufacturing, perhaps even higher selling prices as a result of higher demand, it really is pretty astonishing.

On the conference call (Courtesy of SeekingAlpha -> CEO Mark Parker on Q3 2016 Results), Andy Compion, the chap in charge of the Nike brand (the president) had this to say: "I was just in China three weeks ago, and I can sum up my visit in one word, amazing. Our brand and business in China have never been stronger. And we continue to build momentum. That's not by accident."

The company is still pretty much a footwear company. Sales of footwear represents 61.28 percent of total sales, apparel is 28.29 percent of the total sales. Equipment, over 1.1 billion Rand represents the balance, 4.5 percent. Are those like running arm bands and the like? Further investigation reveals that it is actually hats, sun glasses, soccer and basket balls, back packs, golf bags, beanies, towels, golf clubs, baseball mitts, even lacrosse gloves. Everything that isn't clothing or shoes basically. The company supplies equipment, apparel and shoes for 13 different categories.

The headlines will read that they didn't do it. As Paul points out, this is another quarter of strong earnings in excess of twenty percent growth off a big base for a mega cap. What is actually not to like? We should be so very happy then that whilst we are in accumulation mode that the stock traded lower by 6 percent in the after market. The company continues to be at the cutting edge of innovation, they recently had a two day event showcasing the best of the new, including the USA Olympic uniforms. The company is pretty ruthless, when their athletes get into trouble, they drop them like hot a potato. Which is right, I want to associate the quality with a brand that prides themselves on excellence, not bad behaviour. People like Roger Federer and Serena Williams.

The stock is down, it trades on a lofty multiple of just over 30 times. I think for a growth company that has massive potential in mainland China, to turn that into their biggest destination, this continues to represent a massive opportunity. It is a serious growth business, and whilst the recent quarter looks mixed, the long term story of growth and quality remains intact, we continue to buy.

Late on Friday afternoon Steinhoff International Holdings announced that it would be going forward with one deal and dropping another. The deal being dropped is the one for Argos from HRG where Steinhoff were looking to spend around 1.4 billion Pounds. Remember that Sainsbury had already made an offer to HRG, the market was pricing in a pricing war, so Steinhoff probably would have had to spend more to complete the deal. This deal with HRG would have been around 10% of the company's market cap and the Darty deal around another 5%, it looks like Steinhoff decided to pick one deal and go for the company where they have better synergies.

The cheque book is being taken out for Darty at a cost of 673 million pounds - Steinhoff International holdings offer for Darty PLC. Darty is another company that was on the verge of being bought by someone else, with French retail group Fnac offering 558 million pounds last year and getting the boards backing. The Steinhoff offer is 19% higher and is an all cash offer, where the Fnac offer only has a cash component of 66 million pounds, it is unlikely that Fnac will be able to come with a counter offer that beats the Steinhoff one, even though they have told shareholders to expect one. Schroder who own 14.14% of Darty have put their weight behind Steinhoff making the deal look set to go through.

The idea is to combined the furniture offering of Conforama and the "white goods" offering of Darty to have a more complete product offering for the consumer, bringing more foot traffic to stores. The hope is to create further synergies through Steinhoff's existing distribution lines and get better prices from manufacturers as the combined group now has a stronger negotiating position. Great to see, Steinhoff using their new listing to expand in Europe.

Linkfest, lap it up

It is no secret that coal is on the way out, on the local front Eskom is still building coal powered power stations, so there local miners will still have a customer for years to come. Looking forward we will probably see less investments in coal mining and see coal mines run off as the power stations that they supply run off - Is It Game Over for Coal?

After the horrific bomb blasts yesterday, I am sure that some backlash will be directed at immigrants and those seeking asylum. There is an overwhelming amount of research that points to the positive impacts of foreigners moving to ones country - Immigrants and billion dollar startups. Research in the US has found that over half of the current unicorn companies have been founded by immigrants, with the result being that "immigrant founders have created an average of approximately 760 jobs per company in the United States"

Have a look at the new iPhone SE, the pictures show that ii looks almost exactly the same as the iPhone5s - Here's what it's like using the new iPhone SE

Home again, home again, jiggety-jog. Stocks are lower across the board, not everything though. Mostly across the globe, we are seeing a pause at this juncture, after the Fed inspired and confidence returning rally from about the middle of February. Around 40 odd days of stocks doing better after an equal number of days of stocks doing worse, swings and roundabouts. For now, in a shortened week, I guess caution is the watchword.

Sent to you by Sasha and Michael on behalf of team Vestact.

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Tuesday 22 March 2016

Market keeping you humble

"We experience a certain euphoria for seeing a take down of arrogance and pride, true story. In a way it is reverse envy of sorts. I don't have any beef against Bill Ackman, I just know that in the same way that Benjamin Graham said in the short term the market is a voting machine, in the long term the market is a weighing machine, the market can humble in a heartbeat. You aren't bigger than the collective."

To market to market to buy a fat pig Friday was an age ago, at least for me. A long weekend always throws you out a little. Having said that, I was watching a program called "Brain Games" with my kids and of the seven deadly sins, the one that is supposed to help you the most is actually sloth. Downtime for your brain and body is supposed to get your body going again, or so the experiments suggest. Perhaps for Bill Ackman this is exactly what he needs.

Apparently envy, and in particular seeing the downfall of those in high positions makes us happy, in a strange way. It is exactly what often happens with bystanders in markets. i.e. People who are not in specific positions have a smug feeling about having avoided it, and little pity for gloaters who are in specific positions. For instance Bill Ackman and Pershing Square. I remember his defence of the JC Penney position and his take down of Andrew Ross Sorkin on live TV, that was squirm worthy.

We experience a certain euphoria for seeing a take down of arrogance and pride, true story. In a way it is reverse envy of sorts. I don't have any beef against Bill Ackman, I just know that in the same way that Benjamin Graham said in the short term the market is a voting machine, in the long term the market is a weighing machine, the market can humble in a heartbeat. You aren't bigger than the collective.

Stocks in New York, New York rallied a smidgen last evening, the broader market S&P 500 closed the session up one-tenth of a percent, the Dow Jones Industrial Average was marginally better than that on the day, the nerds of NASDAQ rose a little more, up just over one-quarter of a percent by the close of business. Stocks were actually lower by over one-third in the first half of the day, what this move upwards does is solidify the year to date gains for the broader market S&P 500. A marginal gain is better than no gain at all.

Back home here in Jozi, Jozi on Friday, stocks had an absolute ripper, up nearly 1.2 percent on the day, and if I am not mistaken, having reached the best point for the year. We are now a little below 54 thousand points on the Jozi all share index. The Rand has firmed up nicely, from an inflationary point of view, this is really good news. For now we are also in the sweet spot, if the Fed are not going to raise rates, that should attract some inflows to South Africa. Notwithstanding the politics at the fringes, which the chattering classes are getting anxious about. Politics might feel very important in the moment, you can always get caught up on it.

Company corner

The worst kept secret in technology was revealed by Tim Cook yesterday, a smaller screen iPhone was introduced. Or reintroduced, which ever way you look at it, remember that whilst the company does not flesh out the iPhone numbers themselves, the iPhone 5c has not really been a resounding success. This may well be. Check out the iPhone SE, with a 12 megapixel camera, as quick a chip as the iPhone 6. What is pretty cool is that it is cheaper, 399 Dollars for the phone. For instance, the iPhone 6s costs 649 Dollars, that is why the new smaller phone is attractive.

There is also a new iPad pro, a smaller screened one. I did have the opportunity not so long ago to fiddle with one at the iStore in Sandton a few weeks back, it seems very impressive. I am still of the view that the iPad has tons of business applications, in particular for businesses that have vast surface areas. We maintain our buy rating on the stock, we certainly think that it has been oversold in the very short run.

The stock hardly reacted to the announcement, after-hours the stock added a single cent. After losing a single cent in ordinary trade. What has happened however is strangely (without almost nothing changing), the market is starting to warm to the idea that Apple is still a growth business, with amazing opportunities. And their products are pretty amazing too, unparalleled in my view, I have recently checked out the Oculus (with the Samsung phone), it is pretty impressive. I am sure that Apple are working on a virtual reality product, and I am sure that it will be cool.

Linkfest, lap it up

It is mind boggling, the scale at which we are able to build. The next phase in global LNG has arrived after 7 years of construction and US 54 billion spent, the LNG terminal off the West coast of Australia is operational - First Gorgon LNG shipment leaves Barrow Isl.

Here are a few snippets of Buffett explaining bubbles in 2010 to the US Congress - Buffett Explains Bubbles. It is very interesting to see how Buffett very simply breaks down human and market psychology.

Twitter turned 10 over the weekend, here is a comparison with Facebook at the same age. Twitter wins on the revenue per user front but loses on every other metric - How 10-Year-Old Twitter Compares to 10-Year-Old Facebook

You will find more statistics at Statista

The Dash of insight blog points out that it is irrelevant to investors if this is A Bear Market Rally? or just a continuation of the bull market. The stocks that you own and their prospects is all that matters in the long run.

Home again, home again, jiggety-jog. We are running late today, sorry, there are two important stories to cover tomorrow, Nike results and the Steinhoff announcement from late Friday. We will cover both of those tomorrow. Stocks are lower here today, the Cuban American relationship thing is pretty big, showing that all bridges can ultimately be fixed and crossed. I am guessing that the lead into the Easter weekend, it may be a little quiet on the local front. Mr. Market is pausing here after a huge up day Friday.

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Friday 18 March 2016

Who moved my currency

"And the Brazilian currency was in free fall, right? Wrong. Again, a weaker Dollar boosted the local unit. External factors from the gatekeepers of capital determine the flows."

To market to market to buy a fat pig Step aside, Fed and co, it was time for the SARB to have their say. Whilst the president was taking questions in parliament, whether he answered them well enough for the question askers is in itself questionable, SARB governor Lesetja Kganyago was letting us all know that rates were to go up 25 basis points. Of course you can read the full transcript, delivered mid afternoon: Statement of the Monetary Policy Committee. Inflation higher for now, the longer term outlook has improved on that score, the local economy looks weak. Still.

So why then had the Rand rallied through the day, why then were equity markets hitting their highest level year to date? The world is connected, equity prices don't represent the economy and vice versa. For those of us who are not au fait (with French either) with Latin, it is the other way around. The stock market ain't the economy and the economy ain't the stock market. And certainly this is no more relevant than it is in South Africa, a large portion of Rand revenues of listed businesses are derived in foreign currencies, definitely not our own.

The Rand however was on a tear as the US Dollar sank, the Dollar index weakened, in response to a dovish Federal Reserve statement the session prior. I made a snide comment during the afternoon suggesting that the Rand was strengthening as the president was answering the questions put to him, helping with the confidence of the market. What, it didn't "tank" when the official opposition walked out! And it didn't tank when the next biggest party didn't even bother to show up!

Over in Brazil they have bigger fish frying, the president tried to "employ" the former president, to prevent him from being prosecuted. You cannot make this up: Ex-President Lula da Silva's Appointment Throws Brazil in Crisis. If people were angry last weekend, they certainly are going to be angrier this weekend. Meanwhile Brazil's finest, Neymar, and his team, Barcelona FC, have extended their unbeaten streak to 38 matches. True story.

And the Brazilian currency was in free fall, right? Wrong. Again, a weaker Dollar boosted the local unit. External factors from the gatekeepers of capital determine the flows. Anyways, back to the local market quick sticks, the governor raised rates by 25 basis points, it was however not unanimous. Which may well mean that we are ready to stand pat at the next meeting and take a wait and see approach. Which in light of recent events sounds about right! With demand in the local economy weak, inflation has to be kept in check. Inflation is a curse for all, in particular for lower income groups.

Stocks closed off their best levels in Jozi, Jozi, up 0.96 percent by the end of the session. A smidgen over 53 thousand points, we are still around five percent away from the all time highs. All stocks benefitted from the global rally, apart from the big dual listed stocks, AB InBev, Richemont, SABMiller, CapCo, British American Tobacco, and the like all sold off around two percent or worse. At the other end of the spectrum were the commodity stocks and the financials, in particular the banks. Amongst the majors, Anglo was up nearly 7 percent, Sibanye rallied an almost astonishing 11 percent, and then it was FirstRand, Barclays Africa, and RMB Holdings that made up the balance of the top five performing stocks. The performance of the JSE over the last 12 months? Up. Not even a percent however.

Over the seas and far away, in New York, New York (I listened to old blue eyes on the way home yesterday!) it was another #winning session for the US markets, the Dow Jones year-to-date has now ticked over into the green. Just in time for the end of the first quarter. In years to come we might well look at the scoreboard and suggest it was much ado about nothing. Staying on the Shakespeare theme, there was something that caught my eye yesterday on the BusinessInsider: 21 everyday phrases that come straight from Shakespeare's plays. The Green eyed monster? I can't say I ever use that one! The one I enjoyed the most was Swagger. Yeah, that is right, Shakespeare is so hip and stuff. Learn these, impress your friends, for the 400 year anniversary of the death of Shakespeare is upon us, indeed it is nigh. On the 23rd day of the year twenty-sixteen, the greatest Englishman ever (Beefy Botham is pretty good, as is Freddy Flintoff) would have been dead for 400 years!

We digress. The blue chip index, the Dow Jones Industrial Average, named after Dow Jones and Company founders, Charles Dow and Edward Jones, had tacked on 0.9 percent. It is now up all of 0.32 percent for the year. The broader market S&P 500 closed up two-thirds of a percent, it is still down a smidgen for the year, one good day of gains will see it too erasing those deep losses in mid February where it was nearly 10 percent lower than before. Well done to everyone who sold back then. Remember, the world was ending again, this may well be a crisis equal to the financial crisis. Remember? The market is an unforgiving place and it certainly owes you no favours. The nerds of NASDAQ added one quarter of a percent, year to date still down four and two-thirds of a percent. Eish.

Company corner

TenCent reported numbers yesterday, after the market had closed in Hong Kong. So we got the benefit of what people thought of them, translating that through to the Naspers share price. Remember that Naspers owns over one-third of the Chinese internet/entertainment business. They bought it for peanuts. If Koos Bekker does nothing else from here (which I am sure at 63 he won't, he still has lots to give), then the team that worked on that transaction hopefully had their boots stuffed full of Naspers stock options. Naspers stock here locally added 2.62 percent to close at exactly 2100 Rand a share. The all time high reached last November was 2270 Rand, we are still a way off that. This morning, TenCent stock in Hong Kong is up around three and a one-third of a percent, around 8 odd percent away from their all time highs. That was reached last April.

Here is a look at the TenCent results, from their release: TenCent announces 2015 fourth quarter and annual results. Revenues increased 30 percent. Yip, China must be finished that the revenue base of this company has grown to 15.8 billion Dollars. Operating margins were the same as last year, 39 percent, operating profits increased 33 percent year-on-year to 6.256 billion Dollars.

Non GAAP diluted earnings per share clocked 3.437 Renminbi. Which translated to Hong Kong Dollars equals 4.12 Hong Kong Dollars. Which means that the stock, currently at 157.4 Dollars trades on a multiple of 38.2 times. Put differently, with earnings growth of 16 percent, that means that the PEG ratio for this stock is still above 2 times. That is Price to earnings divided by growth in earnings. Expensive, still growing sharply however, and perhaps Mr. Market in Hong Kong has got it right.

Methinks that us Joburgers down here have it completely wrong. And whomever is buying Naspers currently. Whilst there is no such thing in life as a free lunch (somebody ALWAYS has to pay), the sum of parts calculation always reveals that the other huge businesses that Naspers owns and is developing are valued at basically nothing. I guess the market is saying that there is execution risk, the cash cow satellite TV business is going to face competition in the same way that Amazon and Netflix (and co) present dangers to traditional cable guys. Surely not nothing though?

Multiply Naspers' stake in TenCent (33.85 percent) by the current market cap of TenCent (1.47 trillion Hong Kong Dollars) and then convert it back to Rands, you get to roughly 980 billion Rand. Naspers closed last evening with a market cap of 920 billion Rand. granted the business separately must be valued at face value, they have other serious loss making ecommerce businesses that they are developing, those are not without their risks, equally Naspers are incuring debt in building those businesses. It just always looks like a fabulous opportunity, we continue to accumulate Naspers, and of course watch Tencent really closely!

Linkfest, lap it up

As you know Amazon has very high revenues but not very high profits. The main place they make profits is through the Cloud services business and here is why - Google may be winning some big cloud customers, but it has a long way to go to unseat Amazon

From a revenue and profits perspective Robots are not forecast to make much of either for the next decade, as a result Google is disinvesting from one of their Robotic companies - Google Puts Boston Dynamics Up for Sale in Robotics Retreat. From an outsiders perspective, I hope that whoever buys Boston Dynamics has a large balance sheet to continue spending large amounts of money on the research.

A big break though in paleontology as a Pregnant T. rex unearthed. Part of the reason that it is a big break through is due to researchers not really being able to identify the gender of dinosaurs until now.

Home again, home again, jiggety-jog. Asian markets are mixed, FTSE futures are up slightly and the Rand is holding steady around the R/$ 15.20 level. Our boys kickoff their World T20 tournament today, Sasha turns 40 on Saturday, F1 kicks off in Aus this Sunday and Monday is a holiday. Enjoy!

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Wednesday 16 March 2016

Pills for Bill

"There are problems, and then there are problems. Bill Ackman is getting caned, murdered in fact, in a market sense. People are starting to point out that he blew up before, why can't it happen now. He must be taking calls left right and centre. Here is a BusinessInsider story on the bad time that he and his investors are having: Bill Ackman is having the worst year in his fund's history."

To market to market to buy a fat pig Yesterday was a waiting in formation kind of day, waiting for Janet and her friends. And by that, I mean the FOMC statement that was due for release during the course of the evening local time. I am not too sure why these events capture the market as much as they do, it is however very important what rates are for each and every consumer. I guess there are countries that don't have to worry about interest rates, as they have no central banks.

On further inspection, an earlier list from 2000 is much smaller, and as far as my web snooping can tell, only North Korea (other than small Pacific Islands) has no central bank. Those desperate citizens pretty much have nothing. For me, that is the worst example that we have of the George Orwell's 1984. There are a multitude of other dictatorships globally and autocratic territories, none as bad as North Korea. The anti-human spirit country. Talking of which -> North Korea sentences US student to 15 years' hard labour.

We can be grateful that we have a vibrant democracy. It wasn't always the case, lest we forget. I spoke to a (how should we put this) more mature lovely client yesterday, she recalls the newspaper bans of the 70's and 80's in which she had no knowledge of major events in South African history. She just said that the state made sure all the literature that was fed to all, kept readers in the dark. So I am guessing that if you are over a certain age in this country, your lived history would be skewed and wrong. In the internet era you can try and muzzle the press, there are too many channels for people to communicate. Be grateful for vibrant media, working tirelessly to tell you as much as possible.

Communication is at our core. And until recently, the Federal Reserve did not communicate their statements and explain in a press conference. This is all pretty new to central banks, perhaps in response to the recent financial crisis, central banks needed to show they were on top of things. And as such, answer pressing questions in the best possible way. What does not appeal to me is the idea that central banks often are seen like a doctors visit, if the doc says you are OK, you go away and start feeling better. The Fed is not a doctor, we are not patients, I dislike that analogy. If you are looking for the announcement, then look no further than here: March 16, 2016.

The FT interprets the statement and the Q&A session as follows: Fed scales back forecasts for rate rises amid global risks. The Wall Street Journal says: Fed Dials Back Pace of Rate Hikes. Smaller steps. Longer time. We have always read it that way. No rush, data watching, like all of us. Caution. Dovish stance. Expect only two rate hikes this year. From four earlier. June? Perhaps then, the data obviously has to improve.

The market reaction was understandable, stocks rallied in the aftermath of the announcement, wiping out earlier mid session wallowing. After all was said and done the broader market, the S&P 500 added over half a percent, the Dow tacked on over four-tenths of a percent and the nerds of NASDAQ were the real stars of the show, up three-quarters of a percent. Not all stocks were winners, bank stock prices were factoring in more gradual gains. Higher interest rates = more interest related income for banks. If the Fed rise is more gradual, then so will this earnings boost. Financials closed the day flat, UBS, Bank of America and Wells Fargo all closed lower.

There are problems, and then there are problems. Bill Ackman is getting caned, murdered in fact, in a market sense. People are starting to point out that he blew up before, why can't it happen now. He must be taking calls left right and centre. Here is a BusinessInsider story on the bad time that he and his investors are having: Bill Ackman is having the worst year in his fund's history. All this is related to Valeant of course, the stock traded down over 50 percent two sessions back, on 40 percent of all the shares in issue, last evening another 54 million shares traded (the stock was flat), around 15.8 percent of all the shares in issue. So around 56 percent of all the shares in issue have traded in just two sessions. The situation is very fluid for Ackman, I am guessing that he is fielding awkward calls!

Locally in the city founded on gold, in the capital of continental capital (I am getting all Mark Haines here) we rallied into the close, stocks as a collective added 0.83 percent. Resources stocks were the winners, there you go again, there is your volatility! New 12 month highs for Harmony and Steinhoff, both stocks have been on a tear. Glencore was at the top of the leaderboards, "doing well" recently. Certainly since management followed their rights at 125 pence a share, they are nearly 20 pence in the money at the moment. Although I am pretty sure that they are holders through thick and thin. That is the model, and that is why they get paid a bomb, from time to time they are asked to suck it all up.

Linkfest, lap it up

This is a point that we try convey regularly and is a distinction that gets muddled frequently by the media. Understanding that investing and trading/speculating are different and involves very different time frames will help you better understand markets and know what news to ignore - Warren Buffett has a simple test for separating investors from speculators

The stock market is the one asset class where you can invest in other people's ideas and ride the coat tails of some of the best and brightest people - The Stock Market's Secret Weapon

Here is an infographic showing why starting to save early is important. Smaller and consistent investments is all that is required for financial freedom over the long run.

I like this a lot. It represents that companies are listening to their shareholders. The problem may be that the shareholders are looking to maximise the gains in their stock holdings at the expense of the company longer term. Which ever camp you fall into, according to the BusinessInsider: Activist investors went after companies at a record pace in 2015 - and won.

Is this just a gimmick, or will it take away another needless task, saving a mere 20 odd seconds a day. Either way it looks like progress: Nike just unveiled the first real power-lacing sneaker, the HyperAdapt 1.0. One less thing to do, teach little people to tie up laces. Your parenting skills are being replaced by robots.

Home again, home again, jiggety-jog. Capital markets are looking strong with AB Inbev raising a record EUR 13.25 billion yesterday, the largest amount by a corporation in Euros. Looking to the rest of the day, we have the SARB's interest rate decision this afternoon, Initial Jobless claims out of the US and then a CPI number from the EU. Never a dull moment of financial markets, always a new number to digest.

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