Money with a dash of Funny: Alphabet

Showing posts with label Alphabet. Show all posts

Wednesday, 28 February 2018

Loud and Cloud

To market to market to buy a fat pig. Chatting with many clients, most people hate buying at all-time highs. The feeling is that a correction is coming or at the very least, you have already missed the opportunity. Their proposed solution, keep your gunpowder dry and sit on cash. Ready to deploy at a moments notice, during the next correction.

Kicking off this year, markets went into correction territory; "A stock market correction is when prices fall 10 percent from the 52-week high". If you were on the sidelines, sounds like a perfect time to buy right? What happens in reality though, is that when the market is down 10%, it looks certain that the market will drop further in the coming days. Then a few days later, when things have settled and the market is only down 8%, you promise yourself that you will buy when the market gets back to being down 10%.

Yes, you guessed it. While you were worrying about how far the market will fall, the market dropped and then recovered all without you deploying a single cent. We have seen it many times, where clients have cash on hand to buy the dips, but when it comes time to buy the dip nothing happens. This Tweet from Byron sums things up nicely.

Its far easier to accept that you can't predict where the market will go tomorrow; just buy when you have long-term capital available. As the market adage goes, "It is time in the market, not timing the market".

Market Scorecard. The market didn't like what Jerome Powell had to say to Congress yesterday. The Dow was down 1.16%, the S&P 500 was down 1.27%, the Nasdaq was down 1.23%, and the All-share was up 0.27%. Unless US markets have a rip-roaring day this afternoon, February will be the first down month in 13-months! It has been good to be an equity investor.

Linkfest, lap it up

One thing, from Paul

I've heard that getting divorced can be really bad for your finances? That makes sense, since usually a couple's savings are split and immovable assets have to be sold in a hurry. Setting up two new homes can be really expensive.

The problem is, marriages seem to be ending sooner. Here's a chart which shows the percentage of people who are divorced, separated or in a second or later marriage in America in 1960, 1980 and 2016. In other words, these are people who are probably trailing a number of financial "ex-dependents". That number now peaks at over 40% of the total population.

Here is a link to the the article which contains that graph:

Here's when you're probably getting divorced

Byron's Beats

Imagine the billions of photos, videos, songs and files that get stored on Apple devices. These days, not even 256GB phones can handle all this content. Then this needs to get backed-up onto a computer which duplicates the storage requirements. Step in Apple iCloud. I cannot even comprehend the amount of storage capacity iCloud requires.

I was always under the assumption that iCloud was done in-house. Apple has the capital available. But this CNBC article titled Apple confirms it uses Google's cloud for iCloud suggests that Google has secured a massive cloud storage deal with Apple. The details in the article are a little "cloudy" because these businesses tend to be secretive about their deals with each other. They are supposed to be fierce rivals after all. It seems that Amazon Web Services and Microsoft's Azure used to be the cloud providers, but Google has replaced Azure over the last two years. AWS still seems to be involved.

I recently spoke about Google's cloud business as the next big thing for the business. This is certainly a step in the right direction.

Michael's Musings

Eddy Elfenbein has a great piece this morning in his blog post called, Crossing Wall Street. He speaks about how market guru's make forecasts that they can not be held accountable for. At the start of each year there are a set of people who get wheeled in-front of the cameras to talk about all the reasons the market is going to do badly. Their claim to fame is calling the 2008 crash. As the saying goes, even a broken clock is right twice a day - "A 40% Chance"

Home again, home again, jiggety-jog. Following the path set by the West, our market is down this morning. Added to that, the idea of interest rates rising this year has resulted in a stronger Dollar, currently at $/R 11.74. International data out later today is EU CPI and then US GDP.

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Tuesday, 6 February 2018

Blood on the streets!

To market to market to buy a fat pig. You know that it was a tough day out when CNBC showed the top 5 'gainers' of the S&P 500 for yesterday, as stocks who lost the least! Not even cryptocurrencies have survived the current market sell-off, Bitcoin is down 24% to $6 200 a coin, ouch!

Market Scorecard. After the carnage on the market yesterday, US indexes are now red for the year. The Dow was down 4.60%, the S&P 500 was down 4.10%, the Nasdaq was down 3.78%, and the All-share was down 2.63%. Having a look at Asian markets this morning, our market is going to open very deep in the red! Tencent in Hong Kong is down 6%, which means Naspers will be down a similar amount too. If that happens Naspers will be trading around R2 900 a share, a far cry from the R4 000 plus a share in November last year.

Why is it so 'easy' for the market to fall 4% in a day, but it is almost unheard of for it to gain 4% in a day? You can blame our cave-dwelling ancestors for the irrational thought process of Loss aversion. In simple terms, a loss hurts more than the pleasure you get out of a gain. Roughly speaking, to balance out the potential of a 5% loss, the other side of the equation needs to be the potential to gain 10%.

Added to that, our minds are generally lazy, so they latch onto the stories that are easiest to imagine. What is more natural to imagine, the stock market dropping to levels it has been at before or it pushing higher into uncharted territory? When people talk about stock market history, the landmarks are usually the periods of stock market crashes, not the periods of record highs. As such, after a small drop in stocks, it is not hard to jump directly to the 'this is a crash' scenario.

Add those two mental tendencies together and 'Sell first, ask questions later' becomes our go-to strategy.

The following graphs from mainstream media don't help the situation either! (Here are the biggest one-day point drops in the Dow's history)

As Paul points out below, when ranking yesterdays drop in percentage terms, it would be lower than Bafana Bafana on FIFA's global ranking.

One thing, from Paul

Well, last night was a tough trading session on Wall Street. As you will have read above, the Dow saw it's biggest points decline (1175 points) in history. However, at 4.6% off, it was only the 108th worst percentage drop of all time. So there were lots of days that were worse.

According to Josh Brown, the last time we had a Dow drawdown this big in a single day was in August 2011. He notes that the Dow was at 10,700 points then and today it closed at 24,345. That puts things into perspective.

The intraday slump was even worse, almost 1,600 points before a slight rally into the close. Again, big numbers (the rally of the last eight years) begets big numbers (the slump in nominal terms).

If you feel bad about all this, I wonder how poor Jay Powell is feeling? It was his first day on the job as Federal Reserve chair. Mind you, one of the reasons advanced to explain the sell off was that strong US employment numbers on Friday last week might lead the Fed to hike rates too fast this year. Well, that's easy to fix! No inflation, no need to hike rates aggressively, right?

So the market went lower because people think that the global economy is too strong? We shall see what happens next, but I 'd rather that we were complaining about a strong economy, than one which was too weak.

The right thing for you to do at this time is nothing. Ride it out! Equity markets do this sort of thing from time to time. Its part of the deal. I have been in this business for most of my adult life, and I've lived through many similar dramas. If you jump ship now you lock in poor exit prices and are out of the market when the rally comes. If you feel like being brave, it can be a good idea to buy these dips.

Company Corner

Bright's Banter

On the 1st of February, Alphabet/Google blessed us with financials for the last quarter of the year, as well as the full-year numbers for the year ending on 31 December 2017. The company missed earnings expectations, with $9.70 per share coming in just under the $9.98 forecast. Shares were down 5% in after-hours trading when those numbers came out.

The amazing and not so new Ruth Porat, CFO of Alphabet, opened by saying the following on the earnings call:

"Our business is driving great growth, with 2017 revenues of $110.9 billion, up 23% year on year, and fourth quarter revenues of $32.3 billion, up 24% year on year. Our full year operating income growth continues to underscore our core strength, and on top of this, we continue to make substantial investments for the long-term in exciting new businesses,"

Now in English, "The business is growing from strength to strength. 2017 was our record year and record quarter, and we will continue to seek out more complimentary opportunities to continue to grow our business."

This amazing one-trick pony posted an all-time record for advertising sales which is now 85% of revenues. These ads are the ones we see on our smartphones and at the beginning of a YouTube video. The only problem with the smartphone ads is that they bring home less bacon than the traditional desktop/laptop ads. This will change over time as engagement increases on mobile due to larger screens. Google's cost-per-click, what advertisers pay each time someone clicks on an ad, declined 14% for the quarter, this will stabilise over time.

However, Alphabet posted a net loss of $3 billion for the quarter due to a $9.9 billion once off charge tied to changes in the US tax system. This is not a surprise at all as we have seen banks reporting similar tax charges. Thank you Trump?

Google is still the largest, most dominant search-engine by miles thanks to its positioning as the default search engine on Chrome and on mobile phones. Sometimes Google has to pay the likes of Apple to be the default search engine on their Safari browser and this payment is referred to as traffic-acquisition costs or TAC. TAC was 24% of Google's advertising revenues, which was up 33% year-on-year. According to the lovely Ruth Porat, Mobile Search and something called "Programmatic advertising" carry the highest TAC.

"Other revenues" which include sales from Google's Cloud Business, The Pixel Phone, YouTube Red, Google's Smart Speaker, Google Play Music etc. came to $4.7 billion for the 4th quarter, up 37% year-on-year and was 15% of Google's overall revenues thanks to the strong holiday sales.

Alphabet's "other bets" which include their self-driving car business Waymo, smart-home hardware provider Nest, and their fibre-to-home business Fiber, are still loss-making businesses.

Alphabet's shares were up just over 30% for the year of 2017, they're up 6.5% year-to-date at time of writing, valuing the company at $775 Billion. The company continues to buy back more shares, the board has authorised to buy-back a further $8.6 billion worth of its Class C shares. If you strip out the once-off tax item, the historic price-to-earnings ratio of 35 and a forward price-to-earnings ratio of around 29 is still relatively cheap for a high-growth technology company.

Linkfest, lap it up

Michael's Musings

Putting the market crashing aside. Today humans get one step closer to going to Mars, Elon Musk's Falcon Heavy rocket is scheduled to launch this evening - SpaceX has received permission from the US government to launch Elon Musk's car toward Mars.

Home again, home again, jiggety-jog. Our market is down 3% this morning on the open. The morning after Brexit is the last time I can remember such a poor start to the day. Later today, is the South African business confidence number; given all the positive chatter around I expect it to be smartly up.

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Tuesday, 25 July 2017

The Best Bet is Alphabet

"I remember when I was young, my father had proudly acquired a set of encyclopaedias and tasked me to go look it up when I asked a question about something. Search nowadays is a far easier task than before, my daughters teacher told us that her class of nine year olds all researched their speeches and topics on the internet without help. So my dad telling me to go look it up in the dictionary and encyclopaedia really are days gone by."

To market to market to buy a fat pig Stocks in Jozi rallied nearly four-tenths of a percent, mainly led by industrials and a fresh all time high for Naspers shares, that stock closed at 2860 Rand, up nearly two percent on the day. The top performing stock on the day was Woolies, over two percent to the good. Still, over three months Woolies is down 12 percent, since the surprise rate cut last week, the stock has rallied on the basis that richer customers are likely to have smaller debts to pay and therefore will have more disposable income.

In the down column were some currency impacted stocks, those ones with a Pound Sterling bias. Since last Tuesday the Rand has gained around 60 cents to the Pound Sterling, and we see a number with a 16 in front of it again. You will recall that when the Barmy Army was here and Ben Stokes was flaying a Proteas attack to all parts of Newlands, that the Rand was at 24 to the Pound. We are now 16.84 (or thereabouts).

There was a trading update from AVI that the market didn't seem to like that much, the stock was sent lower and then recovered some of that - Voluntary Trading Update. Group revenues rose by a little over 8 percent, there is a once off after-tax impairment of 108 million Rand on Green Cross, the shoes business. They make decent shoes, it is a pretty crowded space, however.

The stock had been priced for perfection at 97 Rand a share, with a heavy dividend underpin, I would say that the stock may trade down to a five odd percent yield. I would suggest that the price would sag back to around the mid eighties. Hey, what do I know about share price movements? Very little and trying to predict where that is likely to go is tricky at best. Nonetheless, the AVI release is telling you what you know already, it is tough out there. The stock is up marginally this morning! See, what do I know!

Stocks in New York, New York steadied after an initial sell off, the nerds of NASDAQ rallied to an all time high, up over one-third of a percent on the session. Both the Dow Jones and the the broader market S&P 500 sank, the Dow by just under one-third of a percent, whilst the broader market gave up just over one-tenth of a percent. GE stock continues to slide, the stock is down nearly 20 percent year-to-date. The results were iffy at best and unfortunately the outlook is pretty muted, the full year multiple is around sixteen and a half, and I would hardly suggest that enters the realms of dirt cheap. In their favour is that the dividend yield is around 3.8 percent, that yield underpin is probably likely to see the price not fall much more. Unless of course if rates go up a little quicker than you think, although the market is telling you otherwise.

This is a big earnings week, continuing through to Apple results next week Tuesday, remembering that there are unlikely to be any clues with regards to the new phone, Apple are notoriously cagey with regards to the secrecy around their projects. There is some talk of the new iPhone cycle being in time for the Holidays this year, it may be a little later than usual as not all the tweaks on the handset are perfect. That is the understanding. Facebook stock traded at an all time high last evening, closing at 166 Dollars a share exactly. On a 41 multiple, remember how the company was supposed to be not really profitable until round about now.

Company Corner

Alphabet. Alphabet is recently named as the holding company for Google, and their other businesses. Indicating that the company wants to increase their relative market shares in things outside of search. Search of course is synonymous with Google, you never hear anyone say, go Bing it or go Yahoo! it. Or for the older crowd amongst us, you never hear anyone say go Ask Jeeves it. Nor did you hear it in the days gone by, when web pages were flat html text, ah yes, the good old days!

I remember when I was young, my father had proudly acquired a set of encyclopaedias and tasked me to go look it up when I asked a question about something. Search nowadays is a far easier task than before, my daughters teacher told us that her class of nine year olds all researched their speeches and topics on the internet without help. So my dad telling me to go look it up in the dictionary and encyclopaedia really are days gone by. Young kids all use Google to search. And of course YouTube, they (and adults) use that a lot too. Adults, they use this functionality a lot more, of that I am sure.

Alphabet reported their second quarter earnings last evening, you will read loads of headlines of how the EU fine has put a lid on the profits, understandably. Talking adults for a second here, Ruth Porat, the CFO brought across from Wall Street, made the financial statements and use of resources internally less frivolous and more grown up. With no disrespect to the people running the business before, I am pretty sure that this is exactly what the folks who started the business wanted. Along with Sundar Pichai, the company has managed to seamlessly pass onto professional managers who take the business of Alphabet as seriously as the founders and controlling shareholders (Page and Brin).

At a headline level, both the earnings per share number and revenue number was a comfortable beat, quarterly revenues clocked a little over 26 billion Dollars (an increase of 21 percent year over year) and EPS for the quarter was 5.01 Dollars, without the impact of the 2.74 billion Dollar fine levied, it would have been 8.90 Dollars. This time last year, Q2 2016 EPS numbers were 7 Dollars a share exactly. I was pretty surprised to see a massive ramp up in staff, obviously I have not been paying as close attention, the business now employs over 75 thousand folks, happy Googlers (1614 people employed during the quarter). Or are they Alphabetters? The current quarter is where the usual ramp up in staff comes, new graduates enter the workplace.

The business is still dominated by Google revenues, 25.762 billion compared to a mere 248 million Dollars from "other bets". Other bets made a slightly narrower loss, still clocking 772 million Dollars however. Cash on hand swelled to 94.7 billion Dollars (a radio frequency here on the highveld), 61 percent of which is held offshore. Cash to market cap is 14 percent. Far lower than is the case with Apple. The business still does not pay a dividend, perhaps they anticipate a far stronger Capex cycle over the coming years, I suspect that in time they may consider this. The dirty D word (dividend for a growth company) wasn't mentioned once in the conference call.

Sundar Pichai made a few interesting points on the earnings conference call that are worth sharing. Firstly, Youtube has taken a long time to grow to a more important level as a contributor, 1.5 billion monthly viewers watching on average 60 minutes a day. Now before you shout, what the hell are those people doing wasting their time watching Youtube, what are you doing watching an hour of GOT on a Monday night and 90 minutes of football and 80 minutes of rugby on the weekend? It is all entertainment, just of a different kind. Adding to yesterday's Visa piece (and fodder for Amazon), Pichai made an interesting observation yesterday, 90 percent of all transactions still happen offline, i.e. brick and mortar stores. Google needs to help these people in advertising their space.

Alphabet is a phenomenal business. Forget "other bets" and focus on the "one trick pony". The seamless transition to mobile means that they are more in your face, the average cell phone user checks their mobile around 76 times a day. High users are around 130 times, there are a whole lot of separate events. It is great to be the leader in search, on more than one platform, i.e. the internet and Youtube. The biggest reason for the fall in the share price post the market is that the cost of acquiring users to click through on the adverts has risen, in other words, what Google will pay the likes of Apple to get their iPhone users to click through. Forget the fine, cash on hand actually increased by a lot more than that 2.7 billion Dollars.

Alphabet still looks cheap relative to their growth prospects, trading at roughly 25 times next years (2018) earnings, with earnings growing of around 20 percent, that puts the PEG ratio a little above 1. This is a great business, I suspect that we are looking back on a company that will continue to define the next industrialisation phase and be pleased for continuing to own it. Continue to own this one, like Visa, this is a bottom drawer stock.

Linkfest, lap it up!

This is not only an American trend it is a global trend - This chart shows a major shift in the way Americans eat. Good news for the likes of Famous Brands.

Amazing to see how these whales sleep - 'Tail-Standing' Sperm Whales Snooze in Stunning Photo. Given how exposed they are when they sleep it makes sense that they only sleep 7% of their time.

The problem of slums is something that most cities around the world are dealing with. Slums pop up due to the proximity to jobs, so even giving better housing away from the city doesn't help much. The inner-city of Johannesburg currently has that problem, where reclaiming down trodden areas has resulted in poor families being pushed out due to price and higher income families moving in. No doubt a good thing for the city over the long run, not great for the families that used to live there though - There's a simple reason why Indians return to the slums after they've been given better housing.

Home again, home again, jiggety-jog. Tencent is around one-third of a percent higher in Hong Kong trade, stocks on balance are down in Hong Kong and Japan. We have started better for now, mostly a broad based rally here at the get go. Watch out for interesting results coming your way!

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

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Tuesday, 2 May 2017

Lurch at Search

"Quality attracts quality and Alphabet attracts some of the best minds in the world. They also provide an environment that promotes innovation. These new ideas fall within the Other Bets segment. They take it very seriously and provide great capital for big potential ideas. We expect a lot more coming out of Alphabet in the future. But for now their existing businesses tick all our boxes and we are more than happy to continue buying at these attractive levels."

To market to market to buy a fat pig And we are back, you will have to wait another 7 weeks until the Youth Day long weekend, doesn't seem too bad? There have already been 3 short weeks and this week is another one, bringing the total to 4 short weeks in a row! Sasha always says that public holidays should fall on the nearest Monday or Friday thus making them less disruptive for business. If there was the choice I am sure people would rather have long weekends instead of a day off in the middle of the week. Here is what the CEO of FNB had to say, thanks to Twitter:

Friday saw our market in the green again at the close, Mediclinic held onto its gains finishing the day up 13.3%. Yesterday was also a holiday in London so we are not sure which direction the stock will go today, the Rand is slightly weaker against the Pound compared with the rate on Friday which could help push it up. The currency has played a big part in the poor performance of Mediclinic, over the last 12 months the London listed share is down 9%, over the same period the JSE listed share is down 25%. Ouch! If the Rand weakens going forward the share price performance in Rands will look much healthier but if the Rand strengthens the gap between the London listing and the Joburg listing will get wider. Trying to predict currencies though is a fools game, you own this company because you think they operate in the correct sector for long term growth.

New York, New York The US markets were open yesterday, their Labor Day celebrations fall on the first Monday of September which is the 4th September this year. It was a bit of a mixed bag, the Dow closed 0.13% lower but the S&P 500 was up 0.17% and the Nasdaq had another record close, increasing by 0.73%. The big news for the day came from the man at the top, Trump says he's thinking about breaking up the big banks. You can clearly see on a share price graph when the news broke, banking stocks dropped about 1% instantly. Over the day though they mostly recovered the losses, with Wells Fargo actually finishing up over 1% for the day.

The general principle for what Trump is trying to do is to lower the risks in the banking sector by separating the more risky investment banking division from the vanilla retail banking sector. Having said that, bad lending practices from retail banks can make them just as risky. The end goal is to get banks to a size where they are no longer "too big to fail". Given how intertwined the large banks are with the US economy, if any of them had to face financial difficulty putting them out of action for even a short period of time, the ripple effects would be huge. Imagine the 94 million cards that JP Morgan have in issue stop working for just 2 days, what will the impact be on the retail sector? I have not given this topic too much thought but at first glance I think having smaller banks is not a bad thing. The main reason that companies merge is to create efficiencies through economies of scale, I think these banks are getting to the point where they are so big that their size is creating inefficiencies. This is the case in the US at the moment, where the biggest 8 banks have to have higher capital reserves. So more capital sitting essentially idle than needs be. Expect much to be written about this by financial bloggers and journalists, after which you can make up your mind.

Company corner

Last week we had a cracking set of numbers come through from Alphabet, the holding company of Google, YouTube, Android, Nexus, Pixel and many other smaller businesses.

Revenues grew 22% yoy to $24.75bn. Of this, advertising contributed $21.4bn which was up 19% versus this time last year. You would think that coming off such a high base, this would start slowing down but the growth remains solid. This in fact was the biggest beat on advertising estimates in 5 years.

For all these online businesses mobile is crucial. Mobile was the biggest driver in ad growth with paid clicks growing by a whopping 53%. This shows the benefit of offering free mobile phone software (Android) which steers all your users towards your own sites. Operating margins remain strong at 38.6%. This all resulted in operating income of $6.6bn for the quarter which equated to $7.62 per share.

Earnings for the full year are expected to come in at $34.70 which puts the share on a forward multiple of 26 times. For a company growing above 20% a year, margins north of 38% and a cash pile of more than $70bn (11% of market cap) I think this company is very well valued, if not borderline cheap. Even after the recent rally of 8.6% since these results were released.

Since Ruth Porat took over as CFO there has been a lot more visibility and transparency in reporting. Take a look at the image below which categorises Alphabets' businesses.

Google Property revenues come from ad results within Google search. This is the big breadwinner of the business and I do not see any slowing down here. People immediately go to Google to look for anything, it is the most incredible advertising tool. Google Network members include ads on Youtube, Google Finance, Gmail and the millions of partner websites that let Google feed ads towards their traffic. Eyes these days are on the screens of phones and computers, Google have almost monopolised adverting in this space and their moat to competition is as wide as it comes. Of course a company like Facebook will be high on the list for online advertising but I think that marketing world is big enough for two dominant players.

Quality attracts quality and Alphabet attracts some of the best minds in the world. They also provide an environment that promotes innovation. These new ideas fall within the Other Bets segment. They take it very seriously and provide great capital for big potential ideas. We expect a lot more coming out of Alphabet in the future. But for now their existing businesses tick all our boxes and we are more than happy to continue buying at these attractive levels.

Linkfest, lap it up

Here are some random facts about gold, the one about why sailors wore gold earrings caught my eye - Fascinating Facts about Gold on the Occasion of Akshaya Tritiya

In business and in life generally effective communication is important. Step one in effective communication is that the term you are using means the same thing to the other person as it does to you - Measuring Perceptions of Uncertainty. The scary thing here is that military decisions used to be made based on intelligence reports with these words in them.

With the rise of electric cars, the metals that go into their batteries have seen a big increase in demand levels. The price of Cobalt is up around 70% this year already - The hottest thing in the markets right now is an obscure metal mined in DR Congo. The bigger question for the likes of Tesla is how to find "ethically" mined Cobalt.

Home again, home again, jiggety-jog. Our market is in the green again this morning, having crossed the 54 000 mark in early trade. The big news for the week is "what will the Fed do"? Yellen and her colleagues are meeting today and tomorrow, the market doesn't think a raise will happen tomorrow but more likely in their June meeting. Time will tell though. More exciting though is that we have Tesla and Facebook numbers out tomorrow!

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

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Friday, 27 January 2017

Caffeine Injection

"Not only are the company a coffee experience destination, by adding rewards members via their excellent technology platforms, they lock you into the daily routine, they aim to continue to stay abreast with the changing patterns of consumption. Having partnered with WeChat (TenCent owned platform) in China, more Chinese customers can gift each other, or pay, using their existing infrastructure. This is key to finding the right partners and speeding up the payment process, which means getting your coffee quicker. Productivity gains through technology enhancements. "

To market to market to buy a fat pig Stocks in Jozi lifted marginally, up by nearly three-tenths of a percent at the bell. Resources were a marginal drag, down a percent in total, although Kumba topped 200 bucks at one stage, up 4 percent on the day. One year, up 512 percent, three years, down 54 percent. Amazing to think that the stock has delivered those types of returns and once again goes to the core of the cyclicality of the mining business, and how hard it is to call.

Amongst the majors, the Sasol share price was sold off more than a bit, perhaps the idea of a "steadier" Rand and oil prices hovering here for the time being point to a re-rating of some sort. Although as a veteran journalist said to me yesterday, Sasol are always at pains to say that they are a chemicals business. Some negative commentary around the banks saw the share prices fall, Nedbank down one and a half percent. a Lonmin output report saw the share-price shaft sunk, down 23 percent on the day. The stock is down 95 percent plus (plus a heavy and very deep rights issue), and whilst the near death experience has been averted, it remains to be seen how long the company will take to return to profitability.

Across the oceans vast and wide, stocks in New York, New York were mixed by the close. The Dow set another all time record, 20100, up 0.16 percent on the day. What is in an index that is calculated and not led by market participants? Well, the WSJ weighed in with an interesting one yesterday - We're Already at Dow 30000, You Just Don’t Know It. Does that mean that my Dow 36 thousand hat is in a "better" place. Or does it mean that we should (and often discussed) pay more attention to the S&P 500.

That index (the S&P 500) closed down 0.07 percent, whilst the nerds of NASDAQ nearly squeaked out a gain, coming up a point and a bit short of break even. Hopefully we will be driven by earnings through this period in the market and not distracted by rhetoric, see Trump's Economic Approach Starts to Take Shape by Mohamed A. El-Erian. Talking of earnings, let us dive straight in here, GOOGL and SBUX!

Company Corner

The company formally known as Google, Alphabet, reported their numbers for the fourth quarter and full year after the market closed last evening. Google still exists, it is just a business division. For the time being, the other businesses (aptly named "other bets") which includes a whole host of interesting opportunities, is unprofitable and contributes next to nothing on a relative basis to revenues.

It may sound a little strange, and I was having this conversation with a client yesterday about this very point, if you can find an investment that has a founding principle of doing good in the world, that venture may well be staffed with exceptional people that offer an amazing product, and by extension the profitability of such a business will be a foregone conclusion. You will obviously recall the "An Owner's Manual" for Google's Shareholders, which was released at the IPO. You can access the archive of Founders' letters

That letter is always worth reading again, at least once a year. Remember that the same fellows write a similar letter each and a every year. They (Larry and Sergey) suggest that the time horizon for judging whether you are onto something is three to five years. I think that is a fair shake of how one should see any of their newer investments, the "other bets" segment. Herewith the whole group for the full year revenues and income (money received):

Ruth Porat, the CFO who returned to California after some time on Wall Street, said (for the quarterly part) that "revenues (were) up 22% year on year and 24% on a constant currency basis. This performance was led by mobile search and YouTube. We're seeing great momentum in Google's newer investment areas and ongoing strong progress in Other Bets". For the quarter, non-GAAP diluted earnings per share clocked 9.36 Dollars a share, up sharply from a year prior, shy of the street estimates though, the street had pencilled in 9.64 Dollars of earnings per share.

Reported revenues for the quarter were much stronger than the market had anticipated. To put into perspective that this is primarily a "Google" business (all the advertising revenues via the web), that division clocked quarterly revenues of 25.8 billion Dollars, other bets in total increased markedly from last year, still a small contributor, 262 million Dollars for the quarter. That "other bets" sucks so much cash that the operating loss amounted to 1.088 billion Dollars, down from the 1.2 billion for the comparable quarter last year. The core Google business reported operating income of nearly 7.9 billion Dollars.

The market is not too "impressed", the stock is down just around two percent after hours. The long term story remains intact, expectations are for revenues to increase in the high teens this year, to top 90 billion Dollars. In all likelihood, 2018 could see revenues top 100 billion Dollars for the first time. Earnings growth is likely to be in the low twenties percent for this year, EPS may clock somewhere in the region of 41.5 Dollars a share (Bloomberg has 41.26 Dollars), meaning that the multiple (price-to-earnings) is around 20x forward, the PEG ratio is around 1.25 times. That is certainly good value for a company of this magnitude. We remain buyers of what is a business that is always at the cutting edge of innovation, I suspect that "other bets", which may top revenues of 1 billion Dollars this year, is just starting.

Starbucks is another business that reported numbers after the bell yesterday. The headline says it all - Starbucks Reports Record Holiday and Record Q1 FY17 Results. Revenues rose 7 percent to 5.7 billion Dollars, a strong showing in both China and decent enough in the home market. What is also being highlighted is the number of US rewards memberships, which rose 16 percent to 12.9 million folks. Earnings per share grew 11 percent to 51 cents, margins increased by ten basis points, which is always good to see as a shareholder, moving in that direction. The company has a fairly generous dividend policy, 25 cents a share is the current quarterly dividend payment, up from 20 cents previously.

251 stores were opened during the 13 week period in North America alone (currently 5415 stores in total), 303 more in China! Across the rest of the globe it was 95. The expectations across the group are for 2100 new stores to be opened. On a longer dated look, the company expects that by 2021 another 12 thousand net additions, by that time the network would top 37 thousand stores. Currently it is 25,734 as at January 1. That is pretty sizeable, the group are up to over 1000 stores in South Korea (I am guessing 0 in North Korea), over 2500 stores in China (in 118 cities) and now 1245 stores in Japan.

The business in China will be their largest business in the coming decade or so. What is quite amazing is that there are fewer stores in the traditional coffee drinking countries than you may think, 58 in France (the whole country), 161 in Germany, 101 in Spain and of course, zero in Italy, for now. I don't feel so bad for the 3 that we have here, Taste Holdings are doing a good job!

Not only are the company a coffee experience destination, by adding rewards members via their excellent technology platforms, they lock you into the daily routine, they aim to continue to stay abreast with the changing patterns of consumption. Having partnered with WeChat (TenCent owned platform) in China, more Chinese customers can gift each other, or pay, using their existing infrastructure. This is key to finding the right partners and speeding up the payment process, which means getting your coffee quicker. Productivity gains through technology enhancements.

The flagship roastery in Seattle (Paul visited it recently and sent us some pictures) looks absolutely beautiful, a true destination of sorts, see the pictures - Roastery & Tasting room. Coffee truly is a global drink, one that is multicultural, whether you are loading up on an espresso in Italy or drinking condensed milk infused coffee in Vietnam, the social interactions and friendship building (or you quick caffeine fix) at a place that feels homely, is important.

The product is quality and really appeals to the up and coming (and established) middle classes across the globe. In a way it is the same experience whether you are aboard aircraft carrier USS Harry S. Truman (staffed by sailors), or in the Louvre (missed that one) or at the Tower of London, your fix is almost always around the corner. Aircon and Wi-Fi too, right? Their in-home reserve business (bring your beans back home) will no doubt grow over time too, with more "home" solutions. A consistent in-store experience is key to customer retention, as are the prime locations. And of course the rewards program, which is real.

It is always worth noting that Howard Schultz, the current CEO and founder steps into an executive chair position, Kevin Johnson steps into the CEO role; you will recall that we wrote about it in December - Schultz shuffles over, COO holds the coffee cup now. The company announced two days ago that they have strengthened their non-executive management team, the executive chairman of the LEGO brand group, Jorgen Vig Knudstorp joins, as does President and Chief Executive Officer of Sam’s Club Rosalind Brewer (name made for the job) and Satya Nadella, the CEO of Microsoft. Wow. That is a pretty strong team. Technology, logistics and distribution and global brands, all there, dare I say it .... Like a boss.

The company is still around 110 million shares away from completing their buyback program, having acquired 7.6 million shares in the last quarter. There are 1.46 billion shares in issue, that is a buyback of 7.5 percent of all the shares in issue. Over time, of course to a certain extent that is diluted by stock based compensation. Starbucks is a great brand, the guidance may have disappointed to the downside, hence the stock has sold off nearly 4 percent after-hours. We continue to favour (in this space) what we think is an exceptional brand with superb products that consumers are desperate for. The stock trades on a pretty demanding multiple, 27 times forward and we are confident that they can meet the lofty expectations of the investor community. We definitely accumulate on weakness. If congestion is a big problem (as reported), solving it with technology is a huge win in the future.

Linkfest, lap it up

I can associate with this. My little girl has a name similar to the Amazon Echo speaker assistant, Alexa. What happens when your name happens to be the same as the "assistant, Alexa? According to the WSJ, the 39th most popular name in the US. Alexa, Stop Making Life Miserable for Anyone With a Similar Name! You now know why Apple called their assistant Siri, it sounds like a real name, yet I have never met or seen the name.

Does your Wi-Fi stink? I mean the speeds and the ability to access at "all angles" in your office or home. Here are some devices and tips from an exceptionally detailed Bloomberg piece: The End of Terrible Wi-Fi Is Near. I want you all this weekend to stick your wifi in the middle of your house now!

We will have more on this in the coming days, a major deal announced by JNJ yesterday - J&J to spin off Actelion R&D unit into new biotech in major M&A deal.

Real life usage turning into the conversion of a sceptic is not new for Apple products, it is *nice* to see this type of write-up though - Comment: Going from a skeptic to an every day user with Apple Watch Series 2. Battery life is key here, I am very sure they will get it right.

Home again, home again, jiggety-jog. Stocks across Asia are a mixed bag, Hong Kong markets off a little, Japanese markets up. The futures market is marginally lower. Forget the wall and who is going to pay for it, who eats the strawberries, the avos and who drinks the tequila? Who goes where for holiday?

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Friday, 28 October 2016

Alphabets on a Great Future

"We continue to buy shares of what is a unique company. They are working on revenue lines that we have no idea about. And it feels good to know that these are for solving problems of the world, that is the core of the business. Stay young Alphabet. Stay young."

To market to market to buy a fat pig Short intro and market piece again I am afraid for those of you who love this segment. It is too busy on a company front. So, quick sticks, here is the look in. US stocks closed lower, off the best levels by quite some stretch. The nerds of NASDAQ lost two-thirds of a percent, the broader market S&P sank three-tenths of a percent, whilst the Dow Industrial was off half of that (0.16 percent). There is US GDP today, that should be exciting! Rate hikes looming, please get that done already. I am tired of hearing every day will they or won't they. Just get the one done and then wait and see.

Locally, stocks were mixed to lower. Same-same today, AB InBev results have been poorly received. I guess there will be many moving parts in there for 18 months or so, you will just have to roll with the punches if you are part of the new machine that sells around 3 out of every 10 beers across the globe. Just three days ago a driverless truck delivered Bud, the first commercial delivery sans the driver. Wow. The driverless truck is "Otto". 120 miles of driving, Otto is an Uber initiative. Awesome news for all! Except truck drivers.

Company corner

Alphabet reported numbers last evening, this was for their third quarter just passed. This is of course the business originally known as Google. This business is not even 20 years old, yet is synonymous with one of the biggest jumps that we have made as humanity, the internet. The internet is your online everything. You can buy almost anything you want, you can research almost anything you want. Provided of course your internet is not restricted, some poor souls still have their internet screened, or worse, no internet at all. That is another story entirely.

Quarterly revenues jumped 23 percent on a constant currency basis, 20 percent in Dollars to 22.451 billion Dollars. Take a moment to let that sink in, annual revenue approaching 100 billion Dollars and a business that has just become an "adult". GAAP operating income grew 26 percent to 5.767 billion Dollars, margins expanded and GAAP net income clocked just over 5 billion Dollars. On a per share basis, GAAP earnings per share clocked 7.25 Dollars. Non-GAAP, that number was 9.06 Dollars.

Whilst the business is called Alphabet, Google is still everything to the business, revenues from that "division" is 22.254 billion, the other segment, aptly named "other bets" generated quarterly revenues of 197 million Dollars and incurred losses of 865 million Dollars. What? Well, ruth Porat, the CFO credited with professionalizing the business at some level has done an extraordinary amount of work making the business more lean, more standard.

Her (Porat) Wall Street background has more than helped, she may have originated from the West coast (she was born in the UK actually), she spent nearly three decades across the country. The story goes about a time she was going to the gym (she likes spinning), she slipped on the icy curb and shattered her shoulder blade. Ouch. The surgeon said, we got to operate, she said, no can do, as CFO of Morgan Stanley, full year results were two days away. Sorry. No painkillers, that would make things fuzzy. So, off she went, delivered the results for the giant financial institution and only then went for the surgery. I am not too sure if that is dumb or valiant. Possibly both. Her father's entire family was killed in the holocaust, he hails from the Ukraine, ended up being a nuclear physicist. Being born in England, you could technically call her an immigrant, right? Sergey and Larry have an amazing person making the company leaner and more efficient.

Other bets, the moonshots, the dreams, the other businesses that potentially could change the world (and that suck a lot of cash right now) is a mixed bag. Calico is a healthcare business that focusses on longevity, on their website I find the "press" segment amusing: "As we make early progress on our research and goals, our capacity for handling press inquiries is limited. We'll do our best to be in touch". In other words, we are busy, leave us the hell alone. And then an explanation of what they are trying to achieve: "Calico's areas of interest are organized around understanding the basic biology of aging as well as interventions for serious age-related diseases. Calico is exploring the genetics of aging in human populations as well as in a variety of model organisms from yeast to worms to naked mole rats." Nice. So potentially this could be a very important business to Alphabet in the long run.

Another business is "The moonshot factory", which comes with an operating model. Simply called X, the business is designed to turn ideas into real technology. Technology that will change lives and make the world a better place. You may well argue that is the core of Google, the starting point.

And whilst the cash burn is huge for investors, the great ideas turned to prototypes, turned to awesome businesses, turned to bottom line expansion is something that takes a decade. Or more. Foghorn, which is carbon neutral fuel made from seawater sounds like something from a comic book, invented by Professor XYZ. Smart contact lenses, helping people with diabetes. The UK born Astro Teller (real name Eric Teller) runs the business, nicknamed Astro not for his love of small candy balls or science geekiness, rather a hairstyle that looked like fake grass. He looks amazing. Title for Astro? Captain of Moonshots. Ha ha!!

Google Ventures, now known as GV is part of other bets. Other bets that include startups with capital and expertise. This is where investments in Uber (you may recognize this business) and of course Nest, which is wholly owned. Google Ventures invested (Michael tells me) 258 million Dollars in Uber, giving them a 6.8 percent stake in 2013. Dilution along the way? Who knows, time will tell, recent reports suggest they still own the same percentage, it is possible they may have been diluted to half that. Uber is "worth" in the last fundraising, around 66 billion Dollars (June this year), if GV owns three and a half percent, then this is worth 2.31 billion Dollars. Or 0.42 percent of the entire parent company market cap. Ha-Ha! GV may become a more important business in time, as the company looks for other avenues to invest their resources.

Resources that last were 83.056 billion Dollars (Cash, cash equivalents, and marketable securities) at the end of the last quarter. And over 10 billion Dollars more than a year ago. Cash represents 15 percent of the current Alphabet market cap (nearly 550 billion Dollars). So whilst cash conservation and cost controls have been introduced by Ruth Porat, these other bets burn around 3.5 billion Dollars a year. As a shareholder you have to say, yes, this is actually worth every cent. In identifying the next big thing, thinking has always been encouraged at Alphabet slash Google.

We continue to buy shares of what is a unique company. They are working on revenue lines that we have no idea about. And it feels good to know that these are for solving problems of the world, that is the core of the business. Stay young Alphabet. Stay young.

Amazon reported numbers for the third quarter last evening. It is still very important to remember that Amazon is building a business. They are a long way from being mature, I am not too sure where that is, as long as the vision exists and Jeff Bezos has the energy to want to change the world. Like the aforementioned Alphabet, the vision of creating something amazing and huge keeps this business at the forefront of technological innovations. Getting stuff to your front door that you ordered an hour ago is pretty mind blowing. In the old days it took an hour to turn your computer on and to connect to the internet. Not quite, you know what I mean though, that sound where your telephone line connected at the exchange and the "handshake" sound it made, tinny and all. How times change.

And in large part, improving technologies has meant that Amazon have been able to expand other businesses. Amazon Web Services (AWS) increased sales by 55 percent year-on-year, to 3.231 billion Dollars for the last quarter. Operating income for that division increased to 861 million Dollars, up 101 percent year-on-year when measured against the corresponding quarter. For those of you who don't know what it is, AWS is cloud computing. i.e. You can host your website from anywhere and upload all your documents to the cloud.

All the "stuff" that used to be done physically at your desktop can now be done from anywhere, provided you have an internet connection. No more need to store vast documents locally. This business is only 10 years old, and is fast becoming an integral part of their business, representing 8.7 percent of total sales. If you are looking for all their products, visit the link above and then follow the products links. They are selling stuff (products) there that you have never heard of.

The business is still pretty much a US based business, 58.6 percent of the sales still come from that region, 32.7 percent is "international". Rolling twelve month sales clocked 128 billion (nearly) Dollars, up 27 percent year on year. Make no mistake, this business is growing off a bigger and bigger base all of the time. The disappointment however was that profits for the quarter fell and missed expectations, net income for the quarter was 252 million Dollars, this followed a blow out quarter prior to this period.

They continue to make a big loss in the international part of their business, so whilst sales increased 28 percent to 10.6 billion Dollars (for the quarter), the operating loss widened to 541 million Dollars. Twelve month sales for that segment was 41.9 billion Dollars, a huge number. For comparisons sake, Amazon North America registered sales of 75 billion Dollars for the rolling twelve months (i.e. the last four quarters). Home Depot has annual revenues of 88.5 billion Dollars. By this time next year, Amazon North America should have sales in excess of Home Depot. Only Costco and Walmart in North America will have bigger sales than Amazon. Amazon North America is now bigger than Target. Stick that in your tech pipe and smoke it.

Amazon is a business that has many irons in the fire, not too dissimilar to Alphabet. Just read through the Press Release - Amazon.com Announces Third Quarter Sales up 29% to $32.7 Billion. Content, Prime members getting movies, music, the Alexa software (Echo ecosystem) integrates with everything.

You get what you get with Amazon. This is a business that will invest heavily in their infrastructure leading to scant profitability. It won't always work, there will be lines that will be shut down. The user experience is what matters. Fourth quarter guidance may have disappointed some folks and been at the bottom end of the guidance. They had a laughable operating income guidance - "expected to be between $0 and $1.25 billion." Ha ha, that means that they could make nothing or they could make more than ten percent more than a record quarter.

This unsettles people into believing the long term story, they want steady profits now and an amazing future. As a result of unlimited resources, you cannot have it all. And hence you have to roll with the volatility in the share price, which is down five percent pre-market. Buy this business and own it, own it for a decade plus. By that stage it may well be challenging Walmart for the biggest retailer in North America. Or before. And you can bet that they will have many other interesting businesses along the way. Stay long, stay strong.

Linkfest, lap it up

Every week there is that one article that is a must read. Here is this weeks. It was so good that it was shared on our office WhatsApp group twice in 12 hours - Start Now. Time is your friend when it comes to investing, especially when the market has been flat like the last 18 months.

Beer and self driving trucks, sounds like a great combo! (Otto and Budweiser: First Shipment by Self-Driving Truck). Next step is beer being delivered by drones.

As the price of something drops, people use more of it. On shore wind generation costs have dropped by 30% over the last 5 years and solar costs have dropped by 66% - Renewables overtake coal as world's largest source of power capacity. Given how long it takes to build coal and nuclear power stations, I wonder if a Nuclear power plant starting tomorrow makes sense. If by the time it was completed the cost per megawatt would still be less than solar then maybe? Or would solar costs have dropped so much over the years of build time that solar power is cheaper than nuclear.

Home again, home again, jiggety-jog. There were multiple results overnight and over the last few days that we will get to. Amgen had results, we will get to those for sure! Apple have released new MacBooks, that is incredibly exciting. If you think about it, people drive expensive German Sedans for an hour or two a day and then sit in front of their scooter type performance at their desk. For ten odd hours a day. get your company to buy you a MacBook, tell them that IBM research has shown that you will be more productive and cost less over the life of the computer. Stocks are mixed across Asia.

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

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Monday, 20 June 2016

The Larry and Sergey show

"Google is not a conventional company. We do not intend to become one. Throughout Google's evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world"

To market to market to buy a fat pig Bump and grind Friday, we hugged the thin red line all the way through to the close, in the end a nearly one-quarter of a percent gain on the day wasn't the best outcome. Joburg was quiet, a long weekend essentially. We should really make some holidays on Fridays and Mondays rather than outside of that, productivity plumbs new lows is my sense. If anyone has a labour intensive business, let me know what these holidays do to you. Not that I don't think that celebrating these special events in our history are wrong, we could do a whole lot worse in honouring the legacies of those gone before us by working extra smart and extra hard, looking to build a better society.

Of course the most important event of the week, at least as far as Mr. Market's sheep are concerned, is the Brexit or more likely Bremain. Hype sells, ordinary doesn't really sell that much. In other words, not once have I heard anyone put out a note suggesting what will happen if the UK remains in the EU. Which is what the bookmakers are putting the odds at 4-11 for a remain. Or in other words, as a percentage, 73.33 percent. Not much has changed in that regard. And then in terms of the exit crowd, Paddy Power is giving you odds of 9-4, or in percentage terms, 30.77 percent. So ignore the news headlines, the bookies have more to lose than the headline makers. Tell that to the sheep and the herders however. It does however seem that the market is settling to the idea that there will not be a shock vote. Suddenly stocks are going up!

Across in Asia this morning stocks are up, unless of course you are in Shanghai, or participating in that market. Year to date stocks in Shanghai are down nearly 19 percent. Stocks in Japan are up over two and one-third of a percent, the Japanese Yen is weakening again. Let us simply suggest that Mr. Market refers to this as risk on. Again. Stocks in New York (New York) on Friday were sold off, both the S&P 500 and the Dow Jones Industrial Average ended the session down one-third of a percent, whilst the nerds of NASDAQ were sold off a little more aggressively, down 0.92 percent.

Apple stunk up the joint again, that stock was off over two percent, so was Alphabet (Google) though, down nearly two and three-quarters of a percent. Citigroup suggested that Alphabet could miss their second quarter revenue estimates. I was reading the founding letter (again) on Saturday, as well as the references made to the same letter to shareholders by Larry and Sergey. The company refers to these as the founders letters. There are a couple of sentences that are worth sharing from both of those letters, first the last one - 2014 Founders' Letter:

"We shared a profound belief in the power of technology to make life better for people everywhere and imagined what life could be like 10, 15, 20 years down the road. Nevertheless, now that we are here, I am amazed at the progress and opportunities. For example, I could not have imagined we would be making a computer that fits in a contact lens"

We often sit here and get caught up in the day to day machinations of the market and too often discount those trying to (and doing it) change lives. I often tell my youngish kids that they won't need to learn to drive, perhaps not quite yet. Larry and Sergey continue in that letter:

"The increasing power of computation extends well beyond the Internet. One example close to my heart is our self-driving car project. The goal is to make cars capable of driving themselves entirely without human intervention. We hope to make roadways far safer and transportation far more affordable and accessible to those who can't drive."

This continues to be a big investment theme. A trip back down to the listing IPO founders letter has An Owner's Manual for Google's Shareholders:

And then lastly, they nail it:

As a public company, we will do the same. In our opinion, outside pressures too often tempt companies to sacrifice long term opportunities to meet quarterly market expectations. Sometimes this pressure has caused companies to manipulate financial results in order to "make their quarter." In Warren Buffett's words, "We won't 'smooth' quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you."

So I give two you-know-whats about what Citi think about the upcoming quarter. That is their opinion and whilst it counts, it certainly gives us another opportunity to add to what is likely to continue to be an iconic company of our time. Google is down nearly 10 percent year-to-date, let us just say that this might be a huge blessing for all of those wanting to add to the business. Based on the same analyst predictions, Google trades for the next full year earnings at 18.5 times earnings. Sounds dirt cheap for a company with so many amazing opportunities!

And then Apple sold off as the Chinese authorities decided that the iPhone 6 and 6 Plus are too close to a local competitor, in shape and feel and the like. No worries, as far as I understand it, the company hasn't been selling that model for a few months now, remembering that they sell the one model up. The iPhone 6 is so last year. Again, price targets slashed and earnings estimates downgraded for this coming quarter. In the classics, this is a horse has bolted type scenario.

One client, in a WhatsApp conversation said: "market is behaving like a sulky teenager. Making me mad. If Apple drops any further the cash balance will exceed the market cap!" In other words he is saying this company is dirt cheap and the market is wrong on the stock. Lastly, I can't get enough of the Google founders letter. As they say:

"If opportunities arise that might cause us to sacrifice short term results but are in the best long term interest of our shareholders, we will take those opportunities. We will have the fortitude to do this. We would request that our shareholders take the long term view."

We should always think the same. Take the long view. 15 years is hardly a lifetime in investing. It is about as long as it takes to pay off your house, for many people their largest asset. Let your equity portfolio far outsize your property asset, keep saving all you can. It is far easier to spend money and not save it.

Linkfest, lap it up

As department stores struggle thanks to more people moving online, so too are the shopping malls that the retailers are based in - America's Dying Shopping Malls Have Billions in Debt Coming Due. Given how many shopping malls we have in South Africa, how long is it until something similar starts to happen?

Earth has a new rock that orbits us, it is only around 100 meters wide though - Earth's New 'Quasi' Moon Will Stick Around for Centuries

Ladies you now have another reason to buy that Chanel Bag that you have been eyeing out - Chanel Bag value increased 70 percent in the last 6 years. As the globe gets richer, the top 1% will still want to be seen with unique items.

Home again, home again, jiggety-jog. Big news, Rob Shuter who is currently working for Vodafone in Europe has been appointed as MTN CEO, and will take over as soon as possible. He was once upon a time the CFO of Vodacom South Africa, and comes from an investment banking background. Good for him, I am pretty sure that he is thrilled to get the job, he knows the industry well and understands deal making better than most. Positive for the business, let us see how the share price reacts. My little one got to have a picture with three of the Irish (and Ulster) teammates yesterday, including the flyhallf from Saturday, she was pretty pleased with herself. Markets should start a little better here.

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

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