WhatsApp crests 800 million users

"The growth continues to amaze, WhatsApp I think was responsible for the breakdown of the popularity of the messaging platforms such as BBM and MXit to an extent. Back in early January Jan Koum announced that the messaging app had passed 700 million, and that the platform was available for 30 billion messages."

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To market, to market to buy a fat pig. Resource stocks were the drivers of the market yesterday, with the broader market ending the session up 0.2 percent to 53840 points. The Chinese cutting of Reserve Ratio Requirements for their banks being the big driver there, resource stocks collectively added a little over two percent on the day. For stocks in that part of the world however, the fellows over at the securities authorities in China have clamped down on margin trading activities. The one hand giveth, whilst the other hand taketh away. Thanks to the Chinese in part, the resource markets got a boost across the globe. At the same time the outlook for one of the biggest bulk commodities, iron ore, looks muted in terms of the price, that is. Few expect the price to bounce back quickly.

I suspect that the same folks did not foresee prices getting hammered to this point either, it has been ugly for all and sundry. As a consequence of the lower commodity prices, there is a knock on impact to housing associated with mining, and I am not talking about the cheap kind: Mine Bust Halves Home Prices in Australia Outback as Jobs Vanish. In two years house prices in the place called Blackwater (one consonant away from a backwater) have fallen 57 percent. Meanwhile, as the Bloomberg piece points out, location is everything, Sydney property continues to hit record highs.

Location, location, location. You can try, you however cannot replicate natural beauty and climate. In terms of the Economist Intelligence Unit liveability ranking, Melbourne, Sydney and Perth are in the top ten, alongside Auckland as Southern Hemisphere cities. The honourable Robert Gabriel would be shocked to know that Harare unfortunately is at the bottom of that list.

Not at the bottom of any list were US markets overnight, the Dow cresting 18 thousand again, the S&P 500 2100 points, the nerds of NASDAQ ended within 6 points of 5000. It is a massive week for US earnings, there are 147 of the 500 S&P 500 companies reporting this week, there is enough information to keep you reading until Christmas. Unfortunately you cannot know everything, equally you cannot own everything if you plan to be a ordinary stock picker rather than someone who owns the index. Big drivers of the market in the US were the big tech names, Apple, Amazon, Microsoft, IBM (which reported average results after the close) and Google all up between two and three percent. At the other end of the spectrum comes energy, over the last year energy as a whole is down 7.8 (the combined sector) relative to the S&P 500, which is up nearly 12 percent over the same time frame.

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Company corner

WhatsApp Y'all? A monster drive to 800 million users is what the company announced on Friday, although the information itself was not on the WhatsApp Blog, you would have thought that might have been a good place to announce it. The company is a little over six years old. In other words, if this were a little human (I have good recent experience with little people of this age), they would be in their first year of school. They would recognise words and numbers, reading would come next year. Not on the Facebook platform ever, not via their investor relations pages. So where was the "official" release that WhatsApp had passed through that milestone? Via a Facebook post by co-founder of WhatsApp, Jan Koum. I took a screen grab of the post, for the simple reason of who liked it:

Strangely I follow Jan Koum and missed this, I am obviously not very good at Facebook. If there is a such a thing as "being good" at Facebook. The growth continues to amaze, WhatsApp I think was responsible for the breakdown of the popularity of the messaging platforms such as BBM and MXit to an extent. Back in early January Jan Koum announced that the messaging app had passed 700 million, and that the platform was available for 30 billion messages. Since Facebook announced that they were buying the messaging service -> Facebook to Acquire WhatsApp in February of last year, the number of users has swelled from 450 million to 800 million in 14 months. The purchase price was 19 billion Dollars, 12 billion in shares initially and another 3 billion later, vesting over four years, the rest (4 billion Dollars) cash.

Jan Koum and co-founder Brian Acton have been at it since February of 2009. Both were former employees of Yahoo! and famously failed to land jobs at Facebook. Irony is sometimes very sweet, right? So sweet actually that Koum and Facebook founder, Mark Zuckerberg ironed out the details of the purchase over a box of chocolate covered stories, according to a Forbes article that I read. The first year the service is free, thereafter it is 1 Dollar (or 99 cents) per user, so 800 million Dollars, not everyone pays apparently however. I guess there is a fair amount of costs associated with the messaging servers, the employees don't come cheap either is my best guess. When the business was bought, there were roughly 32 engineers in a workforce of 55. Perhaps more insight in the Facebook numbers, which arrive and cross our screens Wednesday after the market closes. And to think that Instagram was bought for a "mere" 1 billion Dollars (300 million in cash and 23 million shares at the time of the Facebook listing), the platform now has 300 billion users, as at December 2014.

According to Marketwatch, 53 analysts cover the stock, in terms of the estimates, the share price trades at 42 times current year estimates and 31 times next years estimates. The founder Mark Zuckerberg turns 31 in around three weeks time, the same as next years earnings multiple. I think that the future is indeed very bright for this company, granted that they are going to have to work hard. Or smart. Or both.

Oh, who would have thought that something of this nature was kept under wraps. Apparently there was a verbal agreement between Elon Musk and Larry Page, in which Google would have acquired Tesla for 6 billion Dollars back in 2013. This was revealed in a book on Elon Musk, from a writer of the name of Ashlee Vance. Ashlee writes for Bloomberg Newsweek. He shares something with Elon Musk and many of you, he was born here in South Africa, growing up in Texas however. The book itself has been available for pre order, only being released 19 May 2015. Well, good thing that Musk did not sell, Tesla has a market capitalisation of 26 billion Dollars. Good work for having not ironed out the kinks, on paper Musk is worth a whole lot more as a result of the company clicking at the right time. In another positive, around three quarters of a year on: Tesla's gigafactory is coming together, thanks to satellite images. Nice. Next set of news relatively soon, the last reporting quarter was 11 Feb, I guess some time in early May.

Two bits of news yesterday from Naspers. The first being that non exec chair of Naspers, Ton Vosloo has resigned from the group. He has been chairman for 23 years. He has been a board member for 32 years. Ton was a journalist from 1956 to 1983, he was editor of the Beeld from 1977 to 1983. He knows how to use a typewriter, I am guessing that he has not used one for two decades however, I may be wrong. He is 76, been working for 50 years plus (admittedly in a non executive capacity since 1998 at Naspers, it is still hard and stressful work). Ton was managing director of Naspers from 1984 to 1992, executive chair thereafter until 1997, and has been in this role since then. Ton will take 160 thousand shares, currently worth 292.8 million Rand into retirement with him.

Koos Bekker at the same time as Ton heading into the sunset, returns to take the role from his old friend, Bekker becomes non executive chair of Naspers. Bekker is worth a little more, directly and indirectly he owns 16 376 499 shares. Which at last evenings closing price is worth 29 968 993 170 Rand. A big number. An after tax dividend of 59 million Rand per annum. These share figures are as of March last year, from the annual report. When it gets to this level, I guess for Koos Bekker it is not really about the money, it is not the fact that he has made MANY South Africans directly and indirectly a lot wealthier - The Public Investment Corporation of South Africa owns 60 382 560 shares, worth 110.5 billion Rand. The PIC is 4 years older than Naspers, Naspers turns 100 this year. As at the end of the 2014 financial year, the PIC managed around 1.6 trillion Rand in assets, with a mere 385 employees. If you ever wanted to know who the PIC manages money for, here goes, from their last annual report:

Good work, the GEPF has 1.2 million active members (from more than 325 government departments), 350 thousand beneficiaries and pensioners. Those 385 employees have a great responsibility to 3 out of every 100 South Africans. The other bit of Naspers news, a little off the radar was Naspers Drops Off $40 Million For Brazilian Mobile Conglomerate Movile. Who? Well, here goes: Movile is the industry leader for development of mobile content and commerce platforms in Latin America. It is a Brazilian App designer. Local commerce, local content. 40 million dollars is nearly half a billion Rand. Founder Fabricio Bloisi is listed as one of the contact people on the Internet CEO's in the Naspers Fact Sheet - January 2015. Naspers is always looking for quality people to partner with, this chap and this company Movile looks fabulous.

I saw an announcement from MTN this morning, here is the story via Business Wire: Vodafone M-Pesa and MTN Mobile Money Agree to Interconnect Mobile Money Services. It is always going to be about size and scale in this case, the two businesses have to talk to one another to make customers feel like they have choice. Pretty darn good news I suspect, it means that if you want to choose your network in East Africa, you do not have to do it on the basis of whether you have to transfer money to x or y on the same network.

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Things we are reading

kalahari.com which is owned by Naspers merging with Takealot is not new news - What Kalahari's closure means for e-commerce. The article gives the final numbers for the merged entity, Naspers will own 41%. Given the resources and the first movers advantage you would have though that Kalahari would have been further ahead than 550 thousand more users; " in December 2014 with 2 277 636 visitors to the site, while takealot.com had 1 737 672 visitors."

Expectations play a big part in the functioning of the economy, the better that people feel about their futures the more they spend on consumption now and the more likely they are going to invest their money in the economy - For the First Time Since 2007, Most Americans Feel Good About Money

Perspective and relativity matter, the 1950s where a lot better than the 30s and 40s and even though relatively the current 10s are not significantly better than the 00s, things are a lot better than the 50s - The Good Old Days Were Fine. These Days Are Better

As South Africans, we are currently very aware of power generation. Thanks to technology we are making green energy cheaper to produce which means we will be using more of it - Solar power will soon be as cheap as coal.

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Home again, home again, jiggety-jog. The Greeks are paying more and more for their three year debt. Not that anyone wants to buy it really. Not exactly the best news: Tsipras to Seize Public-Sector Funds to Keep Greece Afloat. There is perhaps a referendum pending, or even new elections. It seems that everyone has gotten to the point where it may be that Greece and its citizens want the Troika money, and don't want to use theirs, the reality however is that without a lifeline, they cannot pay their own people. And now will have to use internal resources. Once that becomes "real", it then shows that in the end the one with the reserves, the cash, the real cash that is, actually calls the shots. I suspect that we are closer to some sort of resolution in this tragedy, sooner rather than later. Once the cookie jar is empty, it is empty. European stocks are set to open marginally higher, Asian stocks are roaring ahead catching up to a strong close in New York last night.

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Check mate, where is the money?

"Over the weekend, ECB governor Mario Draghi said that he could not even contemplate a Greek default, saying that he wants the Greeks to "do well" and succeed as well the answer being in the hands of the Greek government. Which is possibly code for "you have little choice but to continue" with the list of measures imposed by the rest of Europe. When you are down to a king and a pawn (and a prayer) surely there can be little wriggle room against the collective might who have all 16 pieces left?"

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To market, to market to buy a fat pig. Whoa! Markets across the globe were dealt more than a little tap on Friday. I saw a meme about the weekend, it said Friday, my second favourite F word. One of these words were applicable on the last trading day of the week, and it was not Friday. US markets sold off sharply, down one and a half percent for the Dow Jones and for the nerds of NASDAQ, the S&P 500 ended the session down 1.1 percent, perhaps the 270 odd billion giant General Electric helped the cause a little. After a set of results that the market received favourably on Friday, the company was able to avoid the general market rout, closing down a little over one-tenth of a percent. And that was the good news?

Locally we ended a percent lower on Friday, Naspers was smashed, one day up and one day down. I think what people need to understand is the following. In China there has been a massive property boom, locals pouring their life savings into that market. Why? There is very little, by way of investable assets in China, the social security programs are not efficient at all. There is a deep culture of saving in China, part historical and planning, part as a result of the one child policy, that is more recent. What I mean about the one child policy is that if your parents are married and you live in an urban area (and you are say, 20 years old), and your grandparents are all still around, then you have 6 people above you. You are the only grandchild. Four grandparents. Your grandparents know that their single grandkid will never look after them, hence they have to save like crazy.

Mix together a culture that embraces gambling as part of life. Although it is illegal in China, mainland China that is, Hong Kong and Macau, that is OK. You may, or may not have heard of Mahjong. In China, Japan, Vietnam and Korea it is huge. Mix together aggressive savings, limited asset classes and choices (we are generalising here a LOT, apologies for that) as well as embracing risk, you are bound to see equity markets in China deliver that kind of volatility. Plus of course the sheer size and scale of it all, a country with an enormous population. The last estimate is that the population has ticked over to 1.4 billion souls, as at the beginning of the year.

You may actually be surprised that the percentage of Chinese people relative to the rest of the globe has actually been falling over the last 35 years, according to this table anyhow, scroll down a little to see it: Population of China (2015 and historical). Expectations are for peak population in China over the next 10-15 years. All the info via this pretty cool website: Worldometers. According to that website there are less than 40 years left of oil at current production/use and reserves, 170 odd years of natural gas left by the same metrics, over 400 years of coal left. So Eskom is OK for now. Most people freak out when trying to process these clocks and counters that tick furiously.

So that is my crude and simple explanation why the Chinese stock market has been so volatile and until recently, one way traffic. There is news referencing Bloomberg that suggests that 30 percent of the newest equity investors in China's stock market have only an elementary education. And buying on margin, meaning borrowed money. So why would the People's Bank of China cut the reserve requirement ratio by 100 basis points to 18.5 percent. This is the biggest cut since 2008. Is this to "protect" the equities rally? This is in response to the China Securities Regulatory Commission (CSRC) changing the margin trading rules, making them stricter to "protect" the average Chinese margin trader. I suspect it is just a case of the Chinese authorities doing what they do, using the tools (like all central bankers) available to them.

The other "thing" that is worrying Mr. Market is Greece. Again. And again. The actual modern Greek state dates to around 1828, when they gained independence from the Ottoman Empire. Which in turn (the Ottomans) had gained ascendancy from the Byzantine Empire, which ruled over all the Mediterranean from 5th century AD to 1453. Nearly 900 odd years. And then another 375 years before the Greeks gained independence from what is modern day Turkey. You can see why there is not too much love lost between the Turkish and Greek people, which explains Cyprus. Although the Cypriots will tell you that they are not Greek, which is true. As far as my reading of the situation (challenges, sorry) in Greece goes, they need 1 billion Euros to pay back the IMF by mid May and 1.7 billion Euros by the end of April to pay pensions and civil service salaries. The IMF do not want to extend the timelines for the pay backs. No developed economy has ever not paid back the IMF.

As Michael said, there is always a first. The fact is, Greece has defaulted 5 times since independence, admittedly things were so different now that the two professors (Carmen M. Reinhart, Kenneth Rogoff) who wrote "This time is different", even suggested that Greece had broken the default cycle. That is my go to on this subject of Greece and their borrowings. They called Greece a "graduation candidate", alongside Portugal, Poland, Chile and South Korea, as well as Malaysia. Admittedly the data is taken from Institutional Investor ratings. It is supposed to represent the graduation too from emerging to developed status. So I guess the data is as good as it is presented to anyone. And if there is a default, that would have catastrophic implications (worse than now) for ordinary Greeks.

From this NYT article (Greece Flashes Warning Signals About Its Debt), the suggestion is that private investors own only 10 percent of Greek bonds, the rest are institutions -> After two international bailouts for Greece since 2010, about 90 percent of its debt is owed to its eurozone neighbors, the I.M.F. and the European Central Bank. At the moment, not one of those lenders is showing a willingness to give any additional payback relief to Mr. Varoufakis and the new left-leaning government in Athens.

I wonder how ordinary people feel on the ground? Are they feeling cheated that the folks they elected have not made good on the election promises? Syriza through Alexis Tsipras planned to halve the debt and end austerity. Easier when campaigning and not so easy when put into practice. Over the weekend, ECB governor Mario Draghi said that he could not even contemplate a Greek default, saying that he wants the Greeks to "do well" and succeed as well the answer being in the hands of the Greek government. Which is possibly code for "you have little choice but to continue" with the list of measures imposed by the rest of Europe. When you are down to a king and a pawn (and a prayer) surely there can be little wriggle room against the collective might who have all 16 pieces left? Currently it seems like a stalemate.

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Things we are reading

Stay long Nike. Why? It turns out that sweatpants are becoming a fashion item, but you knew that, right? For the next generation, sweatpants will be what jeans were to us.

The huge value of backing the right "horse" - Jordan Spieth's win at The Masters is worth $3 per share. "So Spieth's Masters win is worth, in Piper's view, $3 per share for Under Armour. There are 218 million Under Armour shares outstanding, Spieth's win is worth around $654 million of earnings for the company."

Technology helping make things cheaper - DNA Sequencing Costs. As DNA sequencing gets cheaper we can better understand our DNA which opens the door to finding better health innovations.

I found this table on twitter over the weekend, cheaper oil is good for everyone except the oil sector; it means that as a society we have more to spend on other things.

Given that Bloomberg terminals were down last week, Here's how Wall Street traded before Bloomberg terminals were everything. Amazing to see guys standing in the snow shouting orders to a trader standing in a window. Also all the telegraph wires that criss-crossed the street, all carrying stock prices.

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Home again, home again, jiggety-jog. It is tech reporting week this week, not all tech companies and certainly not Apple. Apple of course will be reporting on the Monday, next Monday that is. So inside of the next week there will be results from IBM, Yahoo!, Microsoft, Facebook. There will also be results from Starbucks, McDonald's as well as Google and Amazon. This is the best part about being invested, listening to what real companies have to say about their operating conditions. In the end it is all about earnings from the choices that you do have as an equity investor, you can choose what companies to own and what companies to not own.

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Same Same but Different

"The buy side (or those generating the ideas internally for trading and investment houses) are far more focussed on shorter term market movements, and typically generate the short term ideas, like this looks too cheap right now, this looks too expensive. Sell side analysts research, and this is the difference between the two, is disseminated amongst their clients, from short term traders to long term investors. Traditionally the higher worth the client to the firm, the sooner that the detailed reports will land in their inboxes."

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To market, to market to buy a fat pig. We closed a percent higher here in the local market, above 54 thousand points for the very first time. We are in fact up nearly 11 percent since the middle of January. Yesterday however was a broad based rally, including amongst the resource companies where I am afraid that I saw a whole host of downgrades from buy to hold, from hold (neutral) to sell, the one exception was Glencore.

Neutral and hold basically imply that you are neither positive or negative on the prospects (of the share price) relative to the companies potential right now. In other words, where the share price trades today, right now, is where you make your "call" as an equity analyst. These calls are 12 month in nature. Ironically, if you like the longer term prospects of the business, you should always be in accumulation mode, regardless of what the sell side (the research analysts) think. Their time frames are 12 months and typically their job is to produce trade ideas for the part of the business that is client front facing.

The buy side (or those generating the ideas internally for trading and investment houses) are far more focussed on shorter term market movements, and typically generate the short term ideas, like this looks too cheap right now, this looks too expensive. Sell side analysts research, and this is the difference between the two, is disseminated amongst their clients, from short term traders to long term investors. Traditionally the higher worth the client to the firm, the sooner that the detailed reports will land in their inboxes. Securities analysis is something that almost anyone can do, you have to be smart however. In fact the third kind is an independent analyst, who sells their research to either the sell side or the buy side. I have read many research reports, they are detailed and have an enormous amount of information in them.

The part that I guess is always a moving target is the complex modelling around earnings two and three years out. 1000 days is a long time to model revenue expectations and by extension earnings numbers and of course suggesting that the share price based on forward valuations should be at X or Y or Z. Businesses that are excellent are doing what they do, innovate and keep up the pace relative to their competitors. Good businesses with excellent management teams, wonderful products and services tend to trounce their peers in the short term.

You and I have very little idea of knowing for certain that a company like Apple will continue to produce excellent products year in and year out, we have no way of knowing if the premium pricing is something that customers will continue to be drawn to. Obviously quality is everything. That is why I am keen to see adoption of the Watch. Early signs are that Apple sold between 2 and 2.4 million last weekend, they were ordered. Good work, so far the early adopters are many!

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Company corner

SABMiller released a trading update yesterday that was well received, the stock in London (that removes the currency trade) closed the day 1.42 percent higher. The five year performance of the stocks in Pound Sterling has been nothing short of amazing, the stock is up 91 percent in that time. In Rand terms the stock is up 200 percent. That tells you everything you need to know about the Rand, right? 5 years ago you could buy one pound for 11.40 Rand, today that ratio stands at 17.88. The classic Rand hedge, although not entirely, as the company has a large business here in South Africa. The only way to really hedge against the currency is always to externalise money.

Whilst many folks in the developed world may have been pushing back against soft drinks, their high sugar content being linked to obesity as a main concern from consumers opting for healthier consumption patterns (Coke shed 1800 jobs earlier in the year in response to lower sales), in the developing world a Coca-Cola is not just a soda that you enjoy with a meal, or on the fly. It is a drink that shows brand association, it is a soft luxury, it is in a sense an aspirational thing. This is a beer company, not so? They are of course a massive bottler of Coca-Cola products. Plus, it is important to note that a Coke in India does not cost the same as a Coke in South Africa, which does not cost the same in France.

For instance, if I wanted to buy a 2 litre Coke right now (the shops are not open) I can at Woolies for 15.95 Rand or at the current exchange rate, it is 1.33 Dollars. Or 66.5 US cents per litre. In India (via an online shopping website), I can buy a 2.25 litre of Coke for 66.5 Rupees or 1.07 Dollars, 47.5 US cents per litre. I actually found a Coca Cola 2 litre pricing in the US, via Amazon (Target and Walmart will not give you pricing on those items), here goes: Coca Cola Classic 2 Liter (Pack of 4) , excluding shipping, costs 6.47. Or 80.80 US cents per litre. It differs you see. I bet someone has done the exercise using PPP (Purchasing power parity), it comes out about right.

Anyhow, back to the sales update, you can find it here: FY15 Q4 Trading Update. I guess you could argue that with a historic earnings multiple of around 24 times, and with pretty ordinary volume growth that the stock is expensive. Historically it has always been that way, for a pretty simple reason. When looking for a consumer stock globally and trying to pick out one consumer stock that is as geographically diverse and has fast growing consumer businesses in the developing world, this is one of the go-to companies globally. There is that overhang of the big Altria shareholder, equally the Santo Domingo family owns a lot. A very well known bunch of brands in their geographies. The only concern that I have heard lately is that their management structure and team in London is under more than a little pressure, putting it politely.

I see in time more push backs to their business, if their product is enjoyed in the right quantities, all good, if not then there are broad "challenges" in society. Good company, you cannot own everything however. If I like consumers globally, I am more inclined to invest in health and wellness businesses, like Nike who sell apparel, it is a growing business in both developed and developing markets.

Etsy announced that they had raised an enormous amount of money to grow their business. Etsy is interesting, you can manufacture your craft stuff and hook up with buyers online. As a customer you can own bespoke goods, made to order. It is not too dissimilar to your online flea market. Peak hipster? Maybe. Vinyl? Why? Digital music is SO much better. I love old stuff, I love antiques, must they always work? Etsy soared 87 percent on their first day of trading to settle at 30 Dollars a share, down from their high of 35.74. The company trades at a price to book ratio of 50 times. Yowsers. The company loses money. Whilst it may be fun to be a customer and manufacturer, there is no real edge here, right? I can imagine you and I could start something similar. We could also start Amazon, it will take a long time however. Fun to watch, as an investor however, this is an ignore, you cannot own everything. Nor would you want to.

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Things we are reading

The man who moved the markets has now joined a hedge fund - Ben Bernanke's decision to join a hedge fund will cost him something, too. If it wasn't for the policies implemented by Bernanke, I think the world would be a worse place at the moment. Working for the FED is a public sector job, so remuneration is nowhere close to that of their private sector colleagues; I'm glad to see that he can now cash in on the yards he put in at the FED.

Always interesting to see who trades with who and in our case our neighbours are important to us - The Largest Source Of Imports By Country.

Things change a bit if you consider all the European countries as one:

As we move to a wireless and battery powered society, these will help make the transition a bit easier - Kickstarter solves the new MacBook's USB issue

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Home again, home again, jiggety-jog. The Rand is stronger, the Dollar is marginally weaker, the retail stocks are lower. Negative sentiment towards SA inc. I am afraid. Life should not be so cheap, I feel desperate for all involved. Earnings so far have been really upbeat, beating expectations. In the end that is all that it is about, earnings, earnings and earnings. That drives share prices.

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Super cool Mario

"At the same time you do not want to ignore the people, most especially young people entering into the workforce at this time. Paint this scenario quickly, you entered university and graduated in 2009, at the end of that year. Older folks, who may have thought about retirement a couple of years earlier when asset prices were much higher and the future looked more certain (it never does) were getting used to the idea of enjoying their golden years."

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To market, to market to buy a fat pig. I really like Mario Draghi. In fact, I really like most central bankers. In the old days they were not really household names, people knew who they were in the news, people did not see them on the telly's. Perhaps the crises that ensued during the tenures of both Alan Greenspan and Ben Bernanke changed that a little. Most Central bankers I have seen in my time had and have a great sense of humour. Yesterday when a young woman jumped on the desk in front of Mario Draghi and shouted: End the ECB Dictatorship. With slightly more colourful wording. He Was very cool and collected, as he always is.

It did not take too long to find out who she is, her name is Josephine Witt, a 21 year old German woman, who has a message for the ECB. Yes, she even tweeted her "manifesto", which was part of the confetti that she threw at Mario Draghi as she stood on the desk in front of him, here it is, taken from Witt's tweet:

Now excuse me whilst I go on a little rant here. Life is hard, I understand that. Life is tough, I understand that. Life is a lot less tough for someone in the German system than someone born in Somalia at the same time as Witt. There is absolutely nothing stopping her getting the necessary grades in order to enter the German tertiary education system. In order to make progress inside of the ECB and change (or lobby to change) the mandate of the central bank you have to do more than wangle your way into an ECB conference. Good skills in that part, poor message relaying, even as I read her message and Twitter timeline I have no idea what she wants. Change happens through more than a protest. I get the sense that people always feel that change must happen yesterday, it cannot.

What was most impressive about the ECB governor is that after the scuffle, literally minutes later we went on to continue with the press conference and take questions as if nothing happened at all. You can watch the recorded webcast (if you have a spare hour, nobody seemingly has a spare hour any more), or read the text at the bottom: Webcast of the press conference 15 April 2015. If you are hoping to see the incident, forget it on that platform, a small line there: The video has been edited to remove an interruption. I know you want to see it, so I found a clip on Youtube: Josephine Witt Stages Confetti Protest At ECB President.

At the same time you do not want to ignore the people, most especially young people entering into the workforce at this time. Paint this scenario quickly, you entered university and graduated in 2009, at the end of that year. Older folks, who may have thought about retirement a couple of years earlier when asset prices were much higher and the future looked more certain (it never does) were getting used to the idea of enjoying their golden years.

Giant pause, work another five years, the natural attrition in the workforce that makes way for younger entrants does not happen. Youngsters find the going tough in an environment when jobs are being shed. That happened and the jobs have not really come back in the manner that everyone hoped. In the end frustration leads to protests when people feel they are not heard. It is no different here in South Africa, violence is somehow easier than words, perhaps as a result of fewer and fewer platforms to express those views. Perhaps the lack of quality education which should be more than a human fundamental right. With education, everything changes, you cannot take a brain away.

Away from philosophy, those discussions never end. Back to markets. Apart from the ECB news conference disruptions, the real issue that continues to dominate is an almost certain Greek default. Yes, the time has almost come. We have suggested over months and years that this is the case, that Greece will not want to leave the Euro zone. Yes. There is however a time when the other side is frustrated. Frustrated to the point where they are suggesting that there cannot be a solution, there cannot be middle ground met.

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Company corner

Wow. That was pretty big. Standard Bank executive Bruce Hemphill is going to join Old Mutual and run the whole business, replacing Julian Roberts. Group Chief Executive succession is where you can find the official announcement from the company. Obviously this is a big loss for Standard Bank, what it confirms (and you all know this already) is the fact that there is an enormous amount of quality here in South Africa.

Hemphill goes to London, leaves Joburg. He actually returns, he did his articles in London at a law firm by the name of Farrer & Co. Some more snooping reveals that Hemphill has a strong non-banking background in asset management, an area where obviously Old Mutual is strong. He is 51 years old, he has been at the group for 22 years, an executive at Standard Bank in his 2nd year. Perhaps in his (Hemphill) second year in senior management there is a realisation that Sim Tshabalala, four years his junior at co-CEO will own the top job at some stage. And as such, a bold move will see to it that Hemphill carves his own name at another organisation. Well done. Good work.

Holy smokes. Brait with a monster announcement this morning, out of Malta, the little European island. Here it is, the proposed acquisition of a c.80% interest in Virgin Active and withdrawal of cautionary announcement. Brait Mauritius is proposing that they buy 80 odd percent of Active Topco, which trades under the brand Virgin Active, for 682 million Pound Sterling, or 12.21 billion Rand. The group owns 267 clubs in 9 countries across 4 continents. And of course you will know well that they are gyms, clubs, places where you can keep and get fit and healthy. Places that you know and understand that an investment in your health is an investment in the future. The health and wellness theme is something that you know we like, it is evident in our investments in healthcare and more specifically in businesses like Discovery and Nike. People who are making your life healthier and better. The share price is around half a percent off, it seems that all and sundry, the competitions authorities and the shareholders will have to now decide whether this goes ahead.

Brait has a market cap of 44 billion Rand, this is huge. Remember that they have all the cash from the exit from Pepkor, Brait sold their 37.06 percent stake for 200 million Steinhoff shares and 15.086 billion Rand. 200 million Steinhoff shares at 77.52 Rand per share is worth 15.5 billion Rand, which is a lot more combined (30.5 billion Rand) versus the 25.7 billion that Brait valued the stake at. If this purchase goes through, the health club investment will be their second biggest investment after Steinhoff. And there will still be enough cash left over to do something else with. Good work and definitely left field.

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Things we are reading

This is via Marc Andreessen, who is a well know venture capital chap and founder of Netscape (remember that browser?), his firm does work for airbnb, Buzzfeed, Facebook, the list goes on. A picture, via the Economist, tells 1000 words:

What the future of air travel may look like and taking the term "cattle class" to a whole new level - The terrible, claustrophobic airplane seat redesign that could soon be how we fly. I would not be a fan of flying like this but if it was only a short distance flight and it saved a chunk of money, flying becomes even more affordable to everyone.

Driverless cars? What about planes that fly themselves, well they already mostly do - Planes Without Pilots. Take off and landing is all a pilot needs to do - "In a recent survey of airline pilots, those operating Boeing 777s reported that they spent just seven minutes manually piloting their planes in a typical flight. Pilots operating Airbus planes spent half that time."

What impact will buy backs have on EPS and share prices? - The legend of buybacks outperforming the market has outlived the reality Buy backs are great if stocks are fairly valued or in a company that has a bright future.

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Home again, home again, jiggety-jog. Going to another record high here at the start, the local market touched 54 thousand points for the very first time. Another day, if we close here that would be three out of four days that the local index registers another high. So far the big earnings this week in the US have been nothing short of excellent, the strong Dollar theme continues to weigh heavy.

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OMG, China is tanking! Or is it?

"If you add the UK, France and India together, it is still not bigger than the second biggest economy in the world. See? Amazing to think that just a little bit of context is needed to stop people running around like lunatics telling you that Chinese growth is slowing and that this is the worst news that they have ever heard. If China grows at 6.5 percent this year, that is an extra 650 billion odd added to their GDP, which is, if you needed reminding, around the entire economic output in China sometime between 1994 and 1995."

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To market, to market to buy a fat pig. The big story yesterday was the big drop in the Naspers share price, this after Pony Ma indicated that he had sold a portion of his Tencent stock. Just how much? Well, according to Bloomberg, he cut his stake from 9.86 percent to 9.65 percent. That is 0.21 percent of his wealth now in cash, of a 1.55 trillion Hong Kong Dollar market cap, which is 3.15 billion Hong Kong Dollars. Which is 4.9 billion Rand. Which is 410 million Dollars. Which is a lot of money in anyones language. So what is Pony Ma telling you by selling shares? I don't know, really, there is one reason you sell, it is taking some money off the table.

You must remember that Pony Ma (actually his real name is Ma Huateng) is inside of the top 100 richest people on the planet and amongst the top handful of richest people in China. He is worth around 20 billion Dollars, somewhere around there. I am pretty sure that it is not about the money, and I know that he would care if the Tencent share price was at 130 Hong Kong Dollars, that is actually where it was in March this year. The 52 week low is 90 odd Hong Kong Dollars, the high is 171 from a few trading sessions ago. He took a little off the table, good for him. Should you worry? No. Pony Ma still owns 9.65 percent.

And by the way, it suddenly occurred to me yesterday that Naspers themselves have never sold a single share. Koos Bekker is a genius, his timing is almost always spot on. Let the team at Naspers decide when it is time to sell, OK? It is a bit disconcerting that the Chinese have such wild swings in their share prices as a collective, all in or all out, this is what this graph below tells me, courtesy of Google Finance, this is a (maximum) 16 year view of the Shanghai Stock Exchange:

The point that I make in the "way below the all time high" is that for the Shanghai Composite. Over the same time period, the S&P 500 is up 70 percent. That is it. 16 years, 70 percent gain in the US Stock market. The Shanghai Composite is up 251 percent. Chinese GDP, seeing as that is the "other" thing that people are talking about? It clocked 7 percent growth for the first quarter, that is not good and the trajectory of growth in India is expected to eclipse that of China. Which is good, right? For the time being the slowing Chinese economy needs a little bit of context. In 1999 Chinese GDP was 1.083 trillion Dollars, according to Index Mundi -> China - GDP.

In 2013 it was 9.24 trillion Dollars. With a 7 odd percent growth rate in 2014, let us say 7.5 percent, GDP would have crested 10 trillion Dollars for the first time. GDP in aggregate went from 1 trillion Dollars in 1998 to more than 10 trillion Dollars in 2014. A 10 fold increase in GDP, the stock market only registered a 251 percent return. Remembering always that we stress that the market is not the economy, the economy is not the market. If you have a look at the Chinese GDP trajectory from 2005 onwards, you will see that ten years ago the Chinese economy was roughly the same size as the French and UK economies.

And now? If you add the UK, France and India together, it is still not bigger than the second biggest economy in the world. See? Amazing to think that just a little bit of context is needed to stop people running around like lunatics telling you that Chinese growth is slowing and that this is the worst news that they have ever heard. If China grows at 6.5 percent this year, that is an extra 650 billion odd dollars added to their GDP, which is, if you needed reminding, around the entire economic output in China sometime between 1994 and 1995. True story. So whilst the pace of growth is slowing, that is natural, you cannot deliver the same year after year as the base grows.

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Company corner

Oh no. It is sad when a company of any sort goes into business rescue. In this case it is Evraz Highveld Steel and Vanadium, see the announcement: SUSPENSION OF LISTING AND CAUTIONARY ANNOUNCEMENT. Why? The announcement fleshes it out: "Shareholders of Highveld are hereby advised that the board of directors of Highveld ("the Board") has resolved that the Company does not have adequate funding to meet its obligations for the short term. This is primarily as a result of historical operational difficulties and sustained financial losses within a capital constrained operating environment"

Anglo American owned this business for a long time, as part of their divestment from noncore assets, the majority of the shares ended up in the Evraz stable, the giant Russian company (31 percent of which is in the hands of Chelsea football club owner, Roman Abramovich) listed in London. So they lose everything, is my best guess, the part that irks me is that monster dividends were ripped out of the company during the period 2006 to 2008. This is however a sign of the times, the unfortunate thing will mean that eMalahleni (Michael's home town) will suffer here, we have heard a few horror stories already, none confirmed however. Another sign that the business of business is tough, ordinary workers need to understand that this can happen.

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Things we are reading

Peoples creativity is what pushes us forward as a species - Here's what the world's design mavericks created in the last year

Sasol is up close to 8% this week, here is the reason why - Oil Bulls Boost Wagers by Most Since 2010 as Output Seen Peaking. I think the only consensus about the oil price is that it is going to be volatile over the short run - Shale Oil Boom Could End in May After Price Collapse

Learning from history helps us put things into perspective - 9 Lessons From The Great Depression. The one thing that I have noticed about any author from the depression is their aversion to leverage, watching the damage of being over geared makes a life long imprint. I like number 6, "It's right to be an optimist, but be prepared for the worst."

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Home again, home again, jiggety-jog. Resource stocks are on fire, up sharply. With the collective resources up nearly three percent today, the rest of the market is being dragged much higher.

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Tick tock Apple watch

"The Apple products are awesome, it is hard to wrap your head around the fact that the iPod is only 14 years old, and that is in October this year. iTunes is 11 years old. The iPhone turns only 8 this year in late June. The iPad is only 5 years old. The watch is a few days old, in fact you could argue that many people will take time to adopt the technology."

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To market, to market to buy a fat pig. Another day, another closing record high, is that the case? Yes, we beat out the late February highs yesterday, the all share index, which comprises all of the listed companies here in South Africa closed out at 53589 points, after registering an intraday high of 53750 points. There are two points worth making here, over and over again. All of our clients do not own the index, they own companies that are represented in various percentages as a result of their market capitalisation and free float. Simply put, the free float is the portion of shares that are in the hands of public investors. Remembering that the big companies listed here are often secondary listings, which means that large portions of the shareholder register is not here, in most cases it is London.

For instance, the largest listed company here, by market capitalisation, is British American Tobacco. Currently the market cap is 1.317 trillion Rand, a reflection of the primary market where BATS, listed in London has a market cap of 67.53 billion Pound Sterling. It is easy enough to find which share register owns what, all that information is available in the annual report, under "Shareholder and contact information". Here it is, a simple little graphic that shows you that only 15.45 percent of all the shares are held on the South African register:

Remembering that BATS only obtained a JSE listing here in 2008, October the 28th of the year 2008. What was the ownership back at the end of 2008? Easy enough, once again remembering that annual report is a wealth of information, the only thing required is to read it, right? Here goes, same number back from 2008:

As you can see, South African shareholders have changed their holdings over 6 years by less than 70 million shares. UK shareholders have reduced their exposure by a lesser amount, there have of course been some serious buybacks in-between. Quite simply, if the number has not changed too much from the end of December and now, the South African value relative to the overall market cap is 15.45 percent of the current value. Or even easier, take the number of shares that is owned on the South African share register and multiply it by the share price. 313,088,347 shares multiplied by the closing price of 650.22 Rand. That equals 203,576,304,986.34 Rand. Which is just a fraction less than Old Mutual (also two share registers) and Vodacom, both have market caps of 206 billion Rand.

Obviously both those companies will have smaller free floats themselves, in the case of Vodacom, they are 65 percent owned by Vodafone. The free float is reduced significantly, with around 72.1 billion Rand in "public" hands. Although it is worth noting that Government owns 13.9 percent (they have sort of indicated that they are sellers) and the PIC, who own over 3.1 percent, you would think are firm holders.

An index is a complicated measure done on free floats of specific companies. So suggesting that the "market is overdone here" or the "market is way too hot" is possibly not right, I would guess that there are very few people who know the exact composition of the overall market at any one given time. I was asked this very question yesterday on the telly and my response was similar, although I used the examples of Steinhoff and Naspers being at all time highs in Rand terms, whilst the hapless commodity stocks were trading at multi year lows, the example I used was Kumba Iron Ore and Impala Platinum. Since the all time high of Impala Platinum shares, reached in May of 2008, the stock price is down over 80 percent.

To get back to the same level it would have to increase six fold. No markets are the same, ever. Equity market levels are not companies, it is more accurate to address the prospects of a specific company and determine whether or not their price presents an opportunity for you the shareholder. That was the only point I wanted to make.

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Company corner

I saw a tweet that suggested that it took Apple 74 days to sell their first one million iPhones, you know, the first version. According to some early projections, they may very well have sold 1 million Apple watches on Friday. There was something interesting about that, expectations were probably for more, signs are that there are production problems with the watch. The company will no doubt put on a brave face through these "challenges". Some are cheering the fact that Apple are failing to meet the demand, they were just being cautious is my best guess. The Apple products are awesome, it is hard to wrap your head around the fact that the iPod is only 14 years old, and that is in October this year. iTunes is 11 years old. The iPhone turns only 8 this year in late June. The iPad is only 5 years old. The watch is a few days old, in fact you could argue that many people will take time to adopt the technology.

From the time that the first major global consumer product in the form of the iPod was released, Apple clocked just over five billion Dollars worth of annual sales. That number is close to 183 billion now, it is very difficult to try and wrap your head around a 10-fold increase in sales in less than ten years, for a small company that is "ok", for the largest company by market capitalisation that is difficult to get used to. That aside, we were discussing the people who would be early adopters of the watch and more importantly, the longevity of the watch.

If the watch is well received, well accepted as being an integral part of the Apple ecosystem, then I have no doubt that it will sell well. What is more important is the ability to be an early warning system for healthcare, that is why I was not surprised when I saw these types of articles, this one from the FT: IBM strikes digital health deal with Apple, Medtronic and J&J.

Health and wellness are becoming huge investment trends and themes, the whole idea of early detection, prevention coupled with healthy eating. Add into this the ability to be able to Help Transform Medical Research, in the words of the IBM release. There will be an amazing amount of data, scientists and medical professionals will like never before have more data to use than they would have ever dreamed of.

Apple is slowly with all the pharma companies, the technology companies, and with the sharing of information, going to help modern medicine like never before. Lastly, as strange as it may sound from an aesthetic point of view, I see people wearing a timepiece and a tool, being their Vacheron Constantin (timepiece) and their Apple Watch (the tool). Not everyone agrees with me, wearing two watches might look very weird at first, so was wearing headphones all the time and that has become mainstream.

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Things we are reading

A little pocket change collected over and over adds up to a lot. In the case of US airports and travellers change, a whole lot: U.S. Airports Make Thousands From Lost Change Every Year. 675 thousand Dollars in coins each and every year? Wow. I wonder how many jars that would fill.

An interesting look at how we perceive the world, what reality looks like and how we think the world should look - Dan Ariely: How equal do we want the world to be? You'd be surprised. The clip is a bit over 8 minutes long.

Low interest rates are not a new thing, from 1934 to 1953 they were under 3%. The article has a look at what stocks did over that period - Stock Market Losses With Low Interest Rates. The point made by the author is that even with low interest rates, stock prices can fall. During this really volatile time, buying quality and reinvesting dividends meant that you come out ahead of the rest over the long term.

Another push from China to curb smoking, I think this will be a long battle as the government makes huge amounts of cash from the cigarette companies. At some point the public health bill will weigh more heavily - Beijing Turns to Social Media Tattletales in Battle Against Smoking.

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Home again, home again, jiggety-jog. Resource stocks are up sharply here, the market as a collective is down however. Naspers is down around 2 percent as a result of weaker Tencent price, one of the steam is coming out of the rally in Chinese stocks. Again, I have no way of knowing when people are going to stop buying stocks and turn tail and sell them aggressively. What we do have control over as investors is the ability to buy quality businesses, watch them, get less anxious about the price and more entrenched in the idea of owning the company.

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Naspers clocks 2000

"Naspers had a market capitalisation of 813 billion Rand at the open today, up 3.7 percent as I write this in early morning trade which equals 843 billion Rand. The difference between what the stake in Tencent is worth, relative to what the JSE buyers are willing to pay is roughly 8 billion Rand. Effectively, the South African asset management community is telling you that the people of Hong Kong, or the folks valuing Tencent on a 53 multiple are overpaying."

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To market, to market to buy a fat pig. Another jam packed weekend of kids stuff for me, it was fun as ever! Another Lions victory, the home team from the coast was beaten under raining skies, unseasonable at this time of the year, not so? Markets across the vast Atlantic Ocean ended around half a percent higher on Friday, closing near the highs of the session. Locally it was a pretty broad based rally, resource stocks lagged, gold stocks popped hard as the precious metal price ran through 1200 Dollars a fine ounce. What? This is starting to sound like a market report, I must stop this immediately at once.

I had a look at the market capitalisation tables, there are only 22 companies that have a market cap of more than 100 billion Rand. In Dollar terms with the exchange rate at 12 to the US Dollar, there are only 18 companies with a market cap of more than 10 billion Dollars. There are less than 100 companies with a market cap of over 1 billion Dollars here in South Africa. 97 to be exact, Curro Holdings (which has been on a tear, the share price that is) just sneaks in and out of that list. If I apply the same criteria to the NYSE, there are 1903 companies with market capitalisations greater than 1 billion Dollars. Greater than 10 billion Dollars? 553 companies. Imagine if our listed companies were part of that massive pool of investments? Going a little further, there are 61 meg caps listed on the New York Stock Exchange, the choice of monster businesses is actually enough.

The only point I was trying to illustrate is that in a deep and liquid market like the US, investment mismatches are more easily available. The market here is a little more crowded, you must always be looking for global diversification and owning big businesses that are able to operate across a multitude of geographies. I do not know why there is this perception of South African businesses that they are not patriotic when they go abroad? Surely if you are looking for newer customers, you cannot be confined to 54 million souls? I encourage South African businesses to trade wherever they think there are opportunities.

If you think about it, if all the consumers in Sub Saharan Africa started using products that are manufactured on the continent, most especially here, that would be better for trade across Africa, not so? As a collective, we need to recognise that there is a world of opportunities out there, stopping and routing out Xenophobia. There is a reason why people want to live and do business here, it is better than their country. Great risks are taken by people who travel and move out of their comfort zones, there is no plan B. That is why you often find that countries that readily accept immigrants into their systems have a greater rate of productivity than the locals, as a result of only Plan A.

The long and the short of it all is that you should have a globally diversified portfolio with big companies that have better than average growth prospects. You must own high quality, almost always. As they say in the classics, invest in what you know. Rather than going beyond the tried and tested, there is a reason that large and sizeable companies remain enduring parts of the investable world, there is a reason for size and scale and more importantly longevity.

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Company corner

At the start here Naspers have blown through 2000 Rand, as a result of TenCent having crested 170 Hong Kong Dollars for the first time. Perhaps it is time for a refresher in terms of the, what Naspers is worth question. Their results for the full year to end March were released in June of last year. If there is to be a trading update, there could be one at any time in-between now and then, looking back over the years and more especially at the interim phase, the trading statement was ten days before results. End of June says the investor relations calendar, 29 June to be precise.

Our trusty Naspers/Tencent calculator is as follows: Take the Tencent market cap in Hong Kong, which right now is 1.58 trillion HKD. Naspers owns 33.85 percent of TenCent, that translates to 534 billion Hong Kong Dollars. One Hong Kong Dollar at the current exchange rate is 1.56 Rand. So, quite simply, multiply 534 billion HKD by 1.56 and that equals 834.8 billion Rand. Naspers had a market capitalisation of 813 billion Rand at the open today, up 3.7 percent as I write this in early morning trade which equals 843 billion Rand. The difference between what the stake in Tencent is worth, relative to what the JSE buyers are willing to pay is roughly 8 billion Rand. Effectively, the South African asset management community is telling you that the people of Hong Kong, or the folks valuing Tencent on a 53 multiple are overpaying. With growth rates in the mid 30's, the PEG ratio is somewhere in the region of 1.43 times, which is starting to reach expensive levels.

I am reminded many times that a) the internet is still at early stages in China and there is plenty of room to grow rapidly, b) there is very little entertainment in China, that is why the Tencent platforms are so successful and c) the Chinese authorities like having control over the local companies that operate in that space, equally the companies there now will keep external competitors at bay. So whilst Tencent may be at the edge of what is "full" in terms of price, the rest of Naspers is effectively "free". This phenomenon of "getting the rest for free" with regards to the rest of the Naspers businesses has ALWAYS been around, somehow our wisdom amongst South African investors is arrogantly miles better than those folks closer to the action of the business who actually live in the region. Yes. Perhaps it is worthwhile to ask the investor relations person at Naspers this very question, and why she thinks it exists.

Remembering that last year the TV business at Naspers recorded revenues of 36.271 billion Rand and registered EBIDTA of 10.370 billion Rand. You could easily pay 150 billion Rand for that as a standalone business. And yet, I recall over a year ago Koos Bekker thought that the business was a "legacy" business. He is right, more and more content will be available online when the faster internet speeds become available in South Africa (sometime in 2030 - maybe, I am of course kidding), that is a threat to their very own business. Perhaps when the ecommerce businesses are fully fledged and making money (instead of losing A LOT), the TV business will be floated separately. Who knows, for now the cash cow is available for the heavy investments in the ecommerce businesses.

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Things we are reading

This is clever. Via AEI. 33 Insanely Clever Innovations That Need To Be Everywhere Already. They include traffic lights with countdown lights, a folding bike helmet, tile attachments to your keys and wallets to make sure that you can find them, always. Encouraging innovation drives wealth creation.

Phew. This takes a giant sideswipe at the Hedge Fund industry, written by Morgan Housel: Two hedge fund managers walk into a bar. It turns out that the market has crushed hedge funds over ten years. And they were supposed to be "neutral", so much for paying all the fees.

This article has received a fair amount of attention over the last week, I expect this trend to continue - Is Your Job 'Routine'? If So, It's Probably Disappearing. The need for quality education is more now than ever and is a great story for a company like Curro or Advtech.

I found this infographic on twitter over the weekend. You could say that this is economics 101.

When using financial/ mathematical models stop working, the temptation with low interest rates is to double down on the original position - Doubling Down on Risk

Arguably the most important thing for start ups is access to capital, the easier it is to get capital, the innovation a country will have - SEC: Startups Can Now Raise $50 Million in 'Mini IPO'.

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Home again, home again, jiggety-jog. Stocks are up. This is a record, I think. Interestingly we always measure ourselves in Rand terms, the currency that we transact in of course. You cannot go to the shops and buy bread in Dollars, this is not Zimbabwe. It is therefore interesting to note that the iShares MSCI South Africa Index ETF (share code EZA) is 8.78 percent higher in Dollar terms thus far, year-to-date. Over a year however, the ETF is up only 6 percent, meaning that the Dollar return has been quite poor, relative to the S&P 500, which has returned 15.76 percent. Over five years however, it becomes even more apparent that you should and must have offshore investments in a Dollar based environment, owning high cap quality companies. The S&P 500 is up 76 percent, whilst the EZA is up a mere 13.38 percent. Inside of the EZA there are 53 stocks, Naspers is the biggest (nearly 20 percent), with MTN around 9.6 percent. Over five years the Dollar is 65 percent stronger against the Rand, there is your difference. The Rand is nearly 40 percent weaker to the Dollar over the same time.

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