Beer and Cement

“What is the oldest listed company here in South Africa, on the Johannesburg Stock Exchange? PPC was founded in 1892 and listed in 1910. SABMiller was founded in 1895 and listed earlier than PPC, in 1897. Naspers is 100 years old (and completely different from what it was back then), yet it has only been listed since 1994. Anglo American was founded in 1917, when was the company actually listed however?”


To market to market to buy a fat pig. We skipped yesterday to celebrate a day that is very important in the history of South Africa. It is amazing to think that someone born in 1976 would have already finished school and graduated, yet the right to vote after the Soweto uprising of 1976 only saw freedom for those folks in 1994. The wheel turns, it takes a long, long time for that to happen I guess. I personally had the most amazing day, the weather was unbelievable. Accuweather says this morning that the real feel is around minus two, the wind is the real factor here. Thanks frontal systems, remember your geography well at all? Geography was always my easiest subject, easy to understand possibly as a result of being able to see it all the time, like property. Unlike finance. Even though you can live your investments, eat the food the companies that you own manufacture, buying them from retailers you own.

Monday we slid into the close, lower and lower on the day and finishing at the worst point. We ended a percent worse for wear. We should get a lift here today, the S&P 500 is up around 20 points from where our markets closed Monday, although we are about the same levels as we were Friday. Sometimes I wonder what would happen if you went and did five years of humanitarian work and came back to your investments, what they would look like.

Buffett coined the phrase that his favourite holding period was forever, is that still possible? Some of the oldest companies in the world are family owned affairs in Japan, a hotel that has been going for 1300 odd years should make for a fun stay, a construction company named Kongo Gumi is around 1400 years and some change old. Wow. So I guess it is possible, however I read a Seekingalpha article that said that the average lifespan of a company in 1935 was 90 years, today it is just 18 years. Read: Increasing Churn Rate In The S&P 500: What’s The Lifespan Of Your Stock?

So whilst your intention may be to hold companies on a forever basis, unfortunately a company needs to evolve. DuPont is a decent example of a business that evolves and keeps up with the times. Teflon, neoprene and lycra, they developed them. The business is however only 213 years old, they did start out as an explosives manufacturer. In South Africa we have some pretty old businesses, Blaawklippen (1682) with Groot Constantia (1685) and Boschendal (1685) vie for the oldest wine farms in the country. This is where it gets very blurry, why is there a complete lack of African businesses history? There must be loads of trading before that, is it documented? I am looking for good literature on the expansion of our continent, I am pretty sure that it does not always make for comfortable reading. Yes, I am sure of it. The book I just started reading is the Elon Musk book, it is certainly a page turner Kindle clicker.

What is the oldest listed company here in South Africa, on the Johannesburg Stock Exchange? PPC was founded in 1892 and listed in 1910. SABMiller was founded in 1895 and listed earlier than PPC, in 1897. Naspers is 100 years old (and completely different from what it was back then), yet it has only been listed since 1994. Anglo American was founded in 1917, when was the company actually listed however? Old Mutual was demutualised in 1999 and listed in that year, yet they trace their history back to 1845. The JSE only started operating in 1887, so I am guessing that SABMiller may well be the winner on that score.

Wait, then I remembered that I should check back, check a company that is a shadow of its former self, DRDGold. Durban Roodepoort Deep, less than 1 billion market cap. Founded and listed in the same year, 1895, the history of the company is not immediately available on their website, I am relying on information from Sharedata. That seems pretty old by Joburg standards, perhaps that is the real winner of the oldest prize, if not most successful. Our city itself was founded in 1886, our city that is. Hey, Cape Town, you had such a lengthy start on us up here (330 odd years), why no stock market of your own?

On that score, before we wrap the markets, I saw a depressing tweet from Joe Weisenthal, or the Stalwart as he is known on Twitter. He has of course sent 219 thousand tweets. There are bound to be some depressing ones. His retweet originated from Terryanne Chebet, an ex CNBC Africa staffer, she now works for a Kenyan TV channel. It is simple, it is an excerpt from the FT, an article from a Nairobi based staffer titled: Nestle cuts Africa workforce as middle class growth disappoints. The regional chief is quoted as saying that the middle class in that part of the world was overestimated by the company, they thought this would be the next Asia. Worse yet, he suggested that it is not really growing, the middle class that is. Although our old pal from Nairobi (regular on CNBC Africa’s East Africa programming), Aly-Khan Satchu suggested the products were all wrong for the market, perhaps like SABMiller the company should evolve with the populous in terms of product. So perhaps it is a case of having to be different.


The Greek issues still knock around, the Greek leader was defiant in parliament, I get the sense that a soft default is going to happen and that everyone seems to be thinking that is alright. You must remember that whilst Greece has favourable terms for their long term debt, around 9 percent of all of it (approx. 27 billion Dollars) is due this year. More than half of that amount is Short-Term Treasury bills. There is a very detailed description by the WSJ, world class: Greece’s Debt Due: What Greece Owes When. Sigh.

The other important event today is the Fed meeting. Some are suggesting that this meeting will reveal little, or a lot. If it reveals nothing, we are kind of in another period of waiting until 29 July, the FOMC holds meetings every 45 days. And various voting members are talking all of the time. And rates will go up. And no, you must not panic, rates go up and down regularly, this period that we have been through was simply extraordinary and unprecedented, in terms of central banking. That is of course why we do not have a reference point, and too many people are suggesting what could possibly happen next. Keep calm, carry on, stay invested in quality. Rates, you have NO control over that. Expectations are for rates to be on hold until September, a quarterly GDP outlook will also be released.


Stat of the day

Vincent van Gogh never sold a painting in his lifetime is what I heard on the wireless last week, or was it Monday? He died at the tender(ish) age of 37, only painting in the last decade of his life. He created over 2000 works in that time. His most famous piece, The Starry Night has been a permanent fixture at MOMA in New York since 1941. I saw it once, pretty impressive, I am an art heathen however. Of the rank at sale (most expensive at the time) van Gogh paintings own 4 of the 8 spots, number 1. Meaning that when the painting was sold, it was the most expensive ever at that point in time. Two portraits (Joseph Roulin and Dr. Gachet), Vase with Fifteen Sunflowers and Irises were those record setters.

The most visited art museum in the world is the Louvre in Paris, over 9.33 million people visit each and every year. I went once as a ten year old. It was marginally interesting for a ten year old! How much would you say that all of the artworks in Louvre would fetch, should someone want to buy it? 35 thousand art works, 380 thousand objects. Who knows, the Mona Lisa (which resides in the Louvre) is apparently insured for around 750 million Dollars, or it was thought it could be insured for that amount. All 77 by 53 centimetres of it, a pretty small painting. 6 million people see the painting each and every year. So in theory, the painting is never going to be sold, it is behind a glass casing and seems hard to get to, it will be guarded heavily.

The Mona Lisa was bought, it is said, by King Francis I of France, early on, inside of the lifetime of Leonardo da Vinci. Francis bought it for a princely sum of nearly 14 kilograms of gold, 4000 gold florins. That is only around 530 thousand Dollars, which makes the painting and the purchase of the Mona Lisa, possibly one of the best investments for France of all time. France gets nearly 85 million tourists a year, more than any other country in the world, more than Germany and the United Kingdom put together. Astonishing. Well done Francis the first, your legacy may well be that people spend thousands of Euros a year to catch a glimpse of a painting that you once hung in your bathroom. A 6 day 60 museum pass (which includes the Louvre) of Paris costs 69 Euros. A selfie stick costs 30 Dollars. Combine the two, with the Mona Lisa in the background? Priceless for you, not so much for anyone else.


Linkfest, lap it up

I remember seeing this functionality in the Amazon phone which was a bit of a failure – What it’s like to use Amazon’s ambitious new device invented to take over online grocery shopping. This is making shopping “online” and at home even easier and because the prices are competitive I can see more people doing this. Given the trend for professionals to work longer hours, we have less time to drive to the shop, fill a cart, pay for it and then drive home. Ordering online sounds much better and if you know the quality that you will receive, even better.

This is an interesting view considering that Blankfein graduated from Harvard and even more telling is that his three children also graduated from Harvard – Goldman’s Blankfein on Skipping School Work, Wishing to be Chinese. I think the key point he was trying to get across was this “You have to know the content of your field, but you also have to be a complete person, the kind of person that other people want to deal with”

Another case where politicians are more concerned with own bank accounts instead of the people who elected them – Nigeria’s legislators will get $43 million of taxpayers’ money for a wardrobe allowance. Can the argument be made that you get what you vote for? Or is it more of a case of not being able to vote for quality leadership? President Buhari has only recently been sworn in, so lets see what he can do with his tenure.


Home again, home again, jiggety-jog. Markets are half a percent better. As ever, there is something to wait for, even the wildly wild Donald Trump. That is nothing short of hilarious and fits squarely into the self importance category.


Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

Email us

Follow Sasha, Byron and Michael on Twitter

087 985 0939

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s