Solar Revolution

“We have to use fossil fuels until we get to the point where alternatives are cheaper. In a South African context it is getting more expensive, electricity, I still believe we are on the cusp of a solar (residential) revolution. If I were the big banks, I would be thinking (I am sure that they are) of extending loans for rooftop solar installations, that would dramatically reduce usage from the grid. The inverter and battery packs are expensive.”


To market to market to buy a fat pig. The afterglow of the Greek resolution continued yesterday, yet I get the sense that this is not quite “done”. The contentious 13th cheque for 1.2 million pensioners receiving under 700 Euros a month is part of the concessions, Syriza promised to put that benefit back. If you cannot afford it, then I guess that you cannot afford it. Berlin however is insisting that if the Greeks want the money from the bailout package their parliament must vet the reforms. Fair enough. Ironically the opposition parties may be more inclined to support the incumbent who has faced possibly more than he bargained for. The opposition, at least the ones that are not that crazy, are all for staying in the broader European Union. This is it guys, the money moment that I have been waiting for. It is a yes or no to the money based on pension and tax reforms that have been presented to the rest of Europe.

PASOK has less than five percent of the seats in the Greek parliament, New Democracy (which “stole” the PASOK support base) has 27.8 percent, the Communist party (yes) has 5.5 percent of the vote. Syriza, which consists of 17 different factions (and perhaps some more) certainly do not speak from the same page. Yet, they see themselves as united. If you read the different coalition members ideology it reads like 100 years ago: Trotskyism, anti-capitalism, maoism, communism, Marxism-Leninism, revolutionary socialism, democratic socialism, Eurocommunism, green politics, left-wing nationalism, socialism, Euroscepticism, and the list goes on. You get my drift? Yet, like most things in life, you cannot enable yourself without the right resources. Collectively Syriza are less wild than the Golden Dawn chaps, who have been described as neo-Nazi and fascist. Count them out from supporting anything sensible, OK? Yes, this is 2015 and not 1915. And yes, these are the very people who “invented” democracy. Is that right?

The WSJ says to wait and watch, sorry, subscription only: Differences Persist as Creditors Scrutinize Greek Bailout Offer. I have absolutely no idea what is going to happen. All I can say is that whilst this recent rally is something that has taken place across the globe, it has done so in part of a delayed rate rising (and slower pace) than many anticipate. The fact that people think that the Fed HAVE to raise at 25 basis points, really? Surely they can raise by 10 basis points until we get to one percent, why not? The Peoples Bank of China do this, currently the rate is 5.1 percent, it has been 6.56, it has been 5.81 percent. You do not need to move in a number that was always the case in the past.

So whilst Greece and their access to much needed capital is the current and only story, there are of course many in the background that continue to dominate over the longer run, including the Fed and interest rates. I often say that in all of my reading of the past and equity markets of the past, there is always anxiety of what the Fed are going to do and when they are going to do it. Do not make that part of your equity investment long term plan. Of course if a company is currently indebted in this low rate environment, then it becomes difficult to service that debt in a higher rate environment. If one owns businesses that are likely to have a better than even chance of growing comfortably past their current debt burden, then it does not matter too much, where rates go.

Ultimately you want to be owning stocks that have a balance between offering you the best possible returns against current and future dividends that the company pays. Not everyone wants dividends, indeed the greatest investor of all time, Warren Buffet has not paid a dividend from Berkshire Hathaway since 1967. In fact that is the only dividend that they (Berkshire) have ever paid. Only 1. It does not mean that Buffett does not like dividends, he loves them coming in from the businesses that he owns inside of Berkshire, he reckons and rightfully so, that he can do better with them. If a company does not pay you a dividend, it does not mean that they cannot. I am guessing in the coming years that traditional non dividend payers, like Google and Facebook, could hint at changing that. I thought that this Keep calm poster must exist and by jove it does:

Exactly. Keep calm, buy quality, stay the distance, ignore the noise about the Fed, about Greece, about all time highs (there are always going to be those events and many more MUCH worse), if you did nothing forever, you would miss out on returns over decades that need a base.


The US shale revolution has gone quiet, possibly as a result of lower energy prices. We do not talk about it enough, yet I read an article from the same chap who championed the changing world of oil. Fracking is an ugly word for many people, until we crack 2 hour marathons on a daily basis, that commute is going to take place in some form of transportation, be it public or a private vehicle.

We have to use fossil fuels until we get to the point where alternatives are cheaper. In a South African context it is getting more expensive, electricity, I still believe we are on the cusp of a solar (residential) revolution. If I were the big banks, I would be thinking (I am sure that they are) of extending loans for rooftop solar installations, that would dramatically reduce usage from the grid. The inverter and battery packs are expensive. As is a Nissan Leaf, I checked on AutoTrader, there were only 5 and they were ALL new, at a cool 450 thousand Rand a pop. A BMW i3? Same, almost all new and around 530 thousand Rand “used”. So it is expensive. To kit your whole house out and go completely off the grid is going to cost you between 150 to 250 thousand Rand. That excludes the geyser and heating.

I guess you could continue to get hybrid systems, some gas integrated into that. You do not have to get an Elba fit for a king and queen -> From Hirschs -> R39,589.99. There are reasonable gas ovens everywhere! What does the gas supply look like? Mozambique could supply us for days and days, for now of course. I guess solar is the longer term answer, the sun comes up each and every day and last I checked there was no way to tax that.

If you want to read about the looming shale revolution, phase two, then you should read Mark J. Perry’s piece: Bakken updates: 1) Williston as ground zero for the American spirit and 2) Here comes Shale 2.0!. A whole new round of technological advances means that extracting oil becomes more cost efficient, thereby lowering the prices of energy. Unfortunately that is bad news for economies that are reliant on higher energy prices. Good news for us as a net importer of energy.


Linkfest, lap it up

What does 12 months of forward planning and 3000 hours of reading result in? Well in most cases, it results in a good out come and some form of mastery in what ever you are doing. In this article it resulted in going to 41 countries in 4 years – I travelled to 41 countries using borrowed air miles and credit card points

I can’t imagine a world without Google and the internet – Google’s making me dumb.

Here is the great story of Frank Magwegwe who was unemployed and sleeping on the streets in the Eastern Cape, worked to get enough money to study and now is the segment CEO at Momentum Retail – About Frank. Sasha got to meet Frank on the “Tonight with Bruce” show on CNBC, here it is – If you are born poor in S. Africa, are you likely to die that way?

Writing is a great way to grow your own knowledge base and to share what you have learnt, with others – 10 Things I Learned Writing a Book. The article is well worth the read, even if you just look at the headings for each point.

We have spoken a few times about how Amazon is changing the landscape of publishing, Ben Carlson is the first author that I came across who has spoken about Amazon and then I read about how Amazon is changing their business model for books – Amazon to pay e-book authors like Spotify pays artists. Here is a look at how simple books can be if they are self published – In Search of a Smile: A Cleft Palate Mission to Malawi


Home again, home again, jiggety-jog. Handre Pollard was one years old when we won the World Cup Rugby 20 years ago today. I remember it pretty well. It was varsity holidays, I went home the next day. I watched one match live at the stadium in Port Elizabeth, where Hennie le Roux was off screen laying into the Canadian rugby team. Not exactly the best performance from us, unlike when New Zealand stuck nearly 150 points past the hapless Japan. And on that topic of Japan, the Nikkei 225 closed at levels last seen in 1996, AFTER this event. Wow, it certainly has been a tough road for Japanese investors over the last 20 years, many folks suggesting that the US could turn out the same. Different, bigger population, more diverse, positive population growth. Paul was there at the stadium on that day, good, exciting experience. Laurie Kay, the pilot of that SAA Jumbo sadly passed away in 2013.

Markets have started better here, great news for those who are long. I am off, I leave you in very capable hands. I shall return with real stories about Greece, although having said that, I am hardly living in peoples houses and sharing their lived experiences, it is just what people are willing to tell polite people.


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

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