Stay Strong

“We live in a far better world than Zamperini grew up and operated in. The world is not technically at war with itself. We might think that the great financial crisis was comparable to the Great Depression, but I did not see one in three citizens lining up at soup kitchens. I did not see one in four banks go bust. No sir. I did see modern day hardships, nothing as severe. People lost jobs, a degree of savings, much of that was recovered if you were not spooked.”


To market to market to buy a fat pig. There are words that I have tried to cut out of this daily message. Words like because. And but. Why? It was in a conversation with a client, who is older than me and she said that it made her life better. How? It does not place responsibility on any other persons door, you and you alone are responsible for your actions. If you embark on X journey, you will get to Y, perhaps not in the way you intended, you will get there if you have tenacity, grit and smarts. I am a firm believer in the human race, I love reading books about success, people who have overcome all odds. I know that the movie is knocking around, Unbroken, I do however think that the book is (in most cases) far superior to the movie. Louie Zamperini did many things and suffered immeasurably, yet in the end he succeeded. He also lived to a ripe old age of 97.

We live in a far better world than Zamperini grew up and operated in. The world is not technically at war with itself. We might think that the great financial crisis was comparable to the Great Depression, but I did not see one in three citizens lining up at soup kitchens. I did not see one in four banks go bust. No sir. I did see modern day hardships, nothing as severe. People lost jobs, a degree of savings, much of that was recovered if you were not spooked. If you did not get a chance to read Paul’s email last evening, you can catch it here in a piece titled Why Save? You cannot criticise spending habits, I have learnt that, in fact rather than lecture people about what they should and should not do with their earned money, save money to be able to have the choices that Paul talks about in his email.

I keep telling my daughters to focus their energy on the things that you can change. You cannot change the way that people feel about you, or what they say about you. Greet people, no matter what their circumstances are. I often see uncomfortable reactions of richer people with poverty, if you have nothing to give, say sorry and acknowledge the person putting themselves out there begging. You gave something, acknowledgment of their plight. We always try and maintain a positive outlook on life and investments here at Vestact, it is in our nature to be optimistic. Paul once bought us t-shirts from a little store (Best Made) on White Street in New York that also makes these badges. Awesome, not so? I actually have one sewn on my “trading jacket”. Yes, we have those too, you must come visit us and see.

We digress, too much. Greece is certainly front and centre of attention. I have been following the discussion on many different platforms, I am always amazed that everyone has a simple solution for Greece. Ah yes, they must do this or that. And the idea that Greece will get so much cheaper, on what basis? Are the people going to take salary cuts overnight? Are the prices suddenly going to plunge? If anything, it may actually become more expensive. I do think people are getting ahead of themselves, whilst the fatigue exists around dealing with the same issues over and over again (Smashing pumpkins sung despite all my rage I am still like a rat in a cage), I still think the base case is for a solution by Sunday, with Greece remaining inside of the Euro area.

Perhaps a longer dated one. Even though you could argue that the current interest rates offered are better than anything else any country can get. Really. Both the US and the IMF are calling for more debt relief. The other 18 countries will essentially write off the money they have stuck in. As will the rest of the world, in terms of the IMF loans. So is it a humanitarian crisis when rich people struggle? Yes, I guess it is, in the same way that the BP oil spill at Deepwater Horizon had a camera showing oil spewing out at depths that was far greater than Everest was high. Remember? The number of days of spills were displayed on the telly day in and day out. 87 days of gushing went by. In that time BP went from nearly 60 Dollars to 27 Dollars in less than 60 days. BP suspended their dividend. They were sold by pension funds, no more dividends = sell first and ask questions later. They after all have monthly obligations and were reliant on those dividends.

I think that Greece will be fine. It is a sideshow for what we are trying to achieve in the long run. We are only trying to achieve maximum returns on your hard earned savings by selecting companies (and not share prices) to invest in. Companies that we think have the edge over their completion, or companies that are just in the right place right now, at the right time. Companies that fall into sectors that are gathering momentum. Sectors like healthcare (which itself is very broad), consumer related, technology. Those are all sectors that we think are going to outperform established businesses. That does not mean that businesses that are decades old cannot do well or better than their peers.

A decade ago Nokia was the business, every person had one of their phones, Apple did not even make a phone. Yesterday came the announcement that Microsoft wrote off 7.6 billion Dollars, mostly related to their purchase of Nokia. They are also shutting factories, hardware smartphone manufacturing facilities and letting 7800 people go. That is horrible. Consumers ultimately determined the fate of Nokia and the Windows Phone. It was the consumer that decided that they wanted the superior product, Nokia and Blackberry were the major losers in all of this. Samsung and Apple smashed them, superior products and better marketing. The same could happen to those two businesses, which is why it is not as simple as that. We used to own Nokia over Apple, luckily we were early enough to react (even though it seemed late at the time) and do the switch.

In the end you can find 100 reasons not to buy quality businesses. Share prices in the long run reflect the companies financial well being, the more profitable on higher sales the company is in the future, the better the share price will do, there is no doubt about it. What happens in the really short term is a guessing exercise, some are far superior at being able to make accurate predictions in very short periods of time, they are few and far between. I encourage people to trade if they think they have the necessary skills, many (if not all) end up being on the wrong end of what is a bad learning experience. For us, it is about discipline and patience. Be more Jacques Kallis, less of a “dasher”. Not the reindeer that is, Rudolph’s friend.


Markets in New York were slam dunked last evening, there were severe technical issues at the exchange which caused it to be closed for a number of hours. If you subscribe to the Buffett philosophy of not being able to transact on an investment for a full five years, then the market being shut for a few hours is neither here nor there. Liquidity I am reminded is a wonderful thing. I think that greater liquidity does in some senses have some impact on valuations, that might mean it is more likely to reach price discovery easier. The more you can transact is the securities of a company, does that have a positive impact on the price you are willing to pay for that security? I guess it should not really make a difference, the valuation that you pay today should be determined by future prospects of the earnings ability of that particular company. Right? Yes.

In the end the market in New York closed sharply lower, stocks off one and two-thirds of a percent. Whoa, that is serious. Even though earlier in the “worldwide” session stocks had rallied sharply in Europe on the basis that Greece was committed to institute the reforms in return for more aid. That is the truth, with the credit lines, the country will not be able to afford to pay for anything, and by anything that means all state employees from nurses, to teachers to doctors and university lecturers. And other public officials too, I wonder if politicians count too? I mean, if the crazies on the left are so hardcore, does the reality sink in when you check your bank balance? Or if someone transports you around, pays for food and some bills, is it less “real”. Not sure. US futures are sharply higher today, our market is bouncing too, volatility is all around.

Why? Chinese stocks are up sharply, it has been “all go” as Bill Lawry might say. Or was that Queenstown’s finest (in the Eastern Cape), Tony Greig? The Chinese authorities are fiddling, which is not what you want. Telling State Owned Firms not to sell stocks for six months, those with 5 percent or more holdings in a specific company. I do not like lock ups, however it may not be a bad thing. You should subscribe to the forever philosophy. I had a look yesterday and you will be surprised to know that whilst the Shanghai market is up 70 percent over 12 months, and down 31 percent (before todays heroic 5 and a bit percent move) over 4 weeks, it was over 5 years up only 47 percent and a less impressive 8 odd percent year to date. Those last two numbers sound more on the anaemic and unexciting side. As ever, more perspective is needed on all these things.


Linkfest, lap it up

Electricity shortages and increased tariffs are a very good thing for alternate energy sources. – Africa’s largest solar farm now fully operational.

Here is one view of what a Grexit could look like. It is short and in fairly straight forward english. If there ends up being a Grexit, I think it will be very messy for everyone involved given how intertwined things in Europe are and because there is no framework for someone to leave – What Would Grexit Look Like?

We are 5 days away from the first Pluto ‘flyby’. The New Horizons, space craft was launched by NASA in 2006 and on passing Jupiter, used the planets gravity for a ‘gravity boost’ to help with its journey. Here is some cool info collected so far – Turns Out We Were Completely Wrong About How Pluto Looks


Home again, home again, jiggety-jog. One thing very positive that could come out of the ATM limits in Greece should and must be adoption of more electronic methods of payments. Accessibility to your cash deposits and salary should be without ever worrying about counter-party risk. Elon Musk wanted to change the world with X.com (which evolved into Pay Pal), a seamless banking system which enabled peer to peer payments cheaply and seamlessly. In East Africa the payment systems with M-Pesa work just fine. I think that Vodafone in Greece are missing a trick here, M-Pesa could be huge for them, cut the banks out of the system, right?

The market here today is up 1.75 percent, the volatility is incredible. And I wish I could say that volatility is really good for traders, perhaps lucky ones only.


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

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