You make South Africa Great

“It has been tough for SA Inc. stocks, I do get a lot more negative feedback about the country more often, perhaps that is directly linked to the weaker currency, people feeling poorer in global terms. I heard an interview with South African icon Christo Wiese the other day and he mentioned for all the bad economic decisions made by South Africans that he has seen in his time (he is 74 years old), South Africans, real people are the ones that change the country.”


To market to market to buy a fat pig. Stocks in New York, New York made a massive comeback after having been down around a percent around lunchtime there, early evening here in Jozi. The most anticipated jobs number, since the last jobs number is set for release a little later this afternoon. This will possibly show another strong set of numbers, showing that the labour (with no u) market in the US is strong, and the Fed must do whatever they must. Watching the Fed is a fixation of Mr. Market, there is never going to be getting away from that. Waiting for a clue here or there and studying every word, sentence, for changes in the language to get the edge is tiring in my opinion.

Hey, perhaps I am wrong about that, perhaps it is very important as rates have not been moved higher since the middle of 2006. So there are a large proportion of people working in this industry, who may be around the 30 year old mark, who have NEVER seen the Fed raise rates. I don’t think that it is important for the context of running portfolios over the long run, in the very short run where everything is always important (heck I saw the TV comparing Glencore’s drop in their share price, recently, to the collective Greek listed banks), it becomes self fulfilling.

If I were a trader what would my strategy be (hypothetically), would I lock myself in a room and ignore everything around me? It would be pretty hard with an information overload, all you need really is a Bloomberg terminal and a trading screen? I suspect that trading is a hard learned skill and you need an aptitude and certain skill set to master it. Like professional golf, or professional tennis however, there are very few people who scale the heights to be even a tour pro and earn a “decent” living.

Whilst it may require a lot more patience and many more years of being an investor, rather than a trader, the chances of success, provided you watch closely, are far better than one event that could well crush you. It is possible to be wiped out, professionals get wiped out all the time, see this New York Times article titled Risky Strategy Sinks Small Hedge Fund.

The irony, as far as I understand it from the story, was that market turbulence was supposed to generate this funds outlandish sized returns. Often I see people backtest their data against a certain time in history and then suggest that they have a working algorithm that is bullet proof. Except this fund, which lost 48 percent of their clients money, went back to cash, returned the money to their fundholders and no doubt apologised. Eish. OK, today as we said, lookout for those non-farm payroll numbers, they no doubt will be fun to watch of course.

At the end of a session that had digested some of the best automobile sales in ten years, (US auto sales jump last month at Ford, Nissan, Fiat Chrysler), stocks closed mixed, blue chips marginally down, the S&P 500 and the nerds of NASDAQ marginally higher on the day.

Over in the other hemisphere, South Africa is a place that we call home (we the collective), the market had a decent enough day. The Jozi, Jozi all share index closed the day up 0.85 percent higher, off the best levels of the days. I have read that at the current run rate this is without a doubt the worst time for emerging markets since the financial crisis, Q3 was the worst since the last quarter of 2008. Talking about hemispheres, only 10 percent of the people of the entire planet live south of the equator. No wonder northern hemisphere summers and winters are a whole lot more “important”.

It has been tough for SA Inc. stocks, I do get a lot more negative feedback about the country more often, perhaps that is directly linked to the weaker currency, people feeling poorer in global terms. I heard an interview with South African icon Christo Wiese the other day and he mentioned for all the bad economic decisions made by South Africans that he has seen in his time (he is 74 years old), South Africans, real people are the ones that change the country.

Ordinary people who want to improve their lot in life, and there is no way of arguing that the vast majority of people do not have better lives now in this country than 30 years ago. Access to basic services has improved markedly. That does not mean that we shouldn’t be more prudent and accept ordinary, we should continue to strive for excellence. Leave politics out of it, as your mum always told you, steer clear of politics and religion, perhaps economics is intertwined in those two too.


Linkfest, lap it up

This is interesting, from Bloomberg: How Your To-Do List is Killing Your Productivity. What I got out of it was longer task names, habit and sustainability, as well as good old fashioned lists. Put pen to paper!

The headline reads How Often Does Cash Reign as King? My guess was not often, it depends what you call not enough. At this current rate, where we are in early October this might be the first year in the US for 21 years that this has happened. What strikes me is that these years often happen very close to one another.

Here is how different assets classes performed last month in dollar terms – Major asset classes, September 2015 performance review. There are very few assets that were green for the month and many who are down YTD.

Back testing data over a number of decades has shown that value investing has performed the best as an investment style. Having a look at more recent data shows Value Has Underperformed for Eight Years. After how many years do you call a trend long term? The “truth” that a value investor approach clings to is that their style works over the long run and buying unpopular stocks is the way to go about it. One of the biggest sectors that value investors have been buying recently have been commodity stocks, which over the last 3 months has resulted in terrible returns in the value space. I think the next 2 years will be a defining time for the approach/style. I think independent thinking and being flexible is the best way to go.


Home again, home again, jiggety-jog. Stocks in China and Hong Kong (which is part of China, lest you forget) are higher, catching up after being closed yesterday. Japanese stocks are flat and European stocks are all pointing higher. Hopefully we can start better today and close better into the weekend, that would certainly make for a good change. And as for the Rugger tomorrow, let us hope that we can secure our quarter final spot, by far and away the best match of the tournament thus far by the heavyweights could determine the hosts fate. Phew, a world cup without the hosts could be a tough thing for the success of the tournament.


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

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