Important Internet

 

“The internet is so important that for every 10 people who gain internet access, about one person is lifted out of poverty and about one new job is created.”

Which is why I guess the Zuck has this goal of getting the internet to everyone, Bill Gates may not think it is that important, this is his way of showing that it is. I am pretty sure that Gates and the Zuckerbergs want the same thing. Less poverty, better access to medicine, better access to education. The Zuck continues:

“Yet still more than half of the world’s population — more than 4 billion people — don’t have access to the internet. If our generation connects them, we can lift hundreds of millions of people out of poverty. We can also help hundreds of millions of children get an education and save millions of lives by helping people avoid disease.”


 

To market to market to buy a fat pig. Stocks rallied hard on Wall Street yesterday evening, the broader market S&P 500 comfortably over 1 percent on the session, blue chips less than that and the nerds of NASDAQ a fraction less than that. There was weak manufacturing data from the US, perhaps the most surprising news of the day was the lowest German unemployment number in this new chapter, since reunification.

When the Berlin Wall came down, that was a pretty momentous occasion for humanity, this is the lowest since that point in history of the new Germany, as that is when the line was drawn. Allan Gray is running an advert in black and white about a letter being exchanged between two lovers on both sides of the wall. And how waiting for the right returns takes time. I have spoken to many private clients in my time, and if I understand from folks who manage institutional money, their demands are far greater. It has been a tough time for contrarian investing and equally a tougher time for value investors, some of the ideas have been awful. And will they “come to you” if you wait? There are no guarantees in anything, let alone investing, the short answer is that whilst you are waiting for that opportunity, there are many others you are missing.

Quick wrap of US markets, healthcare and financials led the charge, we said yesterday that the last look at the health of the US economy is the non-farm payrolls number on Friday. Tune in, it is always fun to watch. Even if you don’t understand it all, know that the US economy is the biggest standalone economy in the world, driven mostly by consumers, meaning that the lower the unemployment rate and higher the number of people employed, the stronger the US economy. The stronger the US economy translates to a stronger currency, in this car the US Dollar has trounced everything in its path. A quick look at the five year Dollar Index reveals that the last year and a half is where all the Dollar strength comes from, I took a screen grab from Marketwatch -> U.S. Dollar Index (DXY).

So whilst yes, there are many reasons to look locally at the lay of the land and point fingers as to why the Rand is weaker, the reality is that the Dollar is strong, their fundamentals look better. When I see headlines like: Mr. President, save the Rand now, I am not too sure what to make of that really. What can the President do? I suppose there are attractions for businesses of investing in places like Ireland, Mauritius and the like, we could position ourself that way, again, we have a unique set of “challenges” down here.

Spare a thought for the Brazilians, they felt like the hair was being extracted from their “sensitive parts”, GDP shrank 4.5 percent from last year this time. There are problems and there are challenges, perhaps we have the latter. Mind you, when you look at a Brazilian GDP graph, this is what it looks like, courtesy of TradingEconomics:

Recently for Brazil it looks terrible, that can be mostly attributed to the tanking oil and iron ore prices, the rich resource endowed country has diversified their economy, clearly not enough. The economy clearly stumbled badly in the 90’s, it has grown nearly fivefold since 2002, that sounds pretty amazing. I guess it is all about recency bias, Paul will be there in a little bit, hopefully he can come back with some useful insight for us here in the office. Perhaps the labour element, like in neighbouring Argentina (where labour just lost) is on borrowed time too.

On the local front, after spending much of the first part of the day in the green, we fell away, with the Jozi All Share index closing the session down 0.14 percent. Again, it was a sized bag, resources, at least some of them doing better on the day. Naspers feeling a little heat and selling off on the day, the stock has been so strong lately, I don’t blame folks with short time frames taking some off the table. Woolies was also amongst some of the biggest losers, I didn’t see anything specific. There was not too much on the companies front yesterday, 1 December means that with the new month, the rush of companies reporting at the close of the month (i.e. last month) had come and gone.


 

Perhaps the biggest news of the day yesterday at a global level was the news that the Zuckerberg family (the most famous one) had a baby, well done the Zuck and Priscilla. We know her through a picture and know her name is Max, excellent. This A letter to our daughter is a must read. It is a little like the annual Bill and Melinda Gates Foundation letter, perhaps with fewer graphics and written with less time. I am going to pick out the juicy bits, the context of the first one is that the world is a better place and improving, medicine has made many advances over 100 years, yet we can continue to do better.

“The internet is so important that for every 10 people who gain internet access, about one person is lifted out of poverty and about one new job is created.”

Which is why I guess the Zuck has this goal of getting the internet to everyone, Bill Gates may not think it is that important, this is his way of showing that it is. I am pretty sure that Gates and the Zuckerbergs want the same thing. Less poverty, better access to medicine, better access to education. The Zuck continues:

“Yet still more than half of the world’s population — more than 4 billion people — don’t have access to the internet. If our generation connects them, we can lift hundreds of millions of people out of poverty. We can also help hundreds of millions of children get an education and save millions of lives by helping people avoid disease.”

And then the real part, the formation of the Chan Zuckerberg Initiative, which when I read it had over 34 thousand likes already. I was slow, it had jumped the shark. The initiative is to “advance human potential and promote equality for all children in the next generation. Our initial areas of focus will be personalized learning, curing disease, connecting people and building strong communities.”

With all foundations, you need money, right? So how to fund it: “We will give 99% of our Facebook shares — currently about $45 billion — during our lives to advance this mission. We know this is a small contribution compared to all the resources and talents of those already working on these issues. But we want to do what we can, working alongside many others.” Whoa! That is pretty big. So Max and her unborn siblings get a percent from their parents. How will this work, obviously the Zuck is still going to be in charge of Facebook? Earlier in the letter, the Zuck says: “I will continue to serve as Facebook’s CEO for many, many years to come.” More to come when they get into their normal parenting routines. My eldest in ten and a half and I haven’t figured it out yet, good luck Zuck, we will see you in a couple of decades. Kidding!

We like to see this. Good for him, good for his family and of course, great for humanity. This is going to take forever, a long, long time. He will remain in charge, the world needs more people like this.


 

Linkfest, lap it up

The current pollution in China is not great. There is a smog cloud slightly bigger than Spain floating over the northern parts of China – A Chinese artist vacuumed up Beijing’s smog for 100 days and made a brick from what he collected.

The worlds tallest building, due to be completed in 2020 will be 1km tall – Saudi Arabia to build world’s tallest tower, reaching 1 kilometre into the sky. It is amazing what technology allows us to do. The only problem would be the time it takes to get to the top floors.

At the heart of the Discovery business model is to give us small incentives to do what is good for us. Discovery already has a vast amount of data which proves that what they are doing works, here is an economic paper talking about incentives in general – Incentives change how we think. The scientists got people to each insects, slightly less appealing than being incentivised to go to gym.


 

Home again, home again, jiggety-jog. Japanese stocks are down, Chinese stocks are up sharply. Hong Kong stocks are up two-thirds. We are probably going to start better here, in fact as I write this, we have, pretty much a broad based rally. Good work if you can get it.


 

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

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