A Fight over Marmite

“Unilever was a big loser yesterday, revenues were shy of estimates, the argument that the European based company is having with the UK retailer Tesco seemed to capture the headlines, and one product in particular. You may know it. Marmite. Yes, Ma possibly made you a sandwich with it, way back.”


To market to market to buy a fat pig Two percent here, two percent there, two percent everywhere. Sadly not in a northerly direction, at least for the market. Stocks were beaten on the fears that the Chinese economy is going to have a hard landing. China will be fine, even if worse case scenario the die has been cast, the scene has been set, the greatest economic miracle of our time is in motion. We were down just over two percent by the close, all major indices down around that much, pretty much a broad based sell off.

China has a population now that is greater than that of the entire world around 160 odd years ago. It is around 1.384 billion now, versus an entire globe of 1 billion in 1804, and then 2 billion souls in 1927. We have been adding around 1 billion people every 12-14 years for the last 4 billion. In fact, and I hope you are sitting down, China has a population bigger than the USA, Indonesia, Brazil, Pakistan, Nigeria and Bangladesh put together. And those countries occupy places 3 to 8 on the biggest population country list.

I don’t think that our little brains are designed to fathom or picture that many people. All households in the modern era, at least those folks living in urban areas, are going to need everything from energy to transport, food, water, household chemicals, electronics, the list goes pretty much on. Once you have built an infrastructure, there needs to be a fair amount of evolution. In China, the GDP per capita back in 1960 was 88.72 Dollars. Trading economics has the number (from World Bank data) at 6416.18 Dollars per person in 2015. That is a 72 fold increase in 55 years. If that doesn’t blow your mind, I am afraid you may have to read the People magazine.

So will China be “fine”? From Trading Economics below, you tell me:

That does not do much to mask the current problems facing global trade, see the WSJ (subscription only) article – China’s Trade Struggles Add to Worries Over Economic Outlook. Is the globe going through a bit of a funk lately? Lower oil prices means less spending from oil rich countries, lower mineral prices means less spending from resource dependent countries, a stronger dollar means that global consumers have fewer dollars in their pockets to spend. A tough and rough patch. We will get through it. Humans are a pretty resilient bunch (as you can see from our population growth). The world isn’t ending. It may be for many millions, it is equally the beginning for many millions of souls.

Over the seas and far away, stocks bounced hard off their worst levels of the day, the broader market S&P 500 closed out the session down just over three-tenths of a percent, whilst the nerds of NASDAQ shaved off nearly half a percent as a collective. Unilever was a big loser yesterday, revenues were shy of estimates, the argument that the European based company is having with the UK retailer Tesco seemed to capture the headlines, and one product in particular. You may know it. Marmite. Yes, Ma possibly made you a sandwich with it, way back. Marmite is actually, according to Wikipedia, a by product of the beer production process. New Zealand once ran out of the stuff, after the Christchurch earthquake, they called it “Marmageddon”.

There is a “Marmageddon” of sort “brewing” between Unilever, the current owner of Marmite and Tesco, a UK retailer. As a result of the Brexit vote, the weaker Pound means that Marmite in Euros (which Unilever reports in) needs to adjust accordingly. Tesco don’t like this, it means having to tell their customers. A 250 gram “bottle” costs 41.95 Rand at Woolies (on the online platform), at Amazon you can buy a 500 gram one (with delivery) for 11.18 Dollars. Sounds expensive. What is suddenly expensive is the unintended consequences of Brexit. Vote to leave, your food gets more expensive. Inflation goes higher. Your holiday to Ibiza just got more expensive. Hey man, you can’t argue with people when it is what they wanted.


You will recall in one of the finest Dr. Seuss books that a strange looking animal, standing upright, wearing a hat keeps telling some fellow called Sam-I-am to get lost with his culinary (?) delights. The actual book contains only 50 words, Green eggs and Ham, and was as a result of a bet between Seuss and his publisher, according to Wikipedia. It was (or is) the fourth best selling book written in English, specifically for children. It was a simple and effective idea. And you all know it, provided you were a child from around 1960 to now, or a parent in-between now and then. Simple, yet completely successful.

Do you know that WhatsApp was founded “after” the financial crisis. The story goes that Jan Koum (one of the founders, along with Brian Acton) picked up an iPhone and recognised that apps were going to be big. I am not sure that he reckoned that it would be 19 billion Dollars big (for the company) in 2014. I recall people laughing heavily at the Facebook acquisition price. In fact, less than five years actually. WhatsApp was incorporated on the 24th of February 2009 (Koum’s 33rd birthday) and the deal was announced on the 19th of February 2014. Koum turned 40, if it makes you feel better. The idea and use of the application is for very basic purposes. And it is easy to use.

Investing can be incredibly easy or incredibly complicated, depending on whether you overthink these things. If you are a worrier and worried about the next big thing, you are never going to invest a cent. People will still go to the store (or order online), they will still eat, they will still wear the latest fashion, they will still need to bank, they will still want to own the latest consumer electronic goods, see the latest movies, read the newest books, be transported on the latest goods, buy a better house (and finance it), go on a better holiday, the list goes on forever.

You can create the most complicated spreadsheet (and I have seen many) with projected revenues and margins, based on all the numbers you know and the ones that you think you may know, and then wonder whether or not the share price represents good value today. I know some company share prices, like Famous Brands, that are always perpetually expensive. Yet they deliver. You can call the metrics based on what you were taught (finance like most things, are taught) and decide whether a stock is expensive or not. And then get it wrong, almost all of the time.

Things change (like human populations). Or stay the same (like the taste of Marmite). Or sneak up on you slowly (like WhatsApp). Investing metrics, are those supposed to be cast in stone forever? Every investment house follows some metrics in order to make sure they feel comfortable. For every seller and buyer, at exactly the same price, there is something different happening. In the end it is the paying attention along the way, and making sure that it is passively done, that matters. And that changes never.


Linkfest, lap it up

Imagine if our middle class had the spending power of the US middle class. Great to see the number of jobs created by Amazon none the less – Amazon to hire 120,000 temporary workers for holiday season.

Sticking with Amazon – Why Amazon Gives so Many Perks to Prime Members.

Infographic: Why Amazon Gives so Many Perks to Prime Members | Statista

You will find more statistics at Statista

Twitters future lies in being able to broadcast live events and get advertising revenue from it. The first step is to broadcast live sporting events and see how consumers react – Twitter and the Victoria Racing Club announce live stream of the 2016 Emirates Melbourne Cup. I’m sure that next on their list of events will be to broadcast live political events or any event that people need to watch live and comment on in real time.

Given how bumpy markets have been recently, I have seen more articles like this one. It is worth reading regularly, helping to keep your eye on the process and end goal – How Not To Evaluate Investment Performance


Home again, home again, jiggety-jog. Wells Fargo reports number today. That is great. Mamelodi Sundowns are in action tomorrow, I hope that also goes great! As for Mr. Market, today may be better today. Earnings driven I hope, less politics. Please. I may never get my wishes.


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

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