DisMAY. Hung, drawn and slaughtered

“The voters have cast their ballots in this way, whether or not you or I have British electoral fatigue (From the Scottish referendum through to the Brexit vote, through to this election), it is the will of the people. And by implying that the people are wrong, shows a certain ignorance in itself.”


To market to market to buy a fat pig British politics and their little colourful rosettes. It looks like a primary school athletics day event, first, second and third place for the under 8, 60 metre dash, well done you! There are actually rules about these rosettes, I couldn’t believe it. The only people permitted to wear political rosettes are the candidates and their polling agents (observers?). Ordinary voters cannot do that, which is darn hilarious. What would one of my favourite childhood “comic” book characters, Captain Archibald Haddock (from the Tintin series) have to say about this, the fact that the UK election (which was a certainty for the conservatives at the polls), now looks like another hung parliament? According to Wikipedia (and distant memories), he (Captain Haddock) may start something like this:

Ten Thousand Thundering Typhoons! Billions of blue blistering boiled and barbecued barnacles! Great flat-footed grizzly bear! Flaming Jack-in-the-Box! You bashi-bazouks, freshwater swabs, miserable slugs, blundering bazookas, you sea gherkins!”


OK, that is plain mean and downright insensitive. I apologise. The voters have cast their ballots in this way, whether or not you or I have British electoral fatigue (From the Scottish referendum through to the Brexit vote, through to this election), it is the will of the people. And by implying that the people are wrong, shows a certain ignorance in itself. My mother always said, don’t speak politics and religion with first timers at dinner events. It is not physics or math (politics that is) and whether or not (to quote Haddock), you think that the candidates are a “Dictatorial duck-billed diplodocus”, the die is cast. To quote another politician, Julius Caesar …. who would have used the Latin “Alea iacta est”.

Most of us reading this newsletter do not live there, or live where Trump is YUGE, we live here and have our fair share and larger slice of political “issues”. Or in the world where Dr. Seuss and the internet collide, “We live here and there and everywhere.” It does impact on us and our investing lives, it casts uncertainty around the Brexit process, it casts doubts on the ability for a proper negotiation of the British people to muscle any sort of pressure in looking for a favourable outcome for their home base. It actually falls onto the laps of the European people and their strengths in the negotiating process. Sigh.

As to what happens next, your guess is as good as mine, the WSJ leads with U.K. Voters Deliver Stunning Setback to Theresa May’s Conservatives. “Theresa DisMay” is being thrown around. Some are suggesting that there may be another election in the second half of this year. All this is creating an environment of uncertainty. Hung, drawn and slaughtered. Amazingly, the Scottish National Party and UKIP have been slaughtered too. Oh dear, for them that is!

The ramifications for investors suggest that a weaker Pound and more uncertainty means lower asset prices. It has to. And that is not good for our investments in the UK. Less confidence in the UK economy means less spend, which leads to a lower growth trajectory. We managed to find a long term graph of the Pound to the US Dollar. You be the judge of whether the Great British Pound should just be the Pound or the Dollar should be called the Great Dollar:


Quick look at stocks and their performance locally yesterday, after this “stunning” outcome. Locally, the JSE slid around one-third of a percent by the close, the currency also slipped which lent a hand to the resource stocks. There were new twelve month lows aplenty, it certainly looks iffy for SA Inc., Brait, Arcelor Mittal, MMI Holdings, Sun International, Pick n Pay, Tsogo Sun and Pioneer Foods, as well as EOH. Amongst the majors, only the big dual listed resource stocks made any progress, BHP Billiton, Anglo American, Glencore and Bidcorp (food is always in fashion) all in the up column. Sasol and Bidvest were much lower, for different reasons.


Across the oceans wide and vast, stocks ended an up and down session in the green, eyes turned to testimony and Q&A of the old FBI chief. No smoking gun = OK outcome for stocks. As such, the end of the session saw the Dow Jones up a few points, which is 0.04 percent (an intraday all time high earlier in the session), as was the broader market S&P 500 (up 0.03 percent by the close). The real story of the day however was another big all time high for the nerds of NASDAQ, up nearly four-tenths of a percent by the close. Big moves north from the likes of NVIDIA, over seven and one-quarter of a percent, Alibaba added 13 and one-quarter of a percent. Alibaba was the company that moved tech stocks higher as a result of a really bullish guidance, suggesting revenue growth of 45 to 49 percent. So there goes! All Chinese related stocks getting a big lift.


Linkfest, lap it up

Apple has now officially joined the ranks of companies creating TV shows, the idea is not original but they have some very big hitters in the show – How to watch the first episode of Apple’s ‘Shark Tank’ for apps reality show. Look out Netflix, Amazon and HBO?

As Cullen points out, even if we had 1 000 years of historical financial market data we still would not be able to predict the future. There are broad long term trends that we can be fairly certain will happen, over the short term (less than 5 years) we have no idea – 1 000 Years Worth of Market Data.

Here is why you shouldn’t buy a stock for its dividend yield, dividends are at the mercy of the business environment along with all other business metrics – Don’t Be Fooled By High Dividend Yields. Part of the discussion looks at the huge change facing US retailers at the moment, which means it is only a matter of time before South African retailers face the same headwinds.

Absolutely incredible! There were 460 registered electric vehicles in the world in 2007. We found via the via, this .pdf download from the international energy agency – Global EV Outlook 2017. What is important is that in ten years, the number of electric vehicles as a percentage of globally registered new cars has gone from a few hundred to hundreds of thousands to perhaps a million by the end of this year. EVs are now 1.1 percent of all cars sold, and growing like gangbusters. Stay long Tesla for the next 1000 (binary for 8) years.


Home again, home again, jiggety-jog. Righto. Listen carefully here all peoples of the newsletter. Our database and website is moving to Amazon Web Services this weekend. As such, there will be limited accessibility in parts, hopefully a MUCH faster experience. Feel free to email us if there are any queries that you have!

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

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