We Made the Decade

 

This will be the last newsletter for the year, the office will be closing until the 6 January. As always though, if you need to get hold of us we will still be 100% contactable on the office phone (it’s portable), our cellphones and email. Money never sleeps! Have a happy festive season from all of us at Vestact.

Market Scorecard


Santa Claus is coming to town the markets. A tweet from Trump and positive exit polls in the UK have sent US markets back into record territory. We are getting a Santa Claus rally to close out the decade! December 15, was the date for the US to implement the next round of tariffs on China. Shortly after the US market opened yesterday, rumours began to grow that a trade deal could be on the table. Trump tweeted and confirmed that the two sides are close – the market then popped higher.

Adding to global optimism is that exit polls are pointing to a massive Tory victory in the UK election. This could be Labours worst performance since the 30’s, and has resulted in Corbyn stepping down. What it means is that Borris should get Brexit done during the first quarter of 2020, and the UK can then get on with life after three years of paralysis.

Here are all the Christmas presents that equity investors got over the last week. It started with the strong employment from the US on Friday, then the US Fed on Wednesday saying that rates will continue to be low, and now we have the trade deal and Brexit certainty. It is a good way to end off the year, and a very good decade if you have been invested in global stocks. Stay long, stay strong!

Yesterday the JSE All-share closed up 0.10%, the S&P 500 closed up 0.86%, and the Nasdaq closed up 0.73%.

Our 10c Worth


 

One thing, from Paul

This has been a good decade for Vestact and most of its clients. Local portfolios have battled, but those in the US have done very well. We launched our asset management business in New York in late 2005, and endured the nasty crash in 2008 and 2009, but by the start of 2010 things had stabilised quite nicely. It’s been up, up, up since then.

Over that period, our assets under management in the US have grown from a few hundred thousand US Dollars to $228.7 million this morning. That’s R3.3 billion at current exchange rates. Our approach of being fully invested and riding out any market volatility has worked very well.

That growth in assets has resulted both from fresh client inflows as well as very good market performance. You can see from the chart below why being focused on US equites has worked well. Thank you to all of you that have entrusted us with your family savings!

We are ready for the next decade. We expect further gains in selected, high-quality companies. It’s not too late to enter that market now. We will be in touch again in 2020. Happy holidays!


 

This week on Blunders:Saudi Aramco Listing is a Farce – Blunders 168.


 

Byron’s Beats

Yesterday Mediclinic gave an update on their Southern African business. They expect revenue to grow 6.5% for the year which is decent considering the economic conditions. More importantly they expect an EBITDA margin of around 20%. To put that into perspective, the Swiss business has margins of 13.9%.

Does that mean South Africans are getting ripped off? Call me a capitalist but a hospital group with decent margins can operate efficiently, offering great service. Remember, poor hospital service can cost lives. The Swiss approach of targeting private healthcare providers will compromise the quality, no doubt about it. Who would of thought that SA would be easier to do business than Switzerland? Loadshedding and all.

Next year the Stellenbosch facility will be fully operational and the lower margin Intercare will start making a sizeable contribution.


 

Michael’s Musings

Here is an upbeat and positive article to finish off Musings for the year – The tech sector in SA is still a hot place to be.

The article points out that venture capital investments in South Africa are trending higher, both in terms of deal numbers and value. While governments’ chickens are coming home to roost, it is creating gaps in the market that the private sector can fill. Where one man sees problems, another will see opportunities. It is the latter who are busy raising money to build companies of the future.


 

Bright’s Banter

The year 2019 marks the end of a decade, so it only seems fair to see how the technology companies in your portfolio have performed in that period. The technology companies I am referring to here are Apple, Microsoft, Google/Alphabet, Amazon, and the social media giant Facebook.

In hindsight, Amazon looks like it was an obvious choice as the company has grown 1 348% since the beginning of 2010. However, reality is very different because Amazon has been one of the most volatile companies in that period, as it was always loss making, until Amazon Web Services turned profitable.

The most valuable company today is Apple thanks to the 541% gain in the last decade. Apple gave us the iPhone, which is the coolest gadget to have. Even though the iPhone first debuted in 2007, it really took off between 2010-2015 where it went from being a small portion of Apple’s revenues to more than half of the pie.

The chart below shows how all these technology companies have grown in the past decade.

Infographic: A Decade of Growth for GAFAM | Statista You will find more infographics at Statista

Linkfest, Lap it up


Most people try arrange their lives to maximise comfort levels. The problem is that we might be comfortable now but stifling long term growth potential – If You’re Not Outside Your Comfort Zone, You Won’t Learn Anything.

When it comes to drone racing, humans are still superior over AI – It’s Coders Versus Human Pilots in This Drone Race.

Signing off


It is a ‘risk on’ day globally. Asian markets are flying and the Rand is now at $/R 14.44. The JSE All-share is up this morning.

Sent to you by Team Vestact.

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