Monthly Archives: October 2018

S&P500 Earnings


Whether we like it or not, the progress of the JSE is determined to a considerable extent by what happens on Wall Street. If the New York Stock Exchange (NYSE) is in a bear trend then the high probability is that the JSE will also be heading south. So, private investors are always well-advised to keep their eye on American markets and to take a view on where they might be going.

The best way to follow the NYSE is through the S&P500 index. This is a weighted index of the 500 largest companies trading on Wall Street. The 500 companies which it includes are constantly the subject of intense analysis and prediction.  American companies report every three months – so the quarterly updates are eagerly awaited and anticipated. Read More

Gambling Vs. Investing


GAMBLING

Gambling is associated with casinos and is epitomised on the roulette table. In roulette members of the public essentially bet against each other with the casino taking a small percentage for the cost of setting up and running the table. There are 37 numbers on a roulette table – three rows of twelve numbers plus the zero. If you place a R10 bet on every number you will have to outlay R370 – and then you can be certain to win because one of those 37 numbers must come up. Except that when you win you will only be paid out R350, plus the R10 that you bet on the winning number. In other words you will get back R360 for your R370 bet – the other R10 (approximately 2,7%) is kept by the casino to meet its costs and make a profit. That is gambling. And the simple fact of the matter is that the longer you play roulette, the more you will eventually lose – but that does not mean that you will lose on every spin. It just means that the odds are stacked against you so in the end you will always lose. Read More

Post Script – Mining


On 12 October 2018, we published an article on mining in South Africa. One of our clients very kindly corrected some of our mistakes in that article and added more value. He has agreed that we publish his contribution.

Historically the economies of countries first depended on easily exploited resources on land and sea and, as technology developed on, mined minerals.

South Africa is no different and due to gold particularly at one stage, the country’s economy could be described as a one commodity economy.

It should further be noted that thanks to Rhodes and others of his time, mining was based on cheap labour, and even until today it still is.

With respect to gold in alluvial form, it was mined by our ancient ancestors across the globe as gold particles and nuggets was easily separated from other materials.

Gold in hard rock presented a problem as the rock needed to be crushed and milled to liberate the gold before it was recovered by gravitational means. Read More

Speculating on Aveng


Aveng was once the largest construction company in South Africa and in August 2008 it traded for just under R70 per share. Since then it has been hammered by a host of problems beginning with the 2008 sub-prime crisis, to the dearth of construction work following the 2010 World Cup, the heavy fines imposed on the construction shares by the Competition Commission for collusion and several big contracts that went bad. The result of all this has been that the share price has plummeted to just 5c. Read More

Naspers Value


Naspers is something of an anomaly on the JSE because it accounts for roughly 20% of the JSE Top 40 index. This is because of an inspired decision by Koos Bekker to acquire a 33% stake for $32m in what was then a small internet/social media company called “Tencent” back in 2001. This investment has performed beyond even Bekker’s wildest expectations, exploiting the Chinese penchant for social media and gaming. On the 22nd of March 2002 you could have bought Naspers “N” shares for just 1245c. Today they are trading for around R2750 – and we consider them to be highly under-valued at current levels. Read More