PDSNET Market Snapshot

We have never liked Bitcoin or even regarded it as a true investment. As Charlie Munger famously said about those who buy cryptocurrencies, “...somebody else is trading turds and you decide I can't be left out.” More recently, the esteemed Professor Paul Krugman has linked the price of Bitcoin directly to the political influence and dominance of Trump. He described its value as nothing but “technobabble”.

We have always advised people not to invest in it and to sell it if they had it. We hope that you took our advice. Our main reason for not considering it to be an investment is that it offers no return. It generates no interest, dividends or rent – meaning it lacks fundamental value. So, its value really only exists in the minds of the people who buy it and as they come to realise their mistake, the price will inevitably decline.

At one point there was the suggestion that cryptocurrencies were somehow digital gold, but nothing could be further from the truth. The truth is that the demand for cryptos is much more similar to the demand for tulips in Holland in the seventeenth century. It exists only in the minds of a relatively few individuals who have been swept away by the rapid advances in technology in the modern world. Cryptos lack universal appeal. By contrast, gold has been known and prized by every human being on earth for millennia no matter what their culture, creed or background.

In any event we will let the chart tell the story.

The collapse of Bitcoin from its peak in October 2025 has been dramatic. Its value has more than halved through a series of cycles. The cycles are caused by the “stale bulls” who simply refuse to acknowledge that Bitcoin’s popularity is now permanently and irreversibly damaged. The Bitcoin price is falling just as Trump’s popularity and political clout are falling.

The effect of Trump’s ill-advised decision to go to war with Iran and the consequent jump in the price of fuel worldwide can be clearly seen. His popularity has nose-dived. Even hardline MAGA supporters who remained loyal through all his other obvious problems found the jump in the price of “gas” just too much to stomach.

From a technical perspective Bitcoin has broken down through a series of key support levels. Firstly, it found support at $83268 – the cycle low of November 2025 and that was followed by quite a significant “stale bull” rally. The rally came to an end when Bitcoin broke below that support level in February 2026 and then smashed down through the earlier cycle low at $77380 established in April 2025.

When Trump began bombing Iran, a new low point was established on 24th February 2026 at $64 000 and again the stale bulls motivated a rally which took the crypto briefly back above $80 000. However, Trump’s continued unpopularity and the growing evidence that he may be suffering from some kind of dementia has resulted in Bitcoin breaking decisively below $64 000 – which has now become a technical resistance level.   

While we see Wall Street recovering from the current correction, we do not see Bitcoin recovering. As Trump inevitably descends into political oblivion, so too will Bitcoin. Already it is an investment sideshow used primarily by organised crime to move money with impunity.  

From our very first article on Bitcoin in December 2017, The Bitcoin Bubble, we have always advised investors to stay away from it. Our advice remains unchanged:

“If you have it, sell it. If you don’t have it, don’t buy it”.

Experienced investors know that when a market has run hard for a while, as it has for the last two months, some sort of correction is more-or-less inevitable. We suggested in the recent Confidential Report that right now you should be looking for that correction – and then on Friday the 5th of June 2026, the S&P500, which was teetering after having made a new record high (7609.78) fell by an impressive 2,64%. Consider the chart:

The anatomy of a correction is that the positive news in the market reaches a point where it has been heavily over-discounted and shares begin to look seriously vulnerable and over-priced. Profit taking then sets in and the market falls back to more reasonable levels. This is a natural and normal pattern - even healthy - which reflects the interaction of the two great human emotions which dominate the market – fear and greed.

The fundamentals of a share can indicate what profits are likely to flow from owning it, while the technicals show the thrust of investor sentiment towards or away from it. When it comes to analysis, there are two kinds of people in the market – those that say they will not buy a share unless they can see the “real” value (the fundamentalists) – and those who say that the real value does not matter. What matters is what people think the real value is (the technicians). In other words, the reality and the perception of that reality.

And markets, like wildfires, can sometimes create their own energy. They can reach a point where they get carried up or down by the mere fact of their own momentum. In the longer term, the positivism or bullishness which is driving this market up today is beginning to become a self-fulfilling prophecy. Some investors are now coming into the market, not because they have done their homework and can see the earning potential of the shares that they want to buy, but rather because they are confident that in a few weeks’ or months’ time, someone with even less knowledge than them will buy the same shares back from them at a higher price.

When this begin to happen, the share’s price tends to lose touch with its underlying fundamentals and become over-priced. The fundamentals may be very good – but the important question is, “Are they good enough to justify the current price?” In 1998, during the dot-com boom, the blue sky potential of the nascent internet boom seemed immense – just as the potential of AI seems immense to us today. But, markets went too far, bid shares up too high, and inevitably fell back to more reasonable levels. However that did not mean that the potential of the internet was suddenly gone – far from it. The internet’s potential was only just beginning to be understood. It was just that markets had become too excited and lost sight of their underlying fundamentals.

We pointed out in our article of 18 May 2026 that the S&P 500 chart is becoming exponential. The blue sky potential of shares is now the dominant factor in investors’ assessments, with the focus shifting to possible future profits rather than established track records. Investors are concentrating on forward, rather than historical, P:E ratios. It is sobering to realise that all three of the enormous new listings coming to Wall Street this year—SpaceX, OpenAI, and Anthropic—are still unprofitable..

In our view, the current correction on Wall Street, and hence on markets around the world including the JSE, is more than likely temporary. After a period of selling, the downward trend will almost certainly give way to bullish investors seeking to buy the dip. Since there is no obvious fundamental factor driving this downward trend we see it as almost completely technical – and therefore temporary and healthy. The market is literally catching its breath.

What is interesting is that the JSE Overall index made its record high on 27th February 2026, at 128456, and has been basically trending down since then. It is apparent that local investors never really believed much in Wall Street’s strong recovery from Trump’s Iran war correction. We have found that often the JSE is a leading indicator of what happens on Wall Street.

The Hotel business was probably the worst hit of all sectors during the pandemic in 2020. With the travel restrictions and the various difficulties aimed at preventing the spread of the disease, many business people simply elected to stay at home and conduct meetings on Zoom or Skype. Conventions of various sorts which are major business for hotels also stopped almost completely. Gradually, over the proceeding years the situation has steadily improved, and occupancy rates have climbed back.

From an investor’s viewpoint, the hotel industry offers a very secure and relatively unexciting investment. It has a substantial investment in land and buildings and it has a large staff contingent. In normal times, it can be expected to grow steadily as the economy grows. It remains sensitive to political risk and economic external shocks.

Southern Sun Hotels (SSU) was spun out of Tsogo Sun (TSG) and separately listed on 12th June 2019 – immediately before COVID-19. The share opened at 400c and quickly rose to 460c. It was always expected to be a solid well-traded institutional counter. As the pandemic gained momentum, the share collapsed, eventually reaching an intra-day low of 102c on 23rd March 2020.

At that point it was trading well below its net asset value (NAV), clearly under-priced given its huge property asset base and potential. Slowly, as investors began to realise that the pandemic was past its worst levels and that a vaccine would be produced, they looked around for bargains in the market and SSU was an obvious candidate. Consider the chart:

You can see here the impact of the pandemic on the newly-listed SSU. At the time we always said that COVID would result in a V-bottom and therefore a buying opportunity precisely because it was a black swan event and its effects would not last. In our article published on 13th March 2020 we said, “...my expectation is that we will see a “V-bottom” in the chart...” SSU (together with many blue chip shares) moved sideways at its worst level for about year and then began to recover.

Then in February 2022, Russia invaded Ukraine and the share price collapsed again – but this time not as badly as during COVID, which was by that time already fully discounted. The subsequent recovery was slow and steady. We finally added the share to the Winning Shares List (WSL) on 17th May 2024 at a price of 555c, but a more adventurous investor might easily have bought it much earlier and at lower levels.

The chart also shows the impact of Trump’s tariffs which initially caused a significant sell-off and, more recently this year, his war with Iran. Both of these events offered private investors further solid buying opportunities, especially for a relatively low-risk share like SSU.

In its results for the year to 31st March 2026 the company reported income up 9% and headline earnings per share (HEPS) up 20%. The company said, "Trading momentum increased in the second half of the year, with broad-based improvements across all regions underpinned by major international conferences and events including the G20 in Gauteng and improved transient demand in South Africa."

Since we added the share to the WSL it has risen 80% in two years. We believe it will continue to perform well as the economic reforms of the government of national unity (GNU) begin to eliminate or at least reduce some of the absurdities in the South African economy. The November municipal elections at the end of this year are likely to increase and consolidate the DA’s grip on the GNU making this effect more pronounced.