ARTICLES

Market Overview

Over the past few weeks there have been a number of interesting developments. There have been more revelations coming out of the leaked Gupta e-mails which show just how far state capture has gone, but as yet there is no action from the government or even an official position on this matter. It is as if their attitude is that if they ignore it for long enough it will disappear. The Zuma camp is struggling to progress any of their radical populist agendas because of strong opposition from within the ANC and without.

The political dilemma is best evaluated by watching the progress of the rand against the US dollar:

Rand Dollar - Chart by ShareFriend Pro

The above chart shows that the effect of the political turmoil in South Africa has been to temporarily arrest the strengthening trend in the rand rather than to halt it. The international currency traders who dominate this market appear to be positive about the long-term outcome, which can only meanthat they see positive regime change in the not-too-distant future. It is almost as if the Zuma camp, like the Trump camp, is becoming less and less relevant to the progress of the economy and the markets. It is as if the forces which are now playing out, and which were set in motion long before the current political incumbents came into office, are linked together and are set to play themselves out more-or-less irrespective of the shenanigans of the current unfortunate leadership. The JSE is showing clear signs of following other world markets into new record territory. The JSE Financial and Industrial index, which has been trapped in a sideways market for more than two years looks ready to break upwards. Consider the chart:

JSE Overall Index - Chart by ShareFriend Pro

A strong upside break would herald further gains and perhaps a"catching up" with other world markets. We have seen an increasing number of new listings which suggests that we may be heading into some sort of listings boom. Most notable among these are:

• Dischem, which we have written about in previous articles:

Dischem Pharmacies (DCP) - Chart by ShareFriend Pro

• And Long 4 Life, which we have written about in a previous article:

Long 4 Life (L4L) - Chart by ShareFriend Pro

Both are doing very well and show promise of continued steady growth. Underlying these developments is a steady rise in the S&P500 index which has made a series of new record highs. We believe that the S&P will continue to perform well, driven mainly by improving corporate profits in an economy that is now growing strongly as confidence levels return and consumers and businesses begin spending some of the cash they have been hoarding since the sub-prime crisis in 2007/8. Consider the chart:

S&P500 Index - Chart by ShareFriend Pro

Here you can see the S&P500 index climbing steadily between its two long-term channel lines. This index is driving the progress of all markets around the world, including the JSE. It is approaching its upper channel line, which implies that some sort of pull-back or correction may be imminent. You should bear that in mind, as an investor and recognise it, when it happens, for what it is - a healthy correction in a powerful long-term bull trend.  

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

Exponential Growth

The  S&P 500 index is important because all the stock markets around the world tend to follow it. If the S&P is in a bull trend then London, Tokyo and the JSE will also be in a bull trend – and vice versa.

The S&P500 index began 68 years ago on 4 th March 1957 with an initial value of 43,73. It took nearly

The US Jobs Market

International investors who trade on Wall Street are generally negative about any good news from the economy because it tends to make the monetary policy committee (MPC) more hawkish and less likely to reduce interest rates. The opposite is also true. But there comes a point where bad news is so bad that investors begin to fear that the US economy is heading

Jackson Hole

Once a year in late August central bankers and academics congregate in Jackson Hole to discuss the state of the economy and consider the way forward. Traditionally, the Chair of the Federal Reserve Bank (“the Fed”) addresses the meeting and gives direction to its thinking on monetary policy in the US. This year, the comments of Jerome Powell resulted in the

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite

Gold Resistance

All investments throughout the world can be ranked on a scale from high risk to low risk. As a general rule, in the world of investment, risk and return rise together. In other words, as the risks in an investment increase, so does the return necessary to attract investors.

At the one end of the scale there are very low risk investments

Sibanye takes off

We have been writing about Neal Froneman and Sibanye for years now. Beginning in 2013, Froneman assembled the Sibanye group over a period of 7 years, buying up mining operations both in South Africa and America at bargain prices. Initially he bought precious metals producers, but more recently he has been diversifying into base metals like zinc and lithium which

The 16 Year Bull Trend

Since the Second World War, the stock markets of the world, including the JSE, have always tended to follow the New York Stock Exchange (NYSE) - and the NYSE is best measured by the S&P500 index (S&P) of its 500 largest companies.

For this reason, we believe it is important for private investors to constantly

CA Sales Revisited

Retailing in Africa is difficult with many of our leading retailers having attempted to open stores in countries to the North of us without notable success. These countries are often unstable and volatile politically. Getting adequate stock to branches has proved problematic and expensive.

It is not surprising therefore that a company has been

Bluetel

Bluetel (BLU) is a company involved in pinless top-ups, prepaid electricity, ticketing and universal vouchers. As such it is a company with substantial repeat business from existing customers. This type of business model is attractive to investors because it implies minimal working capital and strong cash flows.

Bluetel’s purchase

The Debtors' Book

A BIT OF HISTORY

Many years ago, in 1982 when I started this business (which became “PDSnet”), I ran advertisements in both the Rand Daily Mail (RDM) and in the Star – which were the two most widely read newspapers in Johannesburg at the time. At that time, we were a very small business and had no credit rating at all. Despite this the RDM immediately