Oh happy days...
Boeing (5500 job cuts to add to the 4500 announced in December), Ford Credit (1200 jobs) and now Kodak says its going to cut 18% of its workforce (4500) jobs.
But other than that the world looks hunky dory and equities should head up?!
I didn't think so, I think the enthusiasm for this bounce is drying up quickly.... Remaining short Sasol
Thursday, January 29, 2009
Tuesday, January 27, 2009
Careful what you believe...
A bit of a facetious way to start the morning but I logged on to Bloomberg this morning and it showed the Nikkei was flat - down 29.61 points - from 11AM... My first instinct was - NO PULSE?!
I gotta confess the rebound in equity markets caught me a little off guard yesterday - it's a bit like the institutions are looking for ANY kind of good news to jump on.
A few more companies joined the jobs slashing story:
I don't like harping on about this but the reason earnings will stall is because consumers don't have jobs AND don't have extra disposable income. We're looking at historical PE's and saying "Yip the market is cheap..."
And THAT brings me to my gripe for the day, because I've been listening to some of the verbal being spewed by retail investment managers encouraging people to get back into the market now.
I agree 100% that time in the market will probably do well for you in the longer term, but it irritates the hell out of me that they're talking about how attractive dividends and PE ratios are and this is why, this is asset class is the best.
The reality is that dividends in the developed world (particularly the US) are being slashed rapidly. In SA, our companies are a bit better managed so while they're probably going to get trimmed a bit, its probably not the end of the world...
Just be aware of these things when that slimy looking fundmanager type comes up to you with these as a reason for why equities look attractive...
I gotta confess the rebound in equity markets caught me a little off guard yesterday - it's a bit like the institutions are looking for ANY kind of good news to jump on.
A few more companies joined the jobs slashing story:
- STMicroelectronics to Cut 4,500 Jobs
- Rio Tinto 14000 (I think this was actually announced last week)
- Avery Dennison 10% of its workforce
- Target stores 9% of its head office workforce
I don't like harping on about this but the reason earnings will stall is because consumers don't have jobs AND don't have extra disposable income. We're looking at historical PE's and saying "Yip the market is cheap..."
And THAT brings me to my gripe for the day, because I've been listening to some of the verbal being spewed by retail investment managers encouraging people to get back into the market now.
I agree 100% that time in the market will probably do well for you in the longer term, but it irritates the hell out of me that they're talking about how attractive dividends and PE ratios are and this is why, this is asset class is the best.
The reality is that dividends in the developed world (particularly the US) are being slashed rapidly. In SA, our companies are a bit better managed so while they're probably going to get trimmed a bit, its probably not the end of the world...
Just be aware of these things when that slimy looking fundmanager type comes up to you with these as a reason for why equities look attractive...
Monday, January 26, 2009
Ja, no, WHATEVER!
A 38 point "rebound" on the Dow and we're getting all excited that we've hit a bottom?! Strewth...
A big part of the US rebound was driven by better than expected US Home Sales figures and this got the Yanks all nice and bubbly and the Dow was up nearly 2% until reality hit home and the market scratched out a small gain.
Asia has also started out green, but I wouldn't hold my breath on this one - even if it plays havoc with my short on Sasol.
Home sales
I didn't see much coverage of it and I don't profess to be a master of the US financial reporting sector but at some point home sales figures have to bounce for the simple reason that there is a false "buyer" in the market and it sure as hell ain't the US consumer....
Exactly the same thing is happening in South Africa at the moment - the consumers are getting their houses repossesed and the banks are sending out their agents to buy them up because there is no demand for the properties from consumers who can't afford them.
I also think its quite convenient that it came out a week after Obama signals in "a new era"... but that might just be the conspiracy theorist in me...
Retrenchments
You want to know to know why I doubt its the consumer rushing out to buy a new house?! Try this for the reason:
Put simply - That's 60000 odd consumers having to further watch their spending or fill up their cars or invest in equity markets or the property market that needs to come into the system...
Gold
The gold price broke through US$900 level yesterday following up on the gains made on Friday.
I tend to get a little excited when gold starts firing for the simple reason that it tends to be a pre-cursor to further carnage. That's a bit of a generic statement but I think its justified in the current environment.
Sasol short
I remain with an open short position on Sasol although I think movements in the market yesterday and probably today are going to make position look a little unattractive but let's wait and see.
In my head I still see the Dow dropping probably another 30% from these levels and further downside on the ALSI of between 10 and 15%.
Let's see how today plays out and reassess at the end of the trading day.
A big part of the US rebound was driven by better than expected US Home Sales figures and this got the Yanks all nice and bubbly and the Dow was up nearly 2% until reality hit home and the market scratched out a small gain.
Asia has also started out green, but I wouldn't hold my breath on this one - even if it plays havoc with my short on Sasol.
Home sales
I didn't see much coverage of it and I don't profess to be a master of the US financial reporting sector but at some point home sales figures have to bounce for the simple reason that there is a false "buyer" in the market and it sure as hell ain't the US consumer....
Exactly the same thing is happening in South Africa at the moment - the consumers are getting their houses repossesed and the banks are sending out their agents to buy them up because there is no demand for the properties from consumers who can't afford them.
I also think its quite convenient that it came out a week after Obama signals in "a new era"... but that might just be the conspiracy theorist in me...
Retrenchments
You want to know to know why I doubt its the consumer rushing out to buy a new house?! Try this for the reason:
- Caterpillar: 20,000 job cuts
- Pfizer: 19,000 job cuts (10% reduction), plus additional layoffs due to merger with Wyeth
- Sprint Nextel: 8,000 job cuts
- Home Depot: 7,000 job cuts (ODD IF THE CONSUMER WAS TURNING THE CORNER HUH?!)
- Texas Instruments - 12% of global workforce
- Philips: 6,000 jobs
- Lincoln National Corp - 540 jobs
Put simply - That's 60000 odd consumers having to further watch their spending or fill up their cars or invest in equity markets or the property market that needs to come into the system...
Gold
The gold price broke through US$900 level yesterday following up on the gains made on Friday.
I tend to get a little excited when gold starts firing for the simple reason that it tends to be a pre-cursor to further carnage. That's a bit of a generic statement but I think its justified in the current environment.
Sasol short
I remain with an open short position on Sasol although I think movements in the market yesterday and probably today are going to make position look a little unattractive but let's wait and see.
In my head I still see the Dow dropping probably another 30% from these levels and further downside on the ALSI of between 10 and 15%.
Let's see how today plays out and reassess at the end of the trading day.
Saturday, January 24, 2009
Novice investors
One of my friends is involved with an amateur investment club which involves a couple of ladies getting together, pooling
some funds together, trying to educate themselves about the market and with any luck making a few bucks on the side.
All in all I think this is great but I wanted to maybe post something for novice investors to consider because of something
she said. I asked her how it had been going and she told me that they were down nearly 30% and then said: "Everybody is down
30% because this is how far the JSE has fallen and we just needed to accept this is part of the function of being
invested..."
I pointed out to her that they are using "Shares" as a very broad term and not all instruments on the JSE were down 20 - 30%
in 2008 which piqued her interest in a little.
She got the idea that certain shares were down less than others but didn't understand that there was access to different investment classes on the JSE - some of which had produced a positive return without actively shorting the market.
Preference shares
I'm not going to touch on the mechanics of preference shares too much here but I thought I'd use them as a way to highlight the difference an instrument can make when assessing a particular investment (provided you understand the role they play in YOUR portfolio).
But here was the example I gave her:
Standard Bank ordinary share with a dividend yield of around 4% in 2008 lost around 14% from 1 January 2008 - 31 December
Grindrod ordinary share with a similar dividend yield lost around 30% once you took the dividend yield into account
In comparison
The Standard Bank preference share (dividend included) returned +13.95%
The Grindrod preference share (dividend included) returned roughly a 4% loss
Proves that not everything got wiped out despite popular belief
Property Unit Trusts
I enjoy these as an asset class and if one considers that GrowthPoint returned approximately 5% positive (distribution included) and ApexHi returned about 4.7% positive then it shows that some asset classes did in fact do ok in 2008.
Exchange Traded Funds
Just picked a few here but the X-Tracker (DBXJP) tracking the Japanese market lost around 12% compared to the 26% lost by Satrix 40.
The ZGovi (tracks SA Bond Index returned 12.5%) in the 3 months its been listed (including the turmoil in October) while the NewGold ETF (GLD - which tracks the Gold Price) returned just under 40% - not too shabby Nige...
Even that Carbon Credit note (+5.5%) so far has had a positive return despite the fall in the market...
Conclusion
This isn't a punt to buy any of the above. The point I am trying to make to novice investors is that a lot of people have been scared off by some of the media whores showing how terrible things are in the market, but not focusing on some of the well managed portfolios or products that have in fact held their own despite falling markets.... These are also not instruments you need to watching 24/7 worrying about volatility wiping out your investments.
It all comes down to education and if you can educate yourself you'll quickly learn not to tar the words: "Stock market" and "Investments"... Yeah the market got killed last year but there are asset classes that went up in some cases - the idea is to try and educate yourself to see opportunities and diversify the risk...
some funds together, trying to educate themselves about the market and with any luck making a few bucks on the side.
All in all I think this is great but I wanted to maybe post something for novice investors to consider because of something
she said. I asked her how it had been going and she told me that they were down nearly 30% and then said: "Everybody is down
30% because this is how far the JSE has fallen and we just needed to accept this is part of the function of being
invested..."
I pointed out to her that they are using "Shares" as a very broad term and not all instruments on the JSE were down 20 - 30%
in 2008 which piqued her interest in a little.
She got the idea that certain shares were down less than others but didn't understand that there was access to different investment classes on the JSE - some of which had produced a positive return without actively shorting the market.
Preference shares
I'm not going to touch on the mechanics of preference shares too much here but I thought I'd use them as a way to highlight the difference an instrument can make when assessing a particular investment (provided you understand the role they play in YOUR portfolio).
But here was the example I gave her:
Standard Bank ordinary share with a dividend yield of around 4% in 2008 lost around 14% from 1 January 2008 - 31 December
Grindrod ordinary share with a similar dividend yield lost around 30% once you took the dividend yield into account
In comparison
The Standard Bank preference share (dividend included) returned +13.95%
The Grindrod preference share (dividend included) returned roughly a 4% loss
Proves that not everything got wiped out despite popular belief
Property Unit Trusts
I enjoy these as an asset class and if one considers that GrowthPoint returned approximately 5% positive (distribution included) and ApexHi returned about 4.7% positive then it shows that some asset classes did in fact do ok in 2008.
Exchange Traded Funds
Just picked a few here but the X-Tracker (DBXJP) tracking the Japanese market lost around 12% compared to the 26% lost by Satrix 40.
The ZGovi (tracks SA Bond Index returned 12.5%) in the 3 months its been listed (including the turmoil in October) while the NewGold ETF (GLD - which tracks the Gold Price) returned just under 40% - not too shabby Nige...
Even that Carbon Credit note (+5.5%) so far has had a positive return despite the fall in the market...
Conclusion
This isn't a punt to buy any of the above. The point I am trying to make to novice investors is that a lot of people have been scared off by some of the media whores showing how terrible things are in the market, but not focusing on some of the well managed portfolios or products that have in fact held their own despite falling markets.... These are also not instruments you need to watching 24/7 worrying about volatility wiping out your investments.
It all comes down to education and if you can educate yourself you'll quickly learn not to tar the words: "Stock market" and "Investments"... Yeah the market got killed last year but there are asset classes that went up in some cases - the idea is to try and educate yourself to see opportunities and diversify the risk...
Friday, January 23, 2009
Friday update
Geez these crazy Americans are doing everything in their power to defend the 8000 level on the Dow...
My Sasol short
I remain in my Sasol short. There were a couple of times were the market looked like it was going to give but the Rand slipped in late trade and I think that saved a couple of hedges from a really bad day....
Pity but I'll get over it and I remain short.
Watching US trade I see that the market is bouncing every time it gets close to 8000 and the oil price has moved up a bit - probably going to count against the Sasol position.
The trend remains down and there's no conviction in the US markets either.
Sappi
I see the guys over at the ShareTips site have also hit on the intra day volatility in Sappi (SAP)
For traders who are looking for some action, we'd also recommend a look at Sappi. Plenty of action either way which might catch your eye.
Gold
Gold has spiked up nicely in late US trade to flirt with the US$900 an ounce mark and if the dollar / rand exchange rate continues to weaken then the gold bulls will have a ball...
Fundamentally Gold Fields probably isn't the worlds favourite share at the moment but its got some definite volatility and without stating the obvious if the gold price and rand go the right way who really cares WHAT the CEO has to say....
My Sasol short
I remain in my Sasol short. There were a couple of times were the market looked like it was going to give but the Rand slipped in late trade and I think that saved a couple of hedges from a really bad day....
Pity but I'll get over it and I remain short.
Watching US trade I see that the market is bouncing every time it gets close to 8000 and the oil price has moved up a bit - probably going to count against the Sasol position.
The trend remains down and there's no conviction in the US markets either.
Sappi
I see the guys over at the ShareTips site have also hit on the intra day volatility in Sappi (SAP)
For traders who are looking for some action, we'd also recommend a look at Sappi. Plenty of action either way which might catch your eye.
Gold
Gold has spiked up nicely in late US trade to flirt with the US$900 an ounce mark and if the dollar / rand exchange rate continues to weaken then the gold bulls will have a ball...
Fundamentally Gold Fields probably isn't the worlds favourite share at the moment but its got some definite volatility and without stating the obvious if the gold price and rand go the right way who really cares WHAT the CEO has to say....
Shoprite
Interesting story that I picked up on Moneyweb:
Shoprite Holdings Ltd., South Africa's largest grocery chain by market value, has been added to Merrill Lynch & Co.'s list of most preferred stocks, with the bank citing "excellent growth" in sub-Saharan Africa.
Full article can be found here...
My two preferred JSE listed retailers at the moment remain Pick 'n Pay (Specifically PWK) and Shoprite which is on my shopping list... Good companies / smart managers...
Shoprite Holdings Ltd., South Africa's largest grocery chain by market value, has been added to Merrill Lynch & Co.'s list of most preferred stocks, with the bank citing "excellent growth" in sub-Saharan Africa.
Full article can be found here...
My two preferred JSE listed retailers at the moment remain Pick 'n Pay (Specifically PWK) and Shoprite which is on my shopping list... Good companies / smart managers...
Thursday, January 22, 2009
Justrade
Thanks!
I see the guys over at Justrade have linked to our blog so I thought we'd return the favour.
Justrade is basically a binary options initiative launched by the Bond Exchange of South Africa and they've got a nice cheap trading product. You're basically able to trade contracts from under R2 (according to the info I've got).
Check them out, comment on their blog and most importantly give us your opinions of their product.
I see the guys over at Justrade have linked to our blog so I thought we'd return the favour.
Justrade is basically a binary options initiative launched by the Bond Exchange of South Africa and they've got a nice cheap trading product. You're basically able to trade contracts from under R2 (according to the info I've got).
Check them out, comment on their blog and most importantly give us your opinions of their product.
DOWn we go...
Hhhhmmmm I'll admit I got a little concerned about my Sasol short when the share opened up a coupla percent this morning but the oldest lesson in the traders book - THE TREND IS YOUR FRIEND...
Stuck in the position and sure enough Sasol started trading down a bit. Looking at the action in the US got me even more interested.
At one stage the Dow was grappling for any kind of traction and even traded below 8000 for a while. Unfortunately it seems to have recovered a bit and the last few minutes of US trade are going to be interesting.
SSL is down 5% in the States which keeps me interested.
Momentum remains to the downside so don't see any reason to change direction now but taking some profit off the table should SOL get around R250 - R251....
Stuck in the position and sure enough Sasol started trading down a bit. Looking at the action in the US got me even more interested.
At one stage the Dow was grappling for any kind of traction and even traded below 8000 for a while. Unfortunately it seems to have recovered a bit and the last few minutes of US trade are going to be interesting.
SSL is down 5% in the States which keeps me interested.
Momentum remains to the downside so don't see any reason to change direction now but taking some profit off the table should SOL get around R250 - R251....
Tuesday, January 20, 2009
Shorting Sasol
Well I got stopped out of my Sasol long and promptly reversed my position by going short... The Sasol share price dropped nicely and SSL is down a whopping 12.35% in the US.
(Obviously this is a bit of a function of the catch-up from Monday) but that puts Sasol at around R259 in Rand terms. Well below where we are at at the moment.
With Asia down again (particularly BHP) we should have some more pressure on our resources again today.
A little frustrated with myself as I converted some of my dividend earning shares into trading positions - which went against my "bigger picture" strategy but hopefully it will pay off.
My thinking is to convert some of the profits from the trades back into blue chip just to build the dividend stream as I go along.
Investec
I see InvestVrek (previously known as Investec) also took a whack yesterday.... UK banking operations have been on the receiving end of a hiding since the RBS announcement and with the Pound being flushed down the toilet it hasn't helped the share price here...
Might prove to be an interesting one from a dividend yield perspective in the next few months if it keeps tracking down like this - but that depends on what form Investec will take by the end of the year...
(Obviously this is a bit of a function of the catch-up from Monday) but that puts Sasol at around R259 in Rand terms. Well below where we are at at the moment.
With Asia down again (particularly BHP) we should have some more pressure on our resources again today.
A little frustrated with myself as I converted some of my dividend earning shares into trading positions - which went against my "bigger picture" strategy but hopefully it will pay off.
My thinking is to convert some of the profits from the trades back into blue chip just to build the dividend stream as I go along.
Investec
I see InvestVrek (previously known as Investec) also took a whack yesterday.... UK banking operations have been on the receiving end of a hiding since the RBS announcement and with the Pound being flushed down the toilet it hasn't helped the share price here...
Might prove to be an interesting one from a dividend yield perspective in the next few months if it keeps tracking down like this - but that depends on what form Investec will take by the end of the year...
Monday, January 19, 2009
Bloody Sasol!
I've been out of trading mode for a while as December wound down and we drifted into January...
Anyway decided to get back on the trading horse today and got a nasty start.
Spent a lot of time yesterday scanning through the big caps and isolated the trading options down to Gold Fields, Sasol, Sappi and Anglo American based on their volatility in the last few weeks.
Saw the Rand weakening a bit, thought Sasol had established a base around R290 and seemed to have confirmed something of a short term up-tick. With the ObamaMania swamping the US, I expected some opportunities
Went long Sasol using Sasol warrant SOLSBD. About 10 minutes after I entered the trade, Sasol came out with their Competition Commission disclosures and we "enjoyed" a bitch slap all the way down to R274.
Rough day on the market in general and I'm still anticipating a US "Patriot" rally as Obama sweeps into office. We're seeing the Rand slightly weaker vs. the US dollar but the oil price isn't coming to the party just yet...
Will see what tomorrow brings and then decide what I'm going to do with the position....
Anyway decided to get back on the trading horse today and got a nasty start.
Spent a lot of time yesterday scanning through the big caps and isolated the trading options down to Gold Fields, Sasol, Sappi and Anglo American based on their volatility in the last few weeks.
Saw the Rand weakening a bit, thought Sasol had established a base around R290 and seemed to have confirmed something of a short term up-tick. With the ObamaMania swamping the US, I expected some opportunities
Went long Sasol using Sasol warrant SOLSBD. About 10 minutes after I entered the trade, Sasol came out with their Competition Commission disclosures and we "enjoyed" a bitch slap all the way down to R274.
Rough day on the market in general and I'm still anticipating a US "Patriot" rally as Obama sweeps into office. We're seeing the Rand slightly weaker vs. the US dollar but the oil price isn't coming to the party just yet...
Will see what tomorrow brings and then decide what I'm going to do with the position....
Saturday, January 17, 2009
No way
A quick grumble... I have two picks in the property sector that I hold units in - GrowthPoint and ApexHi B...
Earlier this week I saw the offer from Redefine Income Fund to buy out the units in Madison and ApexHi.
As an ApexHi shareholder I intend voting against the offer. The distribution yield in APA / APB exceeds what was on offer in Redefine (irrespective of the promises for 2010.)
On top of that the conversion ratio doesn't seem particularly generous to APA / APB unit holders to convert to Redefine.
Finally Redefine is going to have to issue a bucket load of new shares to fund the deal.
Definately voting against the deal and I encourage other ApexHi unit holders to do so as well...
Earlier this week I saw the offer from Redefine Income Fund to buy out the units in Madison and ApexHi.
As an ApexHi shareholder I intend voting against the offer. The distribution yield in APA / APB exceeds what was on offer in Redefine (irrespective of the promises for 2010.)
On top of that the conversion ratio doesn't seem particularly generous to APA / APB unit holders to convert to Redefine.
Finally Redefine is going to have to issue a bucket load of new shares to fund the deal.
Definately voting against the deal and I encourage other ApexHi unit holders to do so as well...
Monday, January 12, 2009
Market update
It was an interesting day on the markets with a weaker Rand providing something of a "saving grace" for the JSE with more downside on the cards.
Rand buggers out
The Rand buggered out to above R10 to the US dollar following an Appeals Court decision overturning a previous decision to drop corruption charges against ANC president Jacob Zuma.
Political turmoil is one thing that South Africa can ill afford and currency traders have knocked down the Rand sharply.
Weaker international markets
With the Nikkei closed, we waited to Europe and the US for direction. European markets were weaker and the US has continued to trade down with the Dow dropping another 125 points.
I wouldn't be surprised to see this slump continue over the rest of the week and over the rest of January - I keep asking myself - WHY SHOULD THINGS GO UP?!
Commodities slump
Oil has slumped sharply after a short spike. South African petrochemical giant Sasol was also on the receiving end of an earning downgrade from Credit Suisse which may weigh on the market tomorrow if the Rand remains little changed.
Gold and Platinum have both dropped US$35 in US trade and this could weigh on the SA market tomorrow.
Trading opportunity?
It is not a share I've followed regularly but something I have picked up in the last few days.
Vox Telecom was a share which took a bruising in the Dealstream saga in late 2008. Over the last few days the Lereko Metier Capital Growth Fund have been buying up blocks of shares in the business at just under 80c.
Prior to the Dealstream disclosures Vox was trading above R2 and had a good reputation in the market - might be worth a punt for those who like smaller tech stocks.
Rand buggers out
The Rand buggered out to above R10 to the US dollar following an Appeals Court decision overturning a previous decision to drop corruption charges against ANC president Jacob Zuma.
Political turmoil is one thing that South Africa can ill afford and currency traders have knocked down the Rand sharply.
Weaker international markets
With the Nikkei closed, we waited to Europe and the US for direction. European markets were weaker and the US has continued to trade down with the Dow dropping another 125 points.
I wouldn't be surprised to see this slump continue over the rest of the week and over the rest of January - I keep asking myself - WHY SHOULD THINGS GO UP?!
Commodities slump
Oil has slumped sharply after a short spike. South African petrochemical giant Sasol was also on the receiving end of an earning downgrade from Credit Suisse which may weigh on the market tomorrow if the Rand remains little changed.
Gold and Platinum have both dropped US$35 in US trade and this could weigh on the SA market tomorrow.
Trading opportunity?
It is not a share I've followed regularly but something I have picked up in the last few days.
Vox Telecom was a share which took a bruising in the Dealstream saga in late 2008. Over the last few days the Lereko Metier Capital Growth Fund have been buying up blocks of shares in the business at just under 80c.
Prior to the Dealstream disclosures Vox was trading above R2 and had a good reputation in the market - might be worth a punt for those who like smaller tech stocks.
Sunday, January 11, 2009
Obama promises and Reinet moves
"President-elect Barack Obama said reviving the U.S. economy will require scaling back on his campaign promises and personal sacrifice from all Americans."
This was the intro paragraph on this article on a Bloomberg article and I think its bad news deluxe...
A lot of the initial rebound in equity markets at the start of January was based on renewed optimism in the US equity markets. Heck - the US is going to keep pissing trillions in an attempt to restart their markets.
Already we've seen markets lose their enthusiasm and if Obama is scaling back promises then we can expect quite a lot more downside.
I'm expecting that the Alsi could give up as much as 20% between now and June and as much as 30% could still get taken off the Dow and S&P.
Reinet
One interesting thing came up on Friday. Media speculation was doing the rounds that Johann Rupert through his Reinet vehicle would be buying up about US$250m of distressed assets from Lehman Brothers.
Market commentators seem to be pretty clueless about what Rupert is actually buying - in terms of what assets are in the Lehman Bros - but are pleased to see Reinet putting money to use.
The share broke R10 which I'm pretty pleased about considering I bought a few last week...
This was the intro paragraph on this article on a Bloomberg article and I think its bad news deluxe...
A lot of the initial rebound in equity markets at the start of January was based on renewed optimism in the US equity markets. Heck - the US is going to keep pissing trillions in an attempt to restart their markets.
Already we've seen markets lose their enthusiasm and if Obama is scaling back promises then we can expect quite a lot more downside.
I'm expecting that the Alsi could give up as much as 20% between now and June and as much as 30% could still get taken off the Dow and S&P.
Reinet
One interesting thing came up on Friday. Media speculation was doing the rounds that Johann Rupert through his Reinet vehicle would be buying up about US$250m of distressed assets from Lehman Brothers.
Market commentators seem to be pretty clueless about what Rupert is actually buying - in terms of what assets are in the Lehman Bros - but are pleased to see Reinet putting money to use.
The share broke R10 which I'm pretty pleased about considering I bought a few last week...
Wednesday, January 7, 2009
Priceless!
Oh this is simply priceless:
Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.
Read the full article here on CNN...
I see the Dow is tanking some 250-odd points after this hit the press. Not sure what to make of this
Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.
Read the full article here on CNN...
I see the Dow is tanking some 250-odd points after this hit the press. Not sure what to make of this
Tuesday, January 6, 2009
Energy spike on the cards?
It has been interesting to watch the Russian / Ukraine / Gazprom gas row extend to Europe.
The continent remains heavily dependant on supplies of natural gas from Russia and if "The Bear" decides to switch off the taps then the Europeans suddenly realise just how vulnerable they are possessing little control over their energy needs.
Throw in the fact that there is the small issue of serious tension in the Middle East and you have Venezuela (another oil player) siding with the Palestinians and denouncing Israel and you may begin to appreciate the nature of the problems facing the West and their energy supplies.
Already we've seen the oil price rebound in the last few days and the longer these situations go on, the more demand their will be for energy. It might make sense to position yourself around these sectors, irrespective of the longer term problems facing the global economy...
The continent remains heavily dependant on supplies of natural gas from Russia and if "The Bear" decides to switch off the taps then the Europeans suddenly realise just how vulnerable they are possessing little control over their energy needs.
Throw in the fact that there is the small issue of serious tension in the Middle East and you have Venezuela (another oil player) siding with the Palestinians and denouncing Israel and you may begin to appreciate the nature of the problems facing the West and their energy supplies.
Already we've seen the oil price rebound in the last few days and the longer these situations go on, the more demand their will be for energy. It might make sense to position yourself around these sectors, irrespective of the longer term problems facing the global economy...
Funny
I found this article hilarious. Basically GM is saying that thanks to the governments multi-billion dollar they may just survive and as a result the US dollar has moved stronger...
Honestly I can't see how Detroit can survive without the US government bailing them out for the next 3 years at least - at roughly US$12bn dollars a year...
Surely it's not that complicated - the number of unemployed are going to go up, corporate profits and presumably corporate activity are going to go down. Guess what - people aren't going to buy new cars for at least a big portion of 2009 and if they are going to buy they're going to buy second hand or "cheap and cheerful".
You can't change this by throwing billions of US dollars trying to free up credit markets - people are petrified of losing their money or getting wound up in further debt. Guess who is going to benefit - the Asians with their cheap and efficient cars that they will STILL be able make cheaper - WHY? - because the US culture of "expensive labour" will still persist. With all due respect - if you have worked for 10 years of your life at a certain remuneration level and the government offers you a job at 1/3rd of that level you're going to think very carefully before lowering yourself to that level ESPECIALLY when the government is taking every step possible to protect you from yourself and throwing money at the credit markets to get you spending more.
A bit of economic stimulus will be great in the longer term but serious ly US$8 trillion dollars (can you even begin to comprehend how much a trillion is?!) has been thrown at this problem and it still can't remove the F E A R in the markets.
Dunno - interesting times ahead but "saving" Detroit isn't going to keep the US world afloat....
Honestly I can't see how Detroit can survive without the US government bailing them out for the next 3 years at least - at roughly US$12bn dollars a year...
Surely it's not that complicated - the number of unemployed are going to go up, corporate profits and presumably corporate activity are going to go down. Guess what - people aren't going to buy new cars for at least a big portion of 2009 and if they are going to buy they're going to buy second hand or "cheap and cheerful".
You can't change this by throwing billions of US dollars trying to free up credit markets - people are petrified of losing their money or getting wound up in further debt. Guess who is going to benefit - the Asians with their cheap and efficient cars that they will STILL be able make cheaper - WHY? - because the US culture of "expensive labour" will still persist. With all due respect - if you have worked for 10 years of your life at a certain remuneration level and the government offers you a job at 1/3rd of that level you're going to think very carefully before lowering yourself to that level ESPECIALLY when the government is taking every step possible to protect you from yourself and throwing money at the credit markets to get you spending more.
A bit of economic stimulus will be great in the longer term but serious ly US$8 trillion dollars (can you even begin to comprehend how much a trillion is?!) has been thrown at this problem and it still can't remove the F E A R in the markets.
Dunno - interesting times ahead but "saving" Detroit isn't going to keep the US world afloat....
Asian currency update
No major moves here yet but watching the Singapore Dollar quite closely..
US$1 vs. Japanese Yen = 93.7376
US$1 vs. Chinese Yuan Remimbi = 6.83312
US$1 vs. Singapore Dollar = 1.47174
US$1 vs. Hong Kong Dollar = 7.75377
US$1 vs. Thailand Baht = 35.0324 (international rate)
US$1 vs. Vietnam Dong = 17,478.00
US$1 vs. Indian Rupee = 48.4205
US$1 vs. Japanese Yen = 93.7376
US$1 vs. Chinese Yuan Remimbi = 6.83312
US$1 vs. Singapore Dollar = 1.47174
US$1 vs. Hong Kong Dollar = 7.75377
US$1 vs. Thailand Baht = 35.0324 (international rate)
US$1 vs. Vietnam Dong = 17,478.00
US$1 vs. Indian Rupee = 48.4205
Sunday, January 4, 2009
Dollar fizzling out?
We touched on the declining dollar recently.
There is an interesting article on Bloomberg this morning discussing the dollar rally fizzling out. The link is here:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKpyxDjnfiJ4&refer=home
It's interesting to note two things:
1. They've accepted that all the money the US Federal Reserve is pumping into the markets to try and stimulate economic growth is finally starting to have an impact on the the value of the US dollar.
2. Currencies like the dollar, yen and Swiss franc are going to be the losers while higher yielding currencies such as the Brazilian real, Indonesian rupiah and Polish zloty as well as emerging marketing currencies are going to be the winners.
I thought that was interesting considering that many of the "strategists" within the SA investment scene are talking up Asian markets and currencies at the moment.
There is an interesting article on Bloomberg this morning discussing the dollar rally fizzling out. The link is here:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKpyxDjnfiJ4&refer=home
It's interesting to note two things:
1. They've accepted that all the money the US Federal Reserve is pumping into the markets to try and stimulate economic growth is finally starting to have an impact on the the value of the US dollar.
2. Currencies like the dollar, yen and Swiss franc are going to be the losers while higher yielding currencies such as the Brazilian real, Indonesian rupiah and Polish zloty as well as emerging marketing currencies are going to be the winners.
I thought that was interesting considering that many of the "strategists" within the SA investment scene are talking up Asian markets and currencies at the moment.
Friday, January 2, 2009
Portfolio realignment
I used the first trading day of 2009 to do a bit of realignment to my portfolio. Toward the end of 2008, I spent quite a lot of time look at Exchange Traded Funds (ETFs) to provide a bit of protection and spreading some of the risk.Started 2009 with some specific counters in mind and have outlined them below:
Small caps:
Beige Holdings (BEG) - have been a regular buyer of this counter over the last few years and expect some big things in the future
Bioscience Brands (BIO) - believe that for the patient investor, this is another share that could offer some nice growth potential
Freeworld coatings (FWD) - New one on my list - noticed that it is trading well below its NAV and expect it to come up for grabs for the private equity players
Buildmax (BDM) - Been watching the sharp guys at Brait taking a strategic stake in this business and think that it also offers some intriguing longer term opportunities in the coal and energy space
Interwaste (IWE) - I'm a big believer in the whole waste management game - particularly in South Africa. With Enviroserv having been delisted, Interwaste proves the only entry point - even if the share price has been somewhat battered since listing.
Larger industrials:
Grindrod (GND) - Touched on this shipping and diversified industrial counter previously
Invicta Holdings (IVT) - Long time success story and one of those which I believe will be well positioned despite tough economic conditions
Big names:
Naspers (NPN) - the media company with its offshore strategy (particularly in South America and Asia definately fits my portfolio well)
Reinet (REI) - the Rupert hedge fund as its affectionately known. These guys have made a living generating huge wealth for South Afircans. Suppose it would be good to trust them with a few bucks of mine.
Pref shares and others:
Grindrod Pref (GNDP)
Standard Bank Pref (SBPP)
Beige Holdings Pref (BEGP)
Newgold (GLD) - Gold exchange traded fund - didn't have anything in my portfolio at this stage and thought I might hedge my bets a bit here
CBN013 - The carbon credit note issued by Sterling Waterford. Something a little different for my portfolio but I believe in the longer term story and bought it for many of the reasons I liked GLD.
The main thinking behind this realignment is to begin rebuilding some wealth, protecting the value of the portfolio (in hard currency terms) and using things like the Preference shares to begin to generate cash flow from the investments.
HOWEVER
I still don't buy that the US has seen the end of its troubles and with lots of uncertainty around India / Pakistan - I wouldn't get too excited about this new year rally. Interesting times ahead....
Small caps:
Beige Holdings (BEG) - have been a regular buyer of this counter over the last few years and expect some big things in the future
Bioscience Brands (BIO) - believe that for the patient investor, this is another share that could offer some nice growth potential
Freeworld coatings (FWD) - New one on my list - noticed that it is trading well below its NAV and expect it to come up for grabs for the private equity players
Buildmax (BDM) - Been watching the sharp guys at Brait taking a strategic stake in this business and think that it also offers some intriguing longer term opportunities in the coal and energy space
Interwaste (IWE) - I'm a big believer in the whole waste management game - particularly in South Africa. With Enviroserv having been delisted, Interwaste proves the only entry point - even if the share price has been somewhat battered since listing.
Larger industrials:
Grindrod (GND) - Touched on this shipping and diversified industrial counter previously
Invicta Holdings (IVT) - Long time success story and one of those which I believe will be well positioned despite tough economic conditions
Big names:
Naspers (NPN) - the media company with its offshore strategy (particularly in South America and Asia definately fits my portfolio well)
Reinet (REI) - the Rupert hedge fund as its affectionately known. These guys have made a living generating huge wealth for South Afircans. Suppose it would be good to trust them with a few bucks of mine.
Pref shares and others:
Grindrod Pref (GNDP)
Standard Bank Pref (SBPP)
Beige Holdings Pref (BEGP)
Newgold (GLD) - Gold exchange traded fund - didn't have anything in my portfolio at this stage and thought I might hedge my bets a bit here
CBN013 - The carbon credit note issued by Sterling Waterford. Something a little different for my portfolio but I believe in the longer term story and bought it for many of the reasons I liked GLD.
The main thinking behind this realignment is to begin rebuilding some wealth, protecting the value of the portfolio (in hard currency terms) and using things like the Preference shares to begin to generate cash flow from the investments.
HOWEVER
I still don't buy that the US has seen the end of its troubles and with lots of uncertainty around India / Pakistan - I wouldn't get too excited about this new year rally. Interesting times ahead....
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