Friday 25 February 2005

ROTTEN FISHING

Since I the last edition of Tidemarks there have been quite a few interesting events, some of which deserve comment. Top of the list might be Minister Manuel’s budget speech, or perhaps the economic statistics suggesting slowing economies in Europe and the Far East. Then there was Joburg City’s call for tenders to supply a Human Capital Satisfaction Measurement Survey, and the news of the sale of a downtown city block for just R5.5m. This might sound low but would, in my view, far exceed the total value of the whole of the city (?) of Luanda, capital of Angola; a country from which I have just returned after trying to catch fish in the majestic waters of the Atlantic ocean.
The sea was almost the sole familiar thing about the whole visit. The rest of the place is wholly appalling, but nonetheless interesting. There is an explanation but no longer an excuse for the apparently deepening squalor and dilapidation. Many of us in South Africa are all too painfully aware that this land has suffered some of the continent’s most dreadful strife and bloodshed. But still the oil and natural wealth is failing to create any affluence for anyone outside of a very exclusive elite. The disintegrating and filthy airport is thronged with characters straight from the script of a bad movie about dirty deals and blatant corruption. I thought that the crumpled, sweat-stained linen jacket and crushed panama hat had died with the Graham Greene novel. The only hint that the times had changed was the cellphone jammed against the ear.
The crumbling roads are lined with the remains of horrific accidents involving totally unroadworthy vehicles. The minibus taxi that provided the three hour transfer to the fishing lodge had seats which were not fixed to the floor and a driver who never stopped drinking beer. Potholes in the tar stretch for hundreds of meters – and are almost as deep. Ironically for an oil producing nation, fuel is often difficult to find.
As in most places where the people have no expectation of anything from anyone – especially their government, there is an incredible flowering of commercial activity. The miles long traffic jams and absence of traffic lights have encouraged huge growth in the career of street vending. The only thing not on display for sale from the crush of humanity on both sides of every traffic lane, were stocks and shares. Actually, also missing, was any form of handiwork or craft – maybe because there is not yet any real tourist market in Angola. Nor is there likely to be.
The fishing lodge was fantastically located on an island in the middle of a deep and fast river that, just before it enters the sea, flows parallel to the surf line for several kms, separated from the ocean by a very narrow sand bar. Giant Tarpon infest the waters. The juveniles roll in the fresh water at one’s chalet door and the 60kg adults lurk in the deep sea crashing on to the beach just a hundred meters beyond.
But in five days I never caught a single one of them, so my human capital satisfaction measurement result is pretty low. But while I prepare my fishing kit for sale this weekend I will at least be able to watch the start of the Super 12 rugby season. And it’s one of those weekends when we are certain that at least two of the SA sides can’t lose.
It’s nice to be home.
James Greener
25th February 2005

Friday 18 February 2005

DRESSED FOR EXTINCTION


On my way into the supermarket to fetch a cheese and ham roll for lunch I encountered a cheerful sunburned fellow in complicated boots, green epaulettes and snug khaki shorts. He was soliciting support for the cause of wildlife conservation. This got me thinking about the appropriate uniform for the time when I will have to take up station at the door of Pick ‘n Pay, shaking the slotted tin for donations to save an equally endangered species –  the South African Stockbroker. In ten years we have gone from being a large number of qualified and experienced professionals, mostly respected, who owned both their own firms and also the Exchange itself, to being an almost invisible and unrecognised coterie of greying grumblers generally griping about the way things have turned out.
Unlike the riverine rabbit or the blue swallow, I know that few will lament the drying up of this particular gene pool. Public perception of the stockbroker was usually dominated by stories of spectacular fraudsters and pricey automobiles. However, in this age of international investment banks, CDOs cubed (don’t ask!), hedge funds and the rest of the sophisticated and modern money business, I am always coming across bewildered investors anxious for the service that a professional stockbroker used to provide. That service would include a brief economic scene setting, basic tax information, reasonable and appropriate portfolio advice and very importantly, knowledge of the paths through the jungles of administration and record keeping.
Now I know that I am being nostalgic and romantic to think that the modern investing environment has any place for the amateur investor. Despite its claims to the contrary, the JSE Securities Exchange is neither accessible nor affordable for the man with even as much as R100 000 to invest. I think that this is unfortunate and sad; especially when the suggested home for these funds – the unit trust – has in my opinion, a very poor record. The irony is that there are now more unit trusts than listed shares, so the investment decision for the “small” investor is in fact made harder.
I of course acknowledge that the current stock exchange system is much safer and perhaps a bit fairer and more efficient than what we had ten years ago. Many investors, particularly the computer-literate ones, are delighted with the ease of on-line trading and the access to information, two jealously guarded privileges of the old broking firms, now made public. However, it has been the nature of this technological revolution that the expected cost reductions did not materialise. Some of the extra costs arise from regulatory and administrative burdens imposed by the bureaucrats who realise that with the genie now out of the bottle, the task of policeman just got much larger!
But, back to the problem of the uniform. Dark suit, black shoes, white double cuff shirt, ostentatious cufflinks, old boys tie?  Sounds OK, but the problem is that ever since I came to work with these old fashioned stockbrokers at Watermark I haven’t really needed a suit. I find my friends and clients are more interested in my time and ideas than in my clothes.
Have a great weekend
James Greener
18th February 2005

Friday 11 February 2005

PEOPLE POWER


The other day a fax arrived on our machine here in the office that, I think, was not intended for us. But I read it anyway. It was an invitation to attend the 50th birthday party of Joburg’s illustrious mayor. But what caught my eye was the last line, after the bits about when and where the festivities would be held, which stated: “Presents are Welcome”.  How refreshing to leave the guest in no doubt about the host’s expectations. Imagine an investment report that ended with the words. “Orders are Welcome”. Instead we drop hints that one should think about accumulating on weakness or sell into strength or similar weak-kneed non-committal phrases. When what we really mean is that we hope that you are impressed by all the work we have done in compiling the report and will reward us accordingly.
The Governor’s decision this week not to change interest rates has also been labelled a cop-out by several sections of the market, especially those who had put together nice little positions that would have scored from a rate cut. Probably the most important reaction has been seen in the rand which may be trying to reverse the softening that it began in the final days of last month. The share market seems unconcerned with what the Reserve Bank is up to, and the All Share index has already scored better this month than it managed in the whole of January. However, the dispersion of performance is very wide with the service sectors taking a bit of a hammering. Resources and goods are doing OK. There’s nothing special happening to financials.
I have just spent a week in the E Cape, where the papers wisely devote little space to financial and business matters beyond the price of pineapples and the outlook for ostrich products. Big news was the fire that destroyed a chunk of Grahamstown’s Church Square. Other impressions gained from a leisurely return trip along the back roads of the country were mainly of population pressures. It is astonishing to see how many new small housing units have popped up in huge sprawling townships alongside the old ones outside every dorp and town. There is clearly a massive shift of people from the country to the town and this must be a significant source of the consumer boom being experienced. Also noteworthy were the number of fresh graves visible in the cemeteries. I am certain that we are not getting true or accurate data about just exactly what is happening to this country’s demographics.
Back home with the Biz Day newspaper my anxiety was deepened by the number of stories that show the rapid encroachment of government’s market-unfriendly and   interventionist pronouncements and actions. I was particularly alarmed by the notion that pension funds should not make achieving a high return their top priority. Rather they should support worthy causes, or at least causes deemed worthy by someone else. I was thinking about the reaction of a pensioner on being told that the fund had dried up but not to worry because his cash had been used to “invest” in community projects. Now there’s a fellow for whom presents will most definitely be welcome.
It may almost be time to talk about cricket again.
Keep Well
James Greener
11th February 2005