It looks as if that late March bull market has petered out and the old boy has his eye on a long and quiet spell of rest over all the forthcoming holidays. At least four of the next eleven weekdays are official holidays and lots of people have decided that the month is a dead loss anyway and have already left for the sea or sierra. Not unexpectedly some global economic consequences of the Japanese earthquake tragedy are showing up even in SA with some car assembly plants curtailing production. When the numbers come out, April 2011 could well show up as the end of the rather short recovery phase. On the JSE this week more companies announced or warned of poorer earnings than had good news. The average share price is still almost 16 times larger than the average earnings which seems too high and the most likely source of correction will probably be from falling prices, but there is really no other evidence for that kind of move There are still buyers everywhere.
Particularly for gold, which is setting new highs in almost every currency – even rands.
Our president is a very busy man. At the start of the week he went off to Libya for a meeting where it turned out that nobody had any intention of doing what they agreed. He did get another photo of himself in dubious company for the family album though. Fortunately this ignominy was soon totally forgotten in the obviously hoped-for uproar that followed the display of arrogance and contempt by the leader of his youth league. Having earlier been denied an official bodyguard this “leader” appeared in the midst of a squad of well dressed and fearsomely armed gents who ushered him down the pavement to his court appearance. The trial itself is a fantasy show where hours of expensive lawyers are arguing whether or not a chant is a song or vice versa; and everyone is trying to ignore the plain truth that the phrase “Kill the Boer” is impolite, distasteful, and in every case offensive. And now President Zuma is at some sort of gathering of bric(k)layers discussing the correct way to build a fence on which to sit. The SA delegation is mixing the cement.
Several years ago one of the large assurance houses ran an advertising campaign showing a gracefully greying but surprisingly fit couple in sole control of a sizable yacht ploughing the seas of Table Bay in a very stiff breeze. The implication was that this life of bliss, joy and a slightly damp hair-do awaited clients who entrusted their savings to this financial anchor. The truth, of course was that while the yachts do indeed exist, they belong not to the clients but to the people in the assurance company. And so now we have a raft of laws which allow the consumer to spend a few weeks deciding if what he bought was what he wanted or what he was lead to believe it was.
I have not yet read any of the new legislation and for all I know we suppliers of financial services may even be exempt, but it certainly raises doubts about how to answer the question “What should I buy?” In fact official regulation of mining analysts is already underway based on the utterly false premise that a licensed analyst will be better than an unlicensed one at guessing how much valuable stuff lies buried in the ground. Can an investor get state compensation if an officially recommended mining share goes “bang”? Can the buyer of the shares I suggested send them back after a cooling off period? Is no one responsible for their own actions and decisions?
In a quite brilliant decision the soccer ‘bokke have decided not to buy the Bafana Bafana name from someone else who claims to own it. That should see quite a drop in the asking price! Talking of which, I wonder what the Lions are worth now. Certainly not the sum of their expensive parts. Oh dear.
James Greener
15th April 2011
