For the last nine months the All Share index has languished within a narrow range of no more than 3% either side of its current value. This quite unusual behaviour has probably proved pretty poisonous for punters. For investors the problem has been compounded by the fact that during this time valuations have remained historically high and so opportunities for new money are very limited. The situation will of course change at some stage and in my view the correction will be downwards. Also unknown are when this will happen and whether it will be as sharp as the 2008 correction. And it would be really useful to know how far down the market will fall. In the absence of all this information the best idea is still to sit tight in quality well-managed dividend paying companies, particularly those who have some exposure to mineral exports. This morning’s announcement by Anglo suggests that it might now be back in that category after a very bleak period in its history.
I was a student in England when the politicians there decided that people were incapable of enjoying and organising exercise without interference from the government. A Minister of Sport was appointed and many folk wondered what he was going to do. Would it be unfair to point out that since then England has yet to win another soccer world cup? Naturally here in SA we also have a department and minister to look after sport, recreation and culture with a budget this year of R6.4bn. This week that department plunged into the murky world of SA boxing, promising taxpayer’s money for pugilists who claim that their own governing body has cheated them by allegedly not paying purses or incorrectly withholding taxes on payments. The story is extremely muddled with tales of cancelled bouts, withdrawn boxing licences and stripped titles. Naturally SARS are in the mix too after noting that nothing much appears to have turned up in their coffers either. The best quote so far comes from the head of SA Boxing who complained that his outfit “is not a tax collector.” This could develop into a wonderful drama.
My thanks go to a reader who has pointed out the glaring fact that explains why the government’s anxiety about the merger of Wallmart / Massmart is still dragging on. Presumably it is simply because no palms have been greased and no relatives have been promised mispriced contracts. In the US they have a piece of legislation that forbids any of their companies from paying backhanders and corporate suits are fearful of being caught because the law is enforced and penalties are severe. Local panhandlers have yet to grasp this concept.
Indeed the tide of corruption and inefficiency seems to rise deeper every day. At a rough count almost one half of the stories in the local pages of Business Day are about unusual and unexplained cash flows. With great reluctance suspected miscreants are suspended or allowed to leave, only to pop up in an even more lucrative and sensitive position elsewhere. Here’s a suggestion that might help. In the state sector especially, immediately stop the practice of suspension on full pay. The accused, if guiltless, will understandably insist on a speedy resolution of the case and when cleared can receive the missing salary. The dodgy will be unlikely to want to face an inquiry and with luck will disappear and the post can speedily be filled.
As well as the weather becoming nasty (again!) there are few reasons to get out of bed tomorrow until at least noon. In this way you will miss having to watch live the clash between the ‘Bokke and the All Blacks down on that soggy island. But you will be able to catch the qualifying session at the Hungarian GP. And of course the Currie Cup matches where, I would remind you, the Golden Lions head the log.
James Greener
29th July 2011
