Friday, 4 July 2014


Most of us harbour the same quaint and nagging suspicion that it must be possible to acquire sufficient information, experience and skill to be able to make faultless investment decisions. This naive belief extends to thinking that the industry is packed with people who have attained this pinnacle of expertise and knowledge. There are many things, however, that should point to the small flaws in these assumptions. A fine example this week was provided by the furore that erupted when Aspen, one of the market’s super performers, called a small meeting to warn that business was becoming rather slow and that consequently earnings will be disappointing. Naturally not everyone who felt they needed to know this was present at the meeting – it is interesting to speculate if things would have turned out any different if they had – and so when the share price tanked, a howl about unfairness went up. Actually a careful look at the charts suggests that the price began falling even before the meeting took place. Not an uncommon thing. Prominent among the believers that perfect and universal knowledge is possible and furthermore can be achieved by regulation, are the regulators who needed some prodding before setting off with wailing sirens and flashing blue lights in pursuit of the perpetrators.
Another clue that not even the revered experts are all that confident in their powers can be taken from the fact that fund managers understandably find it both prudent and necessary to extract a small but regular commission from any money entrusted to their care. Relying solely on capital gains for one’s bread and butter is dicey even for investment professionals. If indeed there are any superheroes in this business they wisely keep their skills quiet and to themselves and compile their fortunes in privacy. Even Warren Buffet shamelessly tells the world what he likes and has bought, but does so only AFTER he has arranged his own trades so as to ensure some decent price support from the faithful wannabes.
The Dow Jones Industrial index broke through 17 000 and the JSE All Share achieved 52 000. Buyers in both (and many other markets) can see no difficulty with valuing companies far in advance of any underlying growth in business activity or profitability. In SA this conviction is particularly troubling and puzzling as the nation faces the possibility of the largest single strike in the country’s history. Among the blizzard of opinions, positions and policies being offered by the talking heads, one small but telling statistic was released which undeniably indicates that we are not as a nation keeping up. It turns out that this year we are using about 1% less electrical power than a year ago. This is not bullish news. And the ratings agencies have noticed.
We are also all watching the unruly and unhelpful antics of the Economic Freedom Fighters who have now made their point – such as it was – about coming to parliament dressed for work in red overalls. So far that seems to have been their sole contribution to the legislative processes in the various chambers. There has been no evidence of work, of anyone having read any papers or prepared any arguments.  It would be wonderful if, for example, the EFF were to question government on the contents of yet another international survey that has placed SA far behind the rest of the world in internet services. Unfortunately for far too many the term bandwidth refers to how many chairs are needed on stage for the musicians.
It’s that weekend which every year allows me to showcase my uncanny skills with the TV remote. Added to the usual mix of Durban July, Wimbledon Finals, Tour de France start and Super 15 are Soccer World Cup Quarter finals and Silverstone GP. What a feast. Now just as long as Eskom manages to keep the lights on. Can’t have the beer getting warm.
James Greener
America’s Birthday 2014