A clever cartoon this week depicted a very overweight man, representing the developed nations, painting a bulls eye target on carbon emissions while lesser nations – represented by our very own Pres JZ – was painting a bulls eye on the fat man’s back pocket, out of which was bulging his wallet. Sure enough this morning came the report that one Lumumba Stanislas Dia-Ping of Sudan pitched up in Copenhagen and called on the world’s newest Nobel Peace Prize winner to “help free up $200bn in funds to fight climate change.” It is amazing how many people have travelled to Denmark to promote their pet project for controlling the world’s most lethal and newly identified poison. I am not of course the first to suggest that if they all stopped getting excited and exhaling carbon dioxide so vigorously it would already be a good start.
Meanwhile the pictures coming from Oslo seem to suggest that the Nobel committee were a bit non-plussed to discover that the Mr Obama who had popped in to collect the peace prize was the same one who had just mobilised a large army. I am afraid that the concept of a “just war” has always proved to be flawed. People are going to die.
The All Share index is just about at the level it was in the first half of 2007. In the interim of course share prices went on to set record highs before collapsing to lows in March of this year. The 2009 recovery has taken us to a point about midway between these two extremes. It is interesting to note that company earnings and dividends are also at the same levels they were almost 36 months ago. Metrics like dividend yield and price earnings ratio are therefore similar too. The obvious question is that if in 2007 these share prices were cheap, are they not so now? The problem, however, is that currently both earnings and dividends are plunging at rates approaching -25%pa with no sign yet of a bottoming out. Buyers today will need to be patient. They should also not be surprised to see lower prices in 2010 in which case it would be prudent not to spend all their cash now in one go.
Daily volumes are still amazingly robust but will likely collapse after next week’s close-out event after the public holiday. In fact most true investors should have departed for the beach already and leave these dog days to the derivative desperados.
I doubt that it will ever be revealed how much actual money will be collected by the UK Chancellor’s vindictive and petty 50% tax on banker’s bonuses. Sure, we are all enraged and jealous that those fellows managed to score so much loot. But retrospective legislation stinks and my guess is the revenue raised will be risible.
The chaps down here in the kingdom are delighted with the FIFA draw and are hopeful that they might get to sell all the tickets in the new stadium for several of the seven matches it was built to host. The Portugal Brazil match on 25th June is especially promising. Several tonnes of prawns and litres of pink stuff are not going to make it to the 26th. The draw itself was baffling and it turned out that the lady with the American accent comes from Benoni while the man with the Boksburg haircut works in the US. Also a lot of goldfish were made homeless.
James Greener
11th December 2009.
