Just a few moments ago some news which was deemed “bad for the markets” was released in the USA. This time it was something to do with fewer Americans having jobs and all sorts of prices all over the globe, including our own All Share Index, swooned. The amount of attention that each analyst will pay to this news is probably inversely proportional to his or her age and experience or if they are unlucky, the age and experience of their boss. Among the driving forces of securities analysis is the belief that not only is there a discernable effect for every cause but also that investors should care about each one. An even more dangerous belief is that numbers are accurate and meaningful and worst of all of course is that expectation that potentially market moving information is live and current and that investors have time to react.
The short-term anomaly of today’s US jobs data is that the US markets in particular have been behaving in a very bullish manner this week and it looked like nothing would derail them. The alarming valuations of some of the newer dot.com-like issues that are making a reappearance are worth mentioning again. Back here on the southern tip it seems unlikely that most industrial and financial companies will declare greater earnings or pay larger dividends in 2011 than they did in 2010. This might just mean that some investors become disillusioned and buying opportunities will appear. But we shall just have to be patient. In the meantime simply holding on to one’s shares in well-managed companies with great brands and reputation is about all one should be doing. As usual.
I have great sympathy and admiration for anyone managing a business. This week they were faced with the modern equivalent of the medieval sale of indulgences to buy places in paradise or at least the government’s good books. And this came as strike season hotted up with unions promising their members that 2011 will be a year to remember. For all our sakes let’s hope that it wont be the memory of the year they lost their job.
I am pleased to report from Durban that it does not look as if any Olympic Official missed either lunch or dinner while located here for their important meetings. Blue-light escorted motorcades have been wailing up and down the highway between the conference venue and the area’s top hotels throughout the day and night and no one important suffered the indignity of a traffic jam.
On the other hand it seems as if many potential and probable Springboks have suffered injuries during the marathon Super season. And now the Tri-Nations and World Cup are looming. I suppose only the players and teams themselves have the right to challenge the people responsible for this overfull calendar. But like us investors perhaps they are also loath to pass up a chance to make some money by cancelling some games. Its tough stuff.
I shall be watching the last space shuttle launch tonight. I remember being taken on to Mountain Drive in Grahamstown to see Sputnik.
James Greener
8th July 2011
