Average earnings of the 30 shares that make up the financial &
industrial index continue to grow at slightly better than 15%pa. This is very
acceptable as it easily outweighs inflation and the miserable cash yields now
offered to savers. However, despite the pullback in the average price of these
shares (commonly called the index) the pe ratio is still far too close to 20
for buying anything but carefully selected shares – and only if you really have
to.
The US
share markets are enjoying another sharp upward lunge and index prices are
rising at an average rate approaching 70% pa. That’s very steep and investors
are probably taking way too optimistic a view on the scale of the economic recovery
in that country. Debt and government spending are still by no means under
control. Many contend that technically the world’s richest and most powerful
nation is bankrupt. Hopefully we are not watching the inflation of another
bubble.
A very recently burst bubble, however, is the price (note not value)
of the putative internet currency known as a bitcoin. From over $200 to under
$100 a coin in a matter of hours. Fortunately there are deliberately not very
many bitcoins in circulation and ownership is largely confined to people who
understood fully the risks, but it must have been quite a pop. Bitcoins may or
may not become an alternative to the fiat currencies issued by sovereign
states, but they are definitely intriguing especially for those of us who
dislike and distrust governments and their endless meddling in what we do. Be warned, however, that you will spend many
hours on the internet if you decide to research this fascinating concept.
Meanwhile our rand enjoyed a small recovery presumably as buyers
returned indifferent to the spat about how far back we can attribute blame or
indeed kudos for a current situation. Useful stuff like wheels and grapevines were
introduced ages ago by brave and avaricious explorers and entrepreneurs. But substantial
differences in the standards of living of different folk probably date back
even further than that, with no government until the current actually making
its eradication a policy. Sadly, the very recent past has been characterised by
official hostility to experience and skills that allegedly were obtained unfairly
but which are so grievously needed now to help implement that fine policy. It
is impossible to unwind history and everyone must pragmatically accept that and
criticise all attempt to do so.
While Britain
makes the preparations for the funeral of a political icon, here in SA the
bickering about the legacy of our own is hotting up. Most South Africans would
like fondly to believe that Madiba’s wealth is safely stashed away in the
various charitable trusts and foundations and funds that bear his name. We are hopeful
that benevolent, wise, prudent and honest trustees and managers will ensure
that the money will endure for years and be distributed to the deserving cases
– especially children – that we all know Mr Mandela cares about so
passionately. Sadly however, already his offspring are hiring lawyers and
staking claims and a curtain of murk is descending from which no truth and
precious little charity is likely to emerge.
What has emerged from the legal fraternity, however, is the firmly
stated principle that when selecting judges, race is much more important than
qualification or ability. Oh dear. This is a highly litigious country with
people readily resorting to ever higher courts until a satisfactory verdict is
obtained. This seems particularly to be the case when the state or one of its
agents feels that it needs to teach a lesson to some citizen who has the
temerity to suggest that the state has made a mistake. Poor judgements all
round.
The Sharks ought to come back from Newlands with a victory tomorrow
but it will be tough and probably messy.
And let’s hope that we all have to sit up late on Sunday to watch a
South African shrug on the Green Jacket in Augusta.
James Greener
Yuri Gagarin Day 2013
