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
