A US investment
guru has declared that the bear is now finished with the markets and it’s
happiness all round from here on. Well that’s rather nice, but the bottom of a
bear market is rarely that obvious and often happens only once all the wise men
have declared that it’s the end of shares as we have known them and it’s time
to go and grow vegetables. Another typical indicator is when dividend yields, as
opposed to their more flaky younger brother, earnings yields, rise to be comparable
with government bond yields and other near riskless investments. As always,
however, this time it’s different. We are at a place where news travels at the
speed of light between people who might have huge holdings of currencies that don’t
exist but have value because the computer says so. And the world’s largest
economy is headed by a man who believes that his allocation of assets (usually
to people who are already well off) is better than what a truly free market
would deliver. We have had “stress tests” and all manner of snooping through
the numbers and once again the notion that some organisations are “too big to
fail” is being believed.
And so,
another ANC linked outfit that most of us had never heard of, gets exposed as a
conduit for distributing mostly public funds in unusual directions. Its website
claims that the Bosasa Group is “a multi-functional group of companies
that has developed many of its own specialized techniques for business services”. No kidding! This might be a tad untruthful
since bribery and corruption have been around for millennia. But it has become
apparent in the last few years that down here on the southern tip these
activities have reached gold medal standards. The amount of folding money that
is being sloshed about in secret (presumably the aforementioned “specialized
techniques”) must comprise a significant fraction of the Reserve Bank’s
published total of notes and coin in circulation. And if these transactions
were to be recorded, the nation’s GDP would also be appreciably larger.
It is rather
embarrassing for those of us who made careers in financial research to learn
how naive we were to believe that it is possible to understand, analyse,
interpret, and what’s more forecast, the future levels of significant economic
parameters and company results. The old dictum of “follow the money” is as true
as ever but when the money is rolls of cash that would choke a whale let alone
a horse, it is foolish to trust most published numbers. And now that so many of
the gatekeepers and umpires have misplaced their arithmetic skills and moral compass
it is even worse. So many of the source documents really are “fake news”. More telling and useful is the length of the
price list in the motoring pages of luxury car models. The beneficiaries of
these illegal and unrecorded flows use their cash to buy not only a comfortable
life. They spend huge amounts to buy votes. T-shirts and KFC for eighty
thousand makes a hole in anyone’s wallet, so it’s just as well there are sympathetic
business contacts who understand how things work.
Now that Donald
Trump and Theresa May aren’t going to Davos there is going to be more space for
delegations like our own to send even more folk to fly the flag (in fact, the scarf)
and shake the slotted tin. There have apparently been training sessions for delegates
to ensure that they all sing from the same song sheet. Lots of uplifting verses
about poverty alleviation and job creation. Not a line about the need for
bribes to secure a contract. The fact that not a single conviction of anyone
suspected of corruption has yet been made will however catch the attention of
the many shady characters haunting the bars of the World Economic Forum. The
perfect investors.
It seems
that the Protea’s coach Ottis Gibson has written into his contract the explicit
requirement that he and the lads win the World Cup this year. Wow. No pressure
then? Judging by the way they blasted through the Test matches, Ottis seems to
have got the team already thinking about the 50-over format.
James Greener
Friday 18th January 2019
