Daily Market Blog: Oil Spoil

03-AUG-15

"Two of the big oil companies reported numbers on Friday. The lower oil price has been telling with Exxon Mobil's revenue dropping 33.4% YoY and their EPS dropping 51%! Chevron's revenue dropped to $40 billion from $57 billion the same time last year but their EPS was down a staggering 89.9%!"






To market to market to buy a fat pig. The news all over the financial channels this morning is the reopening of the Athens stock exchange, it has been closed for 5 weeks due to all the uncertainty that surrounded Greece getting and accepting a bailout. Unlike the Lisbon stock exchange that only has a handful of companies (78 to be exact), the Athens exchange has 258 listed companies. As you would imagine there has been a very big sell off, it is currently down 23%! The market pays a premium on listed stocks due to liquidity, the ease of getting your cash out. There are many factors that determine the value of a company but consider that private companies normally trade around 3 - 6 times their earnings, where public companies normally trade around 10 - 20 times their earnings. It makes sense that the market gives a premium to liquidity, how long does it take to get your cash out of a property? In my experience it is between 2 - 3 months and you pay an estate agent around 5%!

This is the sage of Omaha's (Buffett) view on stock markets, "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.". With TV, Twitter and news agencies always bombarding us with what the stock market is doing and the ease at which we can see what our portfolio did over the last 30mins, it is very difficult for investors to ignore the short term noise of the market and only focus on the company and its long term prospects. I remember it being a difficult mental shift from short term fixation to being okay with not worrying about the share price fluctuations over the short run. Here is another quote I found, "Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.". Here are a whole bunch more, they make for very interesting reading - 101 "Hand-picked" Warren Buffett Quotes On Investing.

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Stocks which we currently recommend

Amazon.com is the world's leading online retailer.

Apple is global leader in tablet and smartphone technology.

Aspen is a rising global star in generic pharmaceuticals.

BHP Billiton is the world's largest industrial commodity mining company.

Bidvest is a diversified services company, which may re-organise its portfolio.

Cerner provides IT solutions in the healthcare industry.

City Lodge is a growing mid-priced hotel group in urban areas of SA.

Discovery is a healthcare services administrator and life insurer.

Facebook is a dominant social media platform provider.

Famous Brands is SA's largest quick-service restaurant group.

General Electric is a diversified investment holding company.

Google is the world's biggest search engine and online advertising platform.

Johnson & Johnson is the largest consumer healthcare and pharma company.

L'Oreal is a world leader in the manufacturing and sale of beauty products.

Luxottica is the world's largest branded sunglass maker and retailer.

MTN Group is an emerging markets mobile telecoms giant.

Massmart is a big-box discount retailer in Africa, now 51% owned by Wal-Mart.

Mediclinic owns hospitals in SA, the UAE and Switzerland.

Naspers is an in emerging markets company focussed on digital TV & Internet.

Nike is a global designer and retailer of sporting equipment.

Omnia is a fertiliser and explosives producer.

Richemont is a luxury brands company expanding in Asia.

Sasol is a global player in chemicals and fuels technology.

Starbucks is a roaster, marketer and retailer of coffee.

Stryker makes hip and knee joint replacements and hospital beds.

Tiger Brands is a basic and branded food producer, expanding through Africa.

Visa is a global payments technology company.

Woolworths is SA's leading organic food retailer & clothing business.

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