Research archive for GENERAL

Do we care what Moody's thinks of South Africa's credit rating and what they think about it in the future? Should we care? I think the short answer is yes, we should definitely pay attention. The release, the free one anyhow you can get if you create a Moody's account (free, free), is available at the following link -> Moody's changes outlook on South Africa's A3 government ratings to negative from stable. If you do not have the time (I suspect that you do not) then perhaps you should read these few choice lines that I extracted from the report:

Another part of our puzzle, cement sales were released yesterday afternoon after the market closed. These are released by the South African Cement and Concrete Institute. And as they point out, the CMCI collects this data from the following cement producers: Pretoria Portland Cement, Lafarge, AfriSam, NPC-Cimpor, Ash Resources, Sephaku Ash and Ulula Ash. So, all the majors submit their data to the folks who aggregate it and kindly we get this data delivered to our inboxes every month. Here goes, for the month of October there was a third consecutive month of over one million tons sold. 10.3 percent better than the same month last year. BUT, slightly worse than last month. The year to date figure suggests that we are around 2.9 percent ahead of last years weak number. The more important number (for me anyhow) to look at is the moving annual total, which compares the last 12 months to the 12 months prior to that. And that shows an increase of 2.3 percent. Here are a couple of graphs to help you with this data.

I was chatting to my six and a half year old daughter last evening about the things that we had when I was her age. And how those "things" are so much different nowadays. We all like music in my family, I have a very old generation iPod and my iPhone also has a whole lot of songs on it, which I play through my docking station. Now when I was her age, we used vinyl LP records to listen to music, that was the obvious one when we discussed music. She said "oh ja, I saw that on TV once". Amazing, and that was cool technology, first invented in 1926, the LP. Prior to that of course was the Gramophone, often you associate the Victor Talking Machine dog listening to the speaker. Remember that iconic logo? "His Masters Voice".

I have been asked this question a lot over the last few days, what is happening with the Rand, why is it getting so weak, what is the problem here with us? Why is it weakening like that? Well, the short answer is that it is not just us, it is everyone, because we pulled up a few charts of the Indian Rupee and the Brazilian Real and compared them to the US Dollar and overlayed the graph of the ZAR to the USD. And you know what, in the short term, over the last few weeks the graph is identical. Most emerging market currencies have been smashed against the majors, which is strange, because they have their problems, serious problems. A flight back home, that is what it is.

When one talks about investments it is always fun to get another view, be that an outsider, or someone with a different way of thinking to you. We always have a good chuckle when Mark Mobius comes on the box and we launch generic statements like: "Invest in emerging markets to capture higher growth rates and an expanding middle class". Or even better, we ask one way questions (no matter how hard you shout at the TV, nobody ever looks back, remember that when you watch sport, OK, no matter how hard you clap, they don't listen) like, hey Mark, what do you think about Brazil? And then of course we shoot back the Mobius answer: "Brazil....yes, lots of natural resources, a large growing population starting off a low base, high employment, politically stable, yes, I like Brazil". Something like that, Byron says I gave away too much. Byron then said, why don't you go to his twitter stream - Mark Mobius and find a good one, we liked this one:

The World Economic Forum Global Competitiveness Report for 2011-2012 was released and it saw us jump a few spots. Excellent. Download it here ---> The Global Competitiveness Report 2011–2012. In the opening commentary, there was a nice summary of what you know already:

Did you see that there were over 800 thousand skilled job openings in South Africa? Not being filled..... sadly. According to the Adcorp Employment Index (AEI). If you are looking for the more specific AEI May 2011 to find out why we have so many vacancies, then here is a copy paste, or follow the link above: ".. Adcorp calculates that there are currently 829,800 unfilled positions for high-skilled workers across a wide range of occupations.."

This next piece is awesome. This is as exciting for people who like economic content. OK, please don't stop reading, because this guy, Bob McTeer, a former president of the Dallas Fed writes really well. It has to do with the Feds various liquidity programs, commonly referred to as QE2, the second round. Of course QE stands for Quantitative Easing, and has been nicknamed after the monster passenger ship.

In this day and age of quick money where we agonize about the day moves, investors must remind themselves what they are doing. Buy quality and do not worry too much about the short term moves. I was once struck when old favourite Warren Buffett was asked the question, how often do you look at the Berkshire Hathaway share price a week? And then he answered "maybe two to three times a week". It was Becky Quick from CNBC interviewing America's favourite uncle and she was clearly shocked. I mean, how could someone with nearly all of their net wealth in one stock, not know the price on a day to day, hour to hour basis?

In 2011 Paul will turn 45, Sasha will turn 35 and Byron will turn 25. The hunt is on for our next employee, he/she must have been born in 1996, ie. turning 15 this year.