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Posted: 1 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

 

Given that Gauteng is now abake under the bright September sun, and given thet there is a small (4 large turbine) windfarm between Ysterfontein and Darling on the windy Cape West Coast, and a mere single large turbine at the windy PE coast at Coega, it is fitting (for me) that there has been some dialogue on the talk part of tickertalk about renewable energy, and the cunning of investing therein.

 

See http://www.tickertalk.co.za/forum.php?c=topic&op=index&cid=47&tid=696

 

Its still too soon, I think, for the simple reason that although Eskom has had the wisdom to promote solar geysers, low energy bulbs etc etc as ways to fllatten the power demand curve as the number of connections grows, THERE IS NOT YET AN ACCESSIBLE MARKET TO SELL POWER BACK INTO THE GRID.

 

When will such a market get moving? And what is still needed for that to happen?

 

I expect that that the capacity and appetite of that market to buy back surplus power will accelerate the generation of renewables at a blinding speed. Just imagine if the city councils were obliged to buy back power at the same rate/kWh they sell it to retail customers - I would direct the solar cells pulling my UPS back to them in a heartbeat - wouldn't you?

 

Cheers

Stuart

 

 


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Posted: 2 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

I need to get to the airport today, and back tomorrow afternoon.

 

Do I drive and park at ORT, or do the obvious and take the Gautrain?

 

Its a simple choice - I have to drive! Because to get on the Gautrain, I need to get to Rosebank station. I can get a bus to there, from a point about 1.5kms away from my office, but the bus will not let me on until I re-charge my prestigious gold Gautrain card. To do that, must I walk to the paypoint at the train station? Or buy a new card at a handy retailer (none of which are closer than the Southern tip of the current train service)?. And then back here to get my luggage, and then make my way to the feeder system? Surely if the technology is available on the bus to dock my card and then recredit me with the offset once their big brother sees that I am riding on to the airport and not just going shopping, they could also find it in their hearts to sell me some fare at the bus itself? Or maybe I can pay via cellphone banking - load the gaucard that way? NO DICE.

 

To start appreciating the Kafkaesque design of the fare system, see http://join.gautrain.co.za/GeneralInfo.aspx I suggest you learn their way of doing things, because I have a funny feeling they aren't all that adaptable...

 

And tomorrow afternoon, I need to walk again, or a car and driver at the station, because the buses take time out on the weekend. I mean, who travels on weekends?

 

So, for this trip, I will drive myself to ORT, and park there, and do it in reverse tomorrow.

 

And does the train company mind losing my custom? Not at all - they get paid anyway - regardless of passenger volumes! I suppose giving the concessionaires a bit of time and a few millions while they iron out their teething problems is a wise use of tax funds.

 

See http://dailymaverick.co.za/opinionista/2011-06-23-gautrains-ppp-political-patronage-profiteering 

and if you find Ivo interesting, see also http://dailymaverick.co.za/opinionista/2010-06-08-the-stupendous-gautrain-a-rare-marvel

 

Cheers

Stuart


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Posted: 6 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Research

 

The rugby world cup starts soon in New Zealand. The Springboks have been selected, polished and shipped, so now the ball is in their court – and it should be interesting. I do admire fans who only plan to travel across for late matches – do they insure their fare? As the Cup unfolds, it may be fun to look out for parallels between our rugby team’s approach and results and our national economic  culture (if there is one). Would you buy shares in SA Rugby if you could? The playing team only, or the whole business?
 
Possible examples:-
Players showing an eagerness to be seen to obey the ref // a country that likes a heavily regulated business environment…
Lots of shouting the odds at the ref and linesmen // …but prefers favourable treatment under those regulations
A bias to picking the largest players in all positions // we favour bigger businesses – assuming they will deliver better value than little ones
Leadership from older senior players // respect for elders, perhaps some fear of innovation and dislike of cockiness?
Intrigue between on-field leader and off-field intervention // role definition and delegated authority that could be improved, but good willingness to explore research findings
Rapid player call-ups and send-homes on injury // fantastic depth of resource (one hopes not avoision of testing for substance abuse)  
A very substantial management and expert consulting team relative to team size // a high overhead economy – diligent doers, but lots of passengers, talkers and middle managers
Lots of public and media critique of players and officials before during and after games // did you see the grilling of the new top Judge
Public getting urged to “get behind our boys”, wear green etc // Bald face of capitalism – its not news that the “belongers” are the largest psychographic profile in most segmentations , and we can see as per Pirates, K Chiefs  Man Utd etc that it works. Would be more honest if they punted “Merchandise Mondays” rather than Football Fridays, though.
Bizarre intensity of send-off before the tour // Sponsor ABSA is a professionally managed risk averse bank – why wait if the boys might come home like Graeme Smith did? ( Read Keohane in Business Day for good perspective on the send-off)
Cheers
Stuart

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Posted: 8 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Research

I often get asked at the investing courses I do, for some sources - what should people read as they tackle the market landscape?

 

(the courses are Advanced fundamentals - financial statements course. Stuart Thompson

176 members, led by Stuart Thompson - updated 1 month(s) ago
For people who have attended the Standard OST course by Stuart Thompson on Company financials and announcements. You can have a rolling online tutorial on the course - clarify or challenge as you like! ,  and
44 members, led by Stuart Thompson - updated 2 month(s) ago
Group for people who have attended the Standard OST weekday evening course "Introduction to Fundamentals - Share Selection" This group can act as a rolling online tutorial on the course - ask your questions, clarify stuff or challenge as you like! )

 

 

 

While of course many are looking for easy, silver-bullet stuff, they would find my response frustrating. Regular punts include Ben Graham & Franco Busetti , but I also steer folk at more enduring works such as Sun Tzu's "Art of War", Edward Gibbon's "Decline & Fall" and the Meditations of Marcus Aurelius. This last gets me a few funny looks, afte all what would a Roman emperor be able to write (in Greek, nogal) that could help a modern investor?  ( Aurelius'  Meditations, written in Greek while on campaign between 170 and 180, is still revered as a literary monument to a philosophy of service and duty, describing how to find and preserve equanimity in the midst of conflict by following nature as a source of guidance and inspiration. per Wikipedia)

 

As you can see, the essence of the work, which is available free to people with tablets, is well placed to help with the equanimity needed to invest amid the oscillating madnesses of crowds. And recently it was with some satisfaction that I saw the very work getting an honourable mention nearby in the iMaverick - see http://dailymaverick.co.za/opinionista/2011-08-26-things-the-roman-emperor-taught-us-about-roller-coaster-rides 

 

Cheers

Stuart

 

 

 


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Posted: 12 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Research

I sometimes wonder if facts matter a lot, or even at all.

 

In its release of financial results for the year to June 30 2011, fuel giant Sasol has sought some acclaim for its contribution to the tax affairs of our country. It has received some, too.

 

Are you surprised, when you see this tone and content from the company:-

    "We have paid R25,4 billion direct and indirect taxes to the South African government. This makes Sasol one of the largest corporate taxpayers in South Africa, contributing significantly to the South African economy. We contribute about 5% of South Africa's gross domestic product (GDP), directly and indirectly. We employ approximately 34 000 people globally, of which 80% are in South Africa, and create about 200 000 additional indirect jobs."

This aligns in a way with the facts in Sasol's FY11 "Analyst Book", which are:-

 

alt

 

All good so far, isn't it? But how else might one look at the same facts? Try this:-

 

 

alt

 

Cheers

Stuart

 

 

 

 

 


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Posted: 15 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Research

Exam season? Work pressure? Balance and perspective issues?

 

You may or may not battle with distraction.

 

If you do, and you are at school these days, the system might well try to bludgeon it out of you by diagnosing a deficit of attention - but they just could be missing the boat...  See more on that little evergreen at :- http://www.tickertalk.co.za/blog.php?user=stuart&blogentry_id=2638

 

If, like most sufferers, your distraction arises from ASD - attention surplus disorder - then this little diagram from Barry Ritholz may be of interest:-  

alt


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Posted: 20 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Research

I tackled a longishstanding task this week, by deleting myself off facebook - its not that easy, but by no means impossible. Why? Simply becasue I was not putting any value in, and I wasn't getting any out. So I have ended it. But that doesn't mean I am "anti" social media.  I see social media as languages, just as I see languages as social media. There are many, of both, in which I have no fluency.

 

I have got to benefit a lot from twitter, lately. It seems to be an English-based, cross-cultural, cross-national language that right now is red-hot. Perhaps South African usage of twitter is high because of our paltry bandwidth access, and thanks to our high proportional penetration of handheld web devices. Its tight format works well for me, but a problem is that there are so many voices on it that I have to be very selective.

 

Helen Zille has struggled with it, and yes, Barack Obama's 8 million twitter followers are exceeded by Lady Gaga's 9.5m; but if you care to ponder whether to ignore it, to tweet, or to just be a voyeur on twitter, this (old now) data may be of interest:-

 

South Africa Tenth On Twitter
(Revised: July 29, 2011)
 

According to a recent report by Canadian research company Sysomos, South Africa has become the tenth largest twitter user in the world.
 

According to the report, SA accounts for 0.85% of the total global use of the popular micro-blogging platform, with Japan coming in at 11th place with 0.71%, the Philippines 12th with 0.64%, and China 13th with 0.49%. It’s scarcely surprising that the United States ranks first with 62.14% of global Twitter users hailing from there, followed by the UK at 7.87%, Canada itself at 5.69% and Australia in fourth place with 2.8%.
 

Explosive Growth
Twitter started out as a small, unimportant side-project in 2006, at it’s San Francisco home base. In just over three years, its user base has grown to such an extent that today the site receives 55 million unique visitors every month. (467 500 of which are from South Africa.)And it’s growth can be most easily seen by the fact that, according to Sysomos, 72.5% of users joined Twitter in the first five months of 2009. This is in line with the recent rapid social networking growth  which has been seen in all such mediums.


The study analysed publicly available information from 11.5 million Twitter accounts, to gain an overview of the site in terms of use, growth and demographics.
“While Twitter’s growth has been well documented, we wanted to put the spotlight on how people use Twitter, as well as identify many of the key trends in their backgrounds, demographics and activity,” said Nick Koudas, co-founder and chief executive of Sysomos.
 

Twitter Stats
85% of users tweet less than once a day.
21% have never posted a tweet.
93% of users have less than 100 followers.
92 % of users follow less than 100 people.
5% of Twitter users are responsible for 75% of all tweets.
50% of all tweets are posted from tools other than the Twitter website.
53% of Twitter users are women.
0.29% of users follow more than 2,000 people.
 

Social Networking As Marketing
This growth and popularity have been particularly interesting to marketers. In fact, although only 0.29% of users follow more than 2,000 people on Twitter, 15% of self-identified marketers on Twitter follow more than 2,000 users. The question that remains of course, is how useful social media marketing actually is.

(Original full article at http://www.netage.co.za/resources/110-south-africa-tenth-on-twitter#.TneUduYqAkI.twitter )

 

Cheers

Stuart

 


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Posted: 20 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Research

It is interesting how much advice non-Chinese experts have for China.

 

And its understandable - after all, China does seem to be the robust tractor, and the most likely to pull other economies out of the mire. And if we can help, then we should.

 

But do we understand the questions, never mind the answers, which exercise Chinese behaviour, policy and development?

 

It is all very confusing - look at this graphic - which highlights how the most populous single country has suddenly become a nation of urban, middle-aged people!

 

alt 

 

And this one, which highlights how these damn Chinese just save and save, and won't borrow, like any self-respecting Westerner would!

 

alt

 

To me, pictures like these tell me that recent (post WW2) US/Euro thinking is unlikely to "get" the China story.

 

Among the possible ways to get China to avoid a bubble and into a sustainable, credible boom for our economies to service and leverage off, these are posed by the team at www.breakingviews.com :-

 

 

"Beijing will have to cut saving and boost consumption. There are four main ways to do this
First, push up wages. The snag is that wage inflation is already chipping away at China's competitiveness – and Beijing is scared about what will happen if the economy can't create the millions of jobs that are needed each year to absorb new migrants from the villages to the cities....
Second, allow the exchange rate to appreciate.  But again, it would undermine competitiveness....
Third, give the people a better deal on tax and social security, so that they wouldn't need to save so much themselves....
Finally, give the people a better deal on their savings. At present, savers get a negative inflation-adjusted interest rate of around 2 percent...."

Doesn't tabling that third notion just blow your mind, after watching exactly that approach take the large Western countries into trouble? Anyway, to see more about the Breakingviews team's work, read http://www.breakingviews.com/Info/~/media/Images/Books/CHINA.ashx - its certainly worth the effort.

 

Cheers

Stuart

 


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Posted: 22 September 2011 - 1 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

You may or may not like Kyosaki, and he may or may not be talking to his book.

 

But you will find his comments on who runs the US quite interesting...

 

 


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Posted: 26 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

SA Prime Minister BJ Vorster was both admired and scorned when he tried to use the Supertramp line "Crisis, what crisis?" in trying to downplay one of many wrinkles in the end of the previous SA regime's tapestry. It turned out that he was bluffing, and eventually got caught out.

 

It is strange how many people, often people who are bright and also apparently well-informed,  need to "hit the wall" before they start looking for the writing thereon. 

 

As we lurch from GFC (global financial crisis  of 2008/9) to CFGC (current final? Greek crisis), one must wonder how much airtime and headspace these dramas would have got - if the Banking and Financial Engineering and Services sectors had not become so big - such large employers and such substantial media advertisers. What is their add-up now - around 25-40% of market cap on most "developed" equity exchanges? What should it be?

 

When will people be willing to value entities on the basis of:-

 

Fair Value Today = NAV + Present Value of [value to be added during entity's life].

 

Try that equation on anything whose price action intrigues you - it may be a little direct for many experts to get their skilled heads around, but give it a go.

 

Cheers

Stuart

 


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Posted: 28 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

Given some interest here on tickertalk about Grindrod, and the recent investment into it by Remgro, it is interesting to see the salient points of this article from businessweek.com

 

http://www.businessweek.com/news/2011-09-27/ship-owner-losses-persist-on-glut-as-mine-profits-boom-freight.html

 

 

The central point is that the bulk miners are having it much easier than bulk shippers at present.

 

Cheers

Stuart

 

"Ship Owner Losses Persist on Glut as Mine Profits Boom: Freight

September 27, 2011, 12:47 PM EDT

By Alaric Nightingale Sept. 27 (Bloomberg) --
 
Ship owners may face losses until 2015 even with mining companies poised to increase global iron- ore supplies by almost as much as China imports in a year.

Rio Tinto Group, Fortescue Metals Group and Vale SA will lead a 59 percent expansion in seaborne supply to 1.69 billion metric tons over the next four years, Morgan Stanley estimates. The capesize fleet grew 73 percent since 2007 and will gain 25 percent more by 2015, according to Drewry Shipping Consultants Ltd. Daily rates may not exceed the $20,000 needed to break even until then, said Andreas Vergottis, who helps manage the world’s largest shipping hedge fund at Tufton Oceanic Ltd. in Hong Kong.

The three mining companies will make the most profit ever this year as combined earnings across the 14-member Bloomberg Pure Play Dry Bulk Shipping Index slump 55 percent, analysts’ estimates compiled by Bloomberg show. As the shipping industry grapples with a glut, miners are making money from shortages. Iron-ore prices more than doubled since the end of 2008 as suppliers failed to keep pace with demand from China, where steel production rose more than threefold since 2002.

“It’s really hard for people to grasp the huge number of vessels that are being delivered,” said Erik Nikolai Stavseth, the analyst at Arctic Securities ASA in Oslo who correctly predicted a tripling in charter rates last year and sees no return to profit until 2015. “In addition to the iron ore that we know is coming, we need an extra half a China, growing from where it was in 2002 to where it is now, to mop up the excess.”

Freight Agreements

While rates for capesizes tripled to $28,949 since Aug. 1, the average return since January has been $11,165, heading for the lowest year in more than a decade, data from the London- based Baltic Exchange show. Annual forward freight agreements, traded by brokers and used to bet on future shipping costs, show rates no higher than $18,250 through 2016, according to data from the bourse, which publishes daily assessments for more than 50 maritime routes.

Other shipping markets also face vessel gluts. Supertankers that haul about a fifth of the world’s oil are losing money on the industry’s two busiest trade routes, according to the Baltic Exchange. The container-shipping industry is contending with the longest stretch of near-zero rates in its half-century history on the Asia-to-Europe route as a capacity glut combines with the slowest trade growth since 2009.

Billionaire Wilbur Ross said last month that shipping was probably “relatively close” to the bottom of the cycle. The 73-year-old is part of a group which spent $900 million on 30 ships hauling gasoline, diesel and other refined products, his first investment in the industry. The transaction was completed last night at midnight, he said at Bloomberg Link’s Dealmakers Summit in New York today.

‘More Transactions’

“You’re going to see more transactions in shipping,” Ross said today. “Shipping is a very capital intensive industry, a global industry, but highly fragmented.”

Shipping derivatives are the third-most volatile commodity contract traded globally, according to Nikos Nomikos, a shipping risk management professor at Cass Business School in London. The most volatile are natural gas and electricity.

Rates for capesizes, which hold at least 150,000 metric tons of iron ore, have collapsed from as much as $233,988 in 2008 after owners ordered a record number of new vessels. They are the largest component of the Baltic Dry Index, a measure of the cost of hauling commodities by sea, which fell 84 percent since July 2008.

Stavseth is one of three analysts who estimate new ships need about $20,000 a day to make a profit. Break even rates vary across companies and fleets depending on the age of vessels and the financing terms secured to buy them.

Seaborne Suppliers

More than 90 percent of iron-ore shipments to China, the biggest consumer, from Australia and Brazil, the biggest seaborne suppliers, go on capesizes, according to ICAP Shipping International Ltd., a London-based shipbroker.

Ore deliveries will total 1.06 billion tons this year, accounting for 29 percent of all dry-bulk shipping, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. About 90 percent of world trade is transported by sea, the Round Table of Shipping Associations estimates.

Mining companies will increase seaborne iron-ore shipments by 626 million tons through 2015, Morgan Stanley estimates. China, which now accounts for about two in every five tons of global steel production, will import 674 million tons of ore this year, according to the bank.

Hundreds of new ships will have been built before that expansion is complete, exacerbating the glut. Ship yards launched 375 capesizes since the end of 2008 and another 221 are on order, according to Redhill, England-based IHS Fairplay. The fleet now stands at a record 1,146 vessels, the data show.

Eroding Profit

The surge in ore supply may drive the commodity’s costs lower, eroding profit for the mining companies. Prices will drop to an average of $123 a ton in 2015, from $173 this year, according to the median in a Bloomberg survey of 10 analysts. Net income at Rio de Janeiro-based Vale will drop to $19.2 billion in 2015, compared with $27.6 billion this year, analysts’ estimates compiled by Bloomberg show.

Slowing growth may also erode demand. China, the world’s fastest-growing major economy, will expand 8.7 percent in 2012, compared with 9.3 percent this year, the median of as many as 10 economists’ estimates compiled by Bloomberg show. Japan, the second-biggest steel producer, will contract 0.5 percent this year after March’s earthquake and tsunami, the International Monetary Fund said Sept. 20.

China’s growth will still be fast enough to lift capesize rates above $20,000 as soon as next year, said Ole Stenhagen, the analyst at SEB Enskilda in Oslo whose recommendations on the shares of shipping companies would have returned 22 percent in the past year. Ole Slorer, an analyst at Morgan Stanley in New York, predict rates of $25,000 as early as 2013.

World War II

Mining companies may also respond to slowing growth by curbing supply. Iron-ore output fell 1.1 percent in 2008 and 5.3 percent in 2009 as the global economy was contracting in the worst recession since World War II, according to Morgan Stanley. A return to that trend may further delay the disappearance of the glut in shipping.

A combined measure of the earnings per share of the Bloomberg Pure Play Dry Bulk Shipping Index will drop 55 percent this year, according to data compiled by Bloomberg. Its biggest members are Seoul-based STX Pan Ocean Co. and D/S Norden A/S of Hellerup, Denmark. The gauge retreated 39 percent this year, compared with a 16 percent drop in the MSCI All-Country World Index of equities.

Any rebound in capesize rates may spur owners to order even more new ships, said Tufton Oceanic’s Vergottis, whose shipping fund manages about $1.5 billion of assets. Ship yards may also offer to cut costs to attract new business, he said.

“I don’t think we’ll be in break-even territory until 2015,” he said. “And that is only provided new ordering does not misbehave, either because of yards pushing subsidized slots or ship owners’ animal spirits not being reined in.”


 


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Posted: 30 September 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]

Easy guideline - 15 rules to try and follow

 

Cheers

Stuart

 

 

All 15 in one pdf:- user_uploads/15 tips on how successful people think.pdf

 

Or one at a time from source:-  http://www.businessinsider.com/how-successful-people-think-john-maxwell-2011-9#


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