The Johannesburg Stock Exchange invites you to their next Power Hour presentation. These series of presentations will educate you on the principles of investing and the latest issues in the South African economy. 

In their third presentation, Barry Bramley will give an overview on the generational theory - how the Gen-X's want to manage their money and the impact thereof. 

JSE POWER HOUR
DATE: Thursday, 24 March 2011 
TIME: 17h30 – 18h30 
VENUE: Johannesburg Stock Exchange, Auditorium, One Exchange Square, Gwen Lane, Sandown 
PARKING: Across the road at Village Walk 
RSVP: Please respond by Thursday, 17 March 2011 
FURTHER INFORMATION: Takalani Philip Nyelisani on Tel: (011) 520 7127 or takalanin@jse.co.za 

To RSVP please click here

The annual list of the world's richest people is up on Forbes. Carlos Slim stays at the top with $74b and he is pulling away from the rest of the pack with Gates worth $56b at #2 and Buffett with $50b at #3.

#100 on the list has $9b, so now we know what to aim for and  # 1000 has some $1.2b - not to tall an ask?

South Africa doesn't crack the top 100. But there are 4 in the top 1000 (not bad I spose?).

# 136 - Nicky Oppenheimer & family @ $7b
# 219 - Johann Rupert & family @ $4.8b
# 336 - Patrice Motsepe @ $3.3b
# 782 - Christoffel Wiese @ $1.6b

The big country winners (aside from the US with 31) are Russia with 16 and India with 7. Surprising on the downside is Germany 6, France 4 and UK 1!

twitter.com/SimonPB

 

With the US debt being downgraded to AA from AAA, it really is the end of the world as we know it. Ever since rating agencies starts in the first half of the 1900's the US has had a top notch rating and now it is gone. Something that existed for our entire life time (a triple A rating for the USA) is no more. The world of the USA as the global economic super power is over as that mantle gets handed over to China. Unfortunately the hand over phase is going to be protracted and messy rather than a nice clean ceremonial handover with no fuss or panic.

The deepest irony is that China is now even openly questioning the USA's debt issues!

So now what?
Well firstly the ratings agencies have a tarnished reputation since the crisis of 2008 which they helped fuel by giving junk top ratings - too my mind they played the role of Arthur Anderson in the Enron debacle - but got off largely scot free. In this down grade of the US they actually put the US debt $2trillion higher than it is, but when that was pointed out they commented it didn't change anything. That all said they still rule the roost and may investment firms are only allowed to invest in assets with certain ratings, so I suspects a number of firms who can only buy AAA debt are going to be scrambling come Monday.

Another big issue which Stuart Thompson address's here is what of the risk free rate. Whenever one need a risk free rate the US government bonds was the preferred option - but no more. This has potentially huge options for option prices and the like who now have to rework their numbers with a new risk free rate. And where do they get that new rate from? What is truly risk free in the current environment?

So does this mean the end of the global economy?
In short no. The recovery was always fragile and going to take a long time for full recovery and this is just another point proving just how fragile. Planet earth has massive sovereign debt and hardly any first world growth, that's ugly and means the recovery remains fragile for a while still. As for double dip,  I don't think so but it's certainly not impossible.

So should we panic?
Well no, if you're going to panic, panic early - now is too late. Sure equities are going to get hit hard, but any investor has to have a time line of at least 3-5 years for any investment so while the ride will be wild this is not the end. As for gold, well in the darkest days of 2008 gold did nothing for the simple reason that nobody had money to buy gold and that is likely to play out again in the short term.

So what of Monday?
Well the good news is that the sun will rise but other than that Monday is going to be seriously ugly. The downgrade came out after the US market closed on Friday and while there was a rumour running around before the close markets largely ignored it. Locally Monday could well be +1,000 points down, in fact even 2,000 points is not impossible and if I was a betting man I would suggest closer to 2,000 than 1,000. That makes for around 6% down? So as I said, it is going to be ugly. But as I also said, this is no time to panic.

The big picture is the changing of the guard from the USA to China as earths economic super power was always going to be messy and we now full throttle in that process. Poetically the Chinese curse goes - may you live in interesting times.

It's the end of the world as we know it - released as a single by REM in 1987 (from their album New Adventures in Hi-Fi  actually from Document) reaching a very modest 69 in the US charts and 39 in the UK.

twitter.com/SimonPB

simonbrown.co.za

A quick example of how to use the 2% rule to determine a trade size.

We have a trigger on the Resi20 in our Lazy System (see trade details here), stop loss will be around 56,800 being below the recent low.

Assuming a R100,000 portfolio and a 2% risk we are prepared to risk R2,000 in this trade.

So let's say at 4.30pm today we're entering at 59,280, we subtract the stop from that = 2,480 points at risk. Seeing as we trade the STXRES the price on entry would be 5928c (Satrix trades at a tenth of the index value) and stop value would be 248c (a tenth of 2480 points). So we divide the 248c into the Rand amount we are prepared to risk (R2,000) and we get 806.

That's how many STXRES we would buy to have a risk that we're comfortable with and if we get stopped out at max risk we loss R2,000 plus costs.

twitter.com/SimonPB

So I thought I would look at Capitec price and volume chart to see if there is anything of note. Especially looking to see if we have significantly increasing volume which may have helped push the price higher. In other words institutions getting in on the act in larger volumes and driving the price. Like when a stock transitions from being an undiscovered small cap to larger cap status?

So I got out my trusty excel, pulled out lots of hair and finally worked out the charting function (it was a lot easier in 2003).

Below is the chart, and what does it tell us? Well nothing. Volume has remained pretty much constant. Sure a small uptick in the last 6 months (rights issue maybe?). What we do know is that buyers have been prepared to pay more while sellers have been asking for more, but a significant increase in volume is simple not there.

Of course what is there is significant increase in value traded as the share price has increased, and maybe that would be the better chart - but I know I will see that and maybe my idea is all wrong. Maybe it is value more than volume? In truth volume is meaningless without value?



twitter.com/SimonPB

Simon Brown
 

Who are the largest companies on the JSE? I figure most of us would get the first couple, maybe even 7 or 8 of the top ten. But there are some surprises.

For me; Angloplat, Naspers, Vodacom and Firstrand were the surprises. Heck even Anglogold surprised me.

And total value of the top 15?

R3.912trillion! In US$ that's US$575billion!

BHPBILL  R608bn

BATS  R565bn

ANGLO  R479bn

SAB  R410bn

MTN GROUP  R260bn

SASOL  R252bn

RICHEMONT  R202bn

ANGLOPLAT  R182bn

STANBANK  R165bn

KUMBA  R155bn

NASPERS-N-  R152bn

ANGGOLD  R126bn

IMPLATS  R125bn

VODACOM  R116bn

FIRSTRAND R115bn

Simon Brown

twitter.com/SimonPB

Who are the largest companies on the JSE? I figure most of us would get the first couple, maybe even 7 or 8 of the top ten. But there are some surprises.

For me; Angloplat, Naspers, Vodacom and Firstrand were the surprises. Heck even Anglogold surprised me.

And total value of the top 15?

R3.912trillion! In US$ that's US$575billion!

BHPBILL  R608bn

BATS  R565bn

ANGLO  R479bn

SAB  R410bn

MTN GROUP  R260bn

SASOL  R252bn

RICHEMONT  R202bn

ANGLOPLAT  R182bn

STANBANK  R165bn

KUMBA  R155bn

NASPERS-N-  R152bn

ANGGOLD  R126bn

IMPLATS  R125bn

VODACOM  R116bn

FIRSTRAND R115bn

Simon Brown

twitter.com/SimonPB

Yesterday at the JSE Standard Bank launched their latest Exchange Traded Note (ETN) ad this time the underlying asset is Africa.

173 countries are in the index covering 23 countries including expected ones such as; Egypt, Nigeria but also some surprises such as Sudan, Niger and others.

South Africa is excluded from the index, so it is Africa ex SA.

Code is SBAEI and it can be bought via your stock broker or directly on ETFSA.co.za and you can find more info on the SB website here.

I like, a great way to get overall exposure to Africa, a region I consider to be another China or India, albeit with 53 countries leaving lots of boarders that to my mind make one of the biggest challenges for the continent.

SimonBrown

twitter.com/SimonPB
 

Oil winning - no surprise. Silver still #2 even aftrer the collapse? Equities not so grand.

twitter.com/SimonPB

Simon Brown

So 2010 is over and I think the most important thing about the year was that the world didn't end as many doomsayers would have had us believe it would.

The key features of 2010 for me were;

• Double dippers have gone all quiet. Make no mistake they'll be back at some stage in 2011 - but really their argument needs some serious boosting.
• Hyper inflation is still a million miles away, if at all.
• Gold still flatters only to deceive. Yes gold had about it's 7th green year in a row gaining 28% in US$, but once again SA investors got shafted as it gained only 14% in Rands while the ALSI did 16% (excluding dividends).
• The real precious metal winners where Silver +82% and Palladium +95%, nobody was talking about them at the beginning of 2010.
• The local market did all right adding 16% with most of that gain coming in the last quarter of the year.
• Capitec continues its crazy run adding 118% for the year while Famous Brands added 91%.
• Local indices all closed green; Top40 +15%, ALSI +16%, Fini15 +10%, Indi25 +24%, Resi20 +11%
• The ALSI is just shy of the all time high of 33,233 set in May 2008.
• US indices are all at multi year highs.
• Europe has seemingly worked out how to save countries that are on the brink of debt default. Sure it is still messy and the media get all frothy every time and we'll see more in 2011 - but a default looks very unlikely (and yes I had thought we would almost certainly get an EU country default).

twitter.com/simonpb

Momentum as a strategy is real easy - buy the winners. If you want to get complicated - well then also sell the losers.

So I figure a calendar year is a great time frame and below are the Top40 stocks with their 2010 returns (ex dividends).
 

The answer is easy, buy Truworths, Massmart, Richemont, Shoprite and Kumba and hold them for 2011.

TRUWTHS  62.88%

MASSMART  61.12%

RICHEMONT  55.93%

SHOPRIT  51.56%

KUMBA  36.71%

VODACOM  34.77%

MONDIPLC  32.06%

ABIL  31.94%

GROWPNT  31.59%

EXXARO  31.00%

RMBH  30.51%

NASPERS-N-  28.89%

REMGRO  27.90%

ASPEN  25.32%

SANLAM  22.46%

BIDVEST  21.97%

GFIELDS  21.39%

ARM  20.40%

PICKNPAY  18.05%

MTN GROUP  17.24%

STEINHOFF  16.95%

SASOL  14.15%

TIGBRANDS  13.27%

IMPLATS  10.15%

BHPBILL  9.85%

ABSA  8.93%

HARMONY  8.55%

SAB  7.55%

ANGGOLD  6.46%

FIRSTRAND  6.03%

STANBANK  5.96%

NEDBANK  5.26%

INVPLC  5.19%

ANGLO  4.41%

INVLTD  4.04%

OLDMUTUAL  -1.22%

REINET  -1.94%

ANGLOPLAT  -13.77%

LONMIN  -15.07%

ARCMITTAL  -24.19%

CAPSHOP  -29.40%

twitter.com/simonpb

Level 1 (one level bid/offer)
Live data at 7c plus Vat (8c) per hit.
Capped at 800 hits which them attracts a terminal fee of R49 plus vat (R56).

Level 2 (five levels bid/offer)
Live data at 13c plus Vat (15c) hit.
Capped at 800 hits which them attracts a terminal fee of R69 plus vat (R79).

Indices
Live data at 5c plus Vat (6c) per hit.
Capped at 300 hits which them attracts a terminal fee of R16 plus vat (R19).

The cap system has changed from a combined level 1 and 2 into separate cap system.

Different data vendors will charge differently, so ask them what the impact (if any) will be - the seperating of level 1 and 2 adds a fairly huge increase.

twitter.com/simonpb

JSE Direct with Simon Brown Full Programme. 4 January 2011 .. http://ow.ly/3ytz3

Frank Black, positive for 2011 with some caution .. Likes coal stocks .. http://ow.ly/3ytA8

Marc Ashton .. SME's, government ego, companies sitting with cash and out sourcing to smaller companies .. http://ow.ly/3ytBS

Mike Brown, MD of etfSA.co.za .. Indi25 best performer last 5 years, we not a resource country ?? http://ow.ly/3ytCW

Johan Erasmus Standard Bank .. Commodity ETN's, a new Africa and Comm index to be launched soon .. http://ow.ly/3ytDP

David Levenstein .. bullish on all precious metals, especially Silver .. http://ow.ly/3ytEG

Gary Stone, Share Wealth Systems .. system design and pitfalls to watch out for .. http://ow.ly/3ytFU

twitter.com/jsedirect

The Rand may be moving stronger, but the Oil price in USD is moving higher at an even faster rate - leaving South African's with a rising petrol price.

Below is a chart of the last 5 years of petrol prices in SA, using the JHB 95 price.

Now if oil does go through $100 (and maybe even $120) as some are suggesting we're certainly going to see R9 again and maybe even R10 (unless the Rand can hit 6 or even 5?)?

Source: http://www.aa.co.za/content/59/fuel-pricing/

twitter.com/simonpb

We all tend to think we are aware of everything all the time.

We think we know everything.

Especialy when trading.

Well watch the video below.

We know nothing, we have to be happy to trade knowing nothing.

twitter.com/simonpb

• JSE Direct with Simon Brown Full Programme. 11 January 2011 .. http://ow.ly/3ChGV
• Francois du Plessis, Vega Capital .. Global super cycle until 2030 ?? http://ow.ly/3ChI1
• Noah Greenhill,Head of Alt-X: JSE .. Always great chatting with Noah .. http://ow.ly/3ChIZ
• Dean Sparrow,Deputy CEO: UCS Group .. The BCX deal, is the market pricing this all wrong ?? http://ow.ly/3ChKs
• Martin Rennhackkamp,COO: PBT Group .. Reversed listed into Wooltru late 2010 .. http://ow.ly/3ChL8
• Malcolm Segal,FD: Sasfin Bank .. Talking 2011, Africa, currencies, debt, US inovation .. http://ow.ly/3ChMm
• David Mordant,North American stock market analyst: investor and trader .. Where to invest 2011, likes SP500 and US$ .. http://ow.ly/3ChNe
   

twitter.com/JSEDirect

twitter.com/simonpb

Late last year UCS and BCX announced a deal that the market seems either to have missed in the haze of holidays or they just don't fully understand. Neither sounds plausible - but whatever the case there seems to be an opportunity here.

The deal is simple.

BCX is buying the main assets out of UCS for 101million BCX shares and R30million cash.

USC will be left with their software division that according to Deon Sparrow (deputy CEO of UCS who I interviewed on JSEDirect Tuesday evening - interview here) will have a turnover of some R350m-R400m a year. Further the BCX shares will be distributed to UCS share holders, probably around Q3 2011.

So let's put the pricing together.

• UCS get 101million BCX shares currently trading at 655c = R661.55million
• UCS get R30million cash with the deal = R30million
• At their last reporting period UCS had about R120million cash, some goes with the deal and let's assume they spent some leaving = R20million

That adds up to R711.55million.

Yet UCS market cap is R697million.

Let's round all this smooth and make both values R700million.

So the market is pricing the software part of UCS at zero, the part that is expected to do R350m-R400m turnover!

Now sure there are risks, but then there is never reward without risk.
 

twitter.com/simonpb

• JSE Direct with Simon Brown Full Programme. 18 January 2011 .. http://ow.ly/3Gfs5
• Gerbrand Smit: N-e-FG Fund Management .. Watch out for value traps in construction, likes FSR, SSK, BIL, RMB .. What to do with NPN ?? http://ow.ly/3GfsI
• Gary Harrod,CEO: Racec Group .. Still tough but improving, looking for contracts outside SA .. http://ow.ly/3GftS
• Robin Vela, CEO: SacOil Holdings .. Not only exploration, AIM listing in Q1 .. http://ow.ly/3GfuS
• Douglas Taylor, Wits Business School .. Tax, company and personal .. http://ow.ly/3Gfvw
• Vicki Goodwin,Head of RMB Exchange Traded Note Platform .. OIL ETN and BIPS products .. http://ow.ly/3Gfwh
• Frank Black .. Inflation coming but markets still rising .. Likes; PGL, ANS and VMK .. http://ow.ly/3Gfx4

twitter.com/jsedirect

twitter.com/simonpb

We like to think that we're extra good at noticing things around us and generally paying attention.

But we're not - not even close.

Check out the video experiement below (from What Makes Them Click)

Also have a look at This is an awareness test.

twitter.com/simonpb