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French boast

Published 2023/10/10, 11:54

Market scorecard

US markets started out badly yesterday, as traders wondered about the Israel-Hamas conflict, but rebounded in the afternoon. Oil prices continued to climb, but are not yet at historically problematic levels. Defence contractors Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) climbed 8.9% and 11%, respectively.

In company news, Airline companies fell as flights to Israel were cancelled. American (NASDAQ:AAL), Delta (NYSE:DAL), and United (NASDAQ:UAL) all slipped more than 4%. Eli Lilly (NYSE:LLY) was a standout large-cap performer in the S&P 500, rising by 1.1%. Locally, African Rainbow Capital (JO:AILJ) increased its stake in online freight platform Linebooker, because Transnet remains a disgraceful mess.

In summary, the JSE All-share was flat (just 0.01% down), but the S&P 500 rose 0.63%, and the Nasdaq was 0.39% higher.

One thing, from Paul

How many cups of coffee do you drink every day? I get through quite a few. It has no impact on my sleep later, so I go on firing up the Nespresso machine into the early evenings.

Research in the UK shows that coffee has now overtaken tea. Consumer surveys of daily hot beverage preferences have it as 63% vs. 59%.

About 3 billion cups of coffee are consumed per day around the world, according to the FT. That number has nearly doubled over the past three decades and is expected to double again by 2050.

We recommend that you hold Starbucks (NASDAQ:SBUX) shares. Over the next two years, they are on pace to open a new store in China every nine hours.

Byron's beats

I just came back from a wonderful family trip to France. We watched two rugby matches and also stayed in London for a few nights. Here are a few points I would like to share.

There were electric vehicles everywhere. Teslas were the most recognisable but there were plenty of other EV brands too. Every parking lot had a few charging stations that were almost always occupied.

Paying for things by tapping a card or waving an iPhone Apple Pay was incredibly convenient, especially when using the London Underground. The Paris Metro required complicated passes and tickets so we hardly used it. On that note, train travel is wonderful. It is fast, efficient and the novelty for me has not worn off.

Uber was generally poor. Rides were cancelled by drivers all the time. Even getting a driver in the first place was often very difficult.

Google Maps is indispensable!

Airbnb (NASDAQ:ABNB) was a huge win for travelling with children. That also allowed us to cook at home, which was far more reasonable than eating out.

Euro Disney was a disappointment. The queues were long and the rides were very short. We probably spent 70% of our time queuing, 25% moving between activities and 5% on actual rides. Very poor value for money.

The service levels in restaurants were mixed. The staff were friendly and efficient but they were badly overstretched. Hygiene was an issue and public toilets were filthy. Many restaurants use a QR code system where you can see the menu, order your food and pay. You encounter the waiter for the first time when they bring your meal. That was impressive.

Travelling with kids is hard but incredibly rewarding for both parents and youngsters (but try to bring grandparents along if you can).

It's always great to get home, especially to a blooming spring on the Highveld.

Michael's musings

Vestact's competitive advantage is patience. We pick sectors that are growing significantly faster than the economy as a whole, invest in the leading companies and then wait.

Deciding to sit on your hands and do nothing during the good and bad times is much tougher than it sounds. We try to keep our clients calm during turmoil. That is when we really earn our management fees. We continually research our holdings, which builds confidence.

This buy-and-hold strategy only works if the companies themselves are growing. Cost cutting to increase profits only goes so far, ultimately we must own companies that enjoy continuous, strong revenue growth. The image below shows Wall Street's average expected revenue growth for many of our investments over the next five years. Big tech companies still have a lot of growth ahead of them.

Bright's banter

Take a look at this interesting conversation between Kim Kardashian, co-founder of SKKY Partners, Carlyle veteran Jay Sammons, and the interviewer David Rubenstein.

Kardashian shares insights into her journey to becoming a reality TV star and then a beauty and fashion business owner. Sammons talks about his private equity operations, meeting Kim Kardashian, and their new joint venture SKKY.

During his tenure at Carlyle, Sammons led numerous investments within the consumer, media, and retail sectors, including Beats by Dre, Supreme, philosophy, OGX (Vogue International), Ithaca, Beautycounter, and Grupo Madero.

They explain their investment process, deal-making, how to make a change using capital, and other philosophical topics. You can stream this conversation on YouTube. I hope you'll enjoy it as much as I did.

Signing off

Asian markets are leaning green this morning as the MSCI Asia-Pacific index jumped the most in six weeks. Benchmarks in Japan outperformed the region with gains of more than 2.5%, while Hong Kong and South Korea rose.

US equity futures are flat in early trade. The Rand is trading at around R19.34 to the US Dollar.

Are you ready for the start of US earnings season on Friday? The major banks report that day, to get things started.

Live long and prosper.

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