Market scorecard
US markets rose yesterday, buoyed by optimism about Donald Trump's selection of Scott Bessent as Treasury Secretary. He's a veteran Wall Street guy and considered a calm head. The S&P 500 traded above 6 000 points again, while US small caps surged toward record highs. Most tech giants also enjoyed gains, other than Nvidia (NASDAQ:NVDA).
In company news, Macy's (NYSE:M) fell 2.6% after delaying its third-quarter earnings because a rogue employee hid $154 million of small package delivery expenses. Yikes! Elsewhere, defence contractor Lockheed Martin (NYSE:LMT) fell 3.76% on hopes of a ceasefire between Israel and Hezbollah. In the crypto corner, MicroStrategy (NASDAQ:MSTR) made waves with its largest Bitcoin purchase to date, spending $5.4 billion.
At the closing bell, the JSE All-share was down 0.86%, but the S&P 500 rose 0.30%, and the Nasdaq notched up another 0.27% gain. A win is a win.
One thing, from Paul
I'm sure you've seen this line before in promotional material for investment products: past performance is not indicative of future results. That's put there because managers with a hot hand tend to go off the boil, and funds that have done well often attract lots of investment inflows. The legal advisers to asset management companies are just being cautious.
Vestact has done very well in the past two decades, comfortably beating our benchmark, the S&P 500. Does this mean that we are about to go through a bad patch?
Not necessarily, no. Here are some investors who are most likely to have variable performance from one period to the next. (1) Cowboys who buy speculative assets, get lucky, take more risks, are too big for their boots, and then blow up. (2) Managers at firms who change styles every few years, from growth to value and back again. (3) Country-specific or sector-specific fund managers whose target stock universe falls out of favour. (4) Investors who refuse to own market-leading large caps "because they have run too hard".
Vestact has a solid stock selection process, we like market leaders, and we are very patient. I'm hopeful that our superior investment performance will continue.
Byron's beats
Bright recently compared Walmart's (NYSE:WMT) performance to Target's (NYSE:TGT). It reminded me that investing in retail stocks is tough because the industry itself is so difficult. These companies have to work incredibly hard and only make razor-thin profit margins. Customers are fickle and very price-sensitive. Their relative success depends on great execution from management.
As an investor in public markets, determining whether one management team is better than the rest is very difficult. And they are constantly changing. We have seen first-hand how South African retailers have fallen out of favour due to poor management decisions.
Warren Buffett once said "I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." If a retailer falls into the wrong hands, things can go horribly wrong. That's why we avoid the sector altogether.
Michael's musings
Immigration is a touchy subject at the moment. Legal immigration is one thing, but illegal immigrants flocking over a porous border is another. The latter is probably one of the main reasons that many countries are shifting to the right politically.
From a purely economic perspective, immigration is a good thing - both legal and illegal. This is particularly true in developed countries where unemployment is low. Having extra people to consume and work in an economy helps it grow quicker. Also, immigrants tend to do the jobs that others don't want to do.
"Spain needs around 250 000 registered foreign workers a year to maintain its welfare state", Migration Minister Elma Saiz said in an interview on Wednesday. As a result, the country is about to grant residency and work permits to about 300 000 migrants living in the country illegally each year for the next three years.
It will be very interesting to see how this policy shapes the Spanish economy, its culture, and how people vote in the 2027 general election.
Bright's banter
Back in 2011, two Australian mountain bikers, Chris Peters and Rob Ward, wanted a better way to mount their phones on their bikes. Little did they know, their Kickstarter idea would turn into a multimillion-dollar venture.
Fast forward to today: Swedish outdoor gear giant Thule Group has acquired their company, Quad Lock, for an impressive AU $500 million (USD $327 million).
What started as a niche phone mount for cyclists, quickly grew into a diversified product line catering to motorcyclists, runners, car users, and lifestyle enthusiasts. Quad Lock's success was fuelled by its early embrace of e-commerce and smart expansion strategies.
For Thule, this acquisition isn't just about phone mounts, it's a calculated move to boost their sales in the Asia-Pacific region, doubling their market share there from 5% to 10%.
Signing off
Asian markets dropped at the open after President-elect Trump posted on Truth Social saying he would implement 10% tariffs on Chinese imports, but they later recovered.
In local company news, Super Group's stock surged 14% yesterday after news broke that its Australian subsidiary, SG Fleet, is in talks with private equity firm Pacific Equity Partners (PEP). The discussions centre on PEP buying all of SG Fleet's outstanding shares for around R20 billion.
US equity futures are marginally higher this morning. The Rand is trading at around R18.10 to the US Dollar.
We are looking forward to results out tonight from cybersecurity company CrowdStrike (NASDAQ:CRWD). They have had an interesting year.
Seize the day.