The Africa Boom

I contributed the following article to Dr Marc Faber’s Gloom, Boom, and Doom report in January 2014. It was an updated version of the argument my colleagues and I at ETM Analytics had been making to clients since around 2012. It was a warning to be careful of a coming bust in African economies and markets.

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Email me for the password. (The duplication of chart 2 & 3 in the report was the editor’s error).

At around the same time (December 2012), The Economist ran its Africa Rising cover;

And Renaissance Capital analysts published The Fastest Billion (November 2012).

If one invested in this Africa rising view in November 2012 by adding money to the Market Vectors Africa ETF, you’d  have wiped out 30% of your capital in USD. The exuberance had become a little irrational. If you bought in late 2012 and managed to sell at the 2014 peak you could have picked up at most 9% in USD.

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The time you should have been buying Africa was back in 2000 (when Jim Rogers said the time was right in his book: “Adventure Capitalist”). Africa was an option on a developing commodity boom. Such a buying time will come again, but my sense is we’re not there yet. There are some opportunities across the continent, but they are few and far between.

Holiday from hell in J-Bay as Eskom collapses

Feel so sorry for folks who went to Jeffrey’s Bay over Christmas and New Year’s this holiday, a very popular summer holiday town on South Africa’s east coast near Port Elizabeth. The town experienced the resulting chaos of a grid collapse this holiday.

After three days of power outages, several parts of the town didn’t have water supply; without power sewage pumps shut down, and raw sewage spilled onto some beaches; restaurants couldn’t sell to customers because point of sale terminals weren’t working between the down fixed phone line and power outages, and in addition to this restaurants had to throw away rotting food as their generators couldn’t power all the refrigerators.

As the name of the Herald article suggests, it really was a holiday season from hell.

Take note of what happens and where the opportunities lie when grids collapse and towns are left in darkness. It’s likely coming to your town soon, might as well take some precautions for the inevitable.

Commodity bear market for another 15 years?

Interesting charts from commodity strategist John LaForge at Ned Davis Research. He looked at boom/bust cycles of commodities in the past 214 years, and found that the average commodity bull market lasted 16 years, and the average bear market following the ultimate peak 20 years. If this cycle repeats again today, general commodities could be in a bear market for another 15 years (if 2011 was this cycle’s peak). I recently wrote I don’t believe the bear market will last this long this time, and also believe that agriculture prices and gold could outperform general commodities even in a general commodity bear market.

commodities boom and bust

Sherry Turkle: “Connected, but alone?”

A very interesting TED Talk presented by Professor Sherry Turkle about how social media and technology are changing the way we connect in our relationships. Worth a watch, food for thought, it’s 19 minutes long.

From TED: “As we expect more from technology, do we expect less from each other? Sherry Turkle studies how our devices and online personas are redefining human connection and communication — and asks us to think deeply about the new kinds of connection we want to have.”

FIX IVO APPEAL

My favourite South Africa columnist and writer, Ivo Vegter, has fallen severely ill and getting medical care from a hospital. On a low and volatile freelancer income writing articles with a liberty and freedom slant, he  had to give up medical aid and is now burning through his savings stash to continue to receive medical treatment and recover to health.

Take my word for it, Ivo is doing excellent work in winning the battle of ideas, of communicating to the public that we need less government (i.e. more freedom) in order to see South Africa become a peaceful and prosperous society. If you value this type of world for your and your children’s future, you should consider helping him out, because he’s fighting the most important battle – the battle of ideas and people’s minds – that the rest of us don’t always have the time (or ability) to engage in.

If you have the means to contribute even a little bit to his medical emergency fund, you can get details of how to do so by going to his website, HERE

Regarding a Western Cape Secession

With secession fever in the air in Crimea, Scotland, Catalonia, and Venice, Chris Gibbons wrote a blog post at his blog titled “Could the Western Cape Secede?” (Read it here). Chris argues there are too many constraints to the Western Cape being a success un-shackled from the regressing South Africa as a whole, and concludes that:

No, despite the fact that secession might be in the air elsewhere, it really does look as though we South Africans are stuck with each other.

I disagree with this assessment. I believe Chris should focus less on the constraints on the Western Cape as they stand, and more with how the constraints would be lifted under an independent Western Cape. It’s in imaginating a future that doesn’t yet exist, and the policies required to bring this into existence, which is where the Western Cape secession scenario becomes exciting.

I tried to post a comment on the blog but it’s somehow disappeared into the interwebs, so I’ll put my thoughts up below.

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