ARTICLES

S&P500, Quo Vadis?

Because the stock markets of the world generally follow Wall Street, it is always wise to keep an eye on what is happening to the S&P500. Last night the S&P closed above its all-time record high of 2130 – a high that was made on 21^st May 2015.

Does this portend the resumption of the great bull market which began in April/May of 2009? Or is it a “double top” formation which will soon see investors retreating again? These are the questions that should be occupying the minds of private investors on the JSE. On the first scenario, you should be filling your pockets with shares in anticipation of a renewed bull market, and on the second, you should be running for cover. So which is it?

To answer this question let us consider the immediate news that stimulated this sudden enthusiasm for shares on Wall Street. That was the June jobs report in America – which showed that the US economy added an impressive 287 000 new jobs in June month – well ahead of expectations and much better than the disappointing May jobs number of just 38 000.

This indicates, fairly convincingly, that the recovery in the US economy remains well on track – and that it is even gaining momentum. Obviously and historically, the stock market must always ultimately reflect the underlying economy sooner or later - and it usually anticipates the economy by at least 9 months – because smart investors are always looking ahead. So, clearly, investors as a group are telling us that this June jobs report is not a “flash in the pan”, but a clear indication of further growth in the future.

And that is not really surprising. Since the 2008 sub-prime crisis began in 2007/8, the US economy has been subjected to the most intensive and continuous monetary stimulation ever. Ultra-low interest rates on top of unprecedented quantitative easing over the past several years seem to be finally having the desired result – strong GDP growth. That this comes just in time for the US presidential election in November cannot be entirely a coincidence. Obviously, the ruling democrats want to be able to point to a strongly recovering economy as they seek to keep Donald Trump out and get the first woman president elected.

In our view, it seems likely that, while there may be some considerably “backing and filling” as the record level of 2130 is surmounted, the road ahead is almost certain. The S&P500 will sustain its break to a new all-time record high and the stock markets of the world, including the JSE, will follow it up. The “double top” possibility will remain a potential threat, but, we believe that the bull trend is, once again, on its way.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

Jackson Hole

Once a year in late August central bankers and academics congregate in Jackson Hole to discuss the state of the economy and consider the way forward. Traditionally, the Chair of the Federal Reserve Bank (“the Fed”) addresses the meeting and gives direction to its thinking on monetary policy in the US. This year, the comments of Jerome Powell resulted in the

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite

Gold Resistance

All investments throughout the world can be ranked on a scale from high risk to low risk. As a general rule, in the world of investment, risk and return rise together. In other words, as the risks in an investment increase, so does the return necessary to attract investors.

At the one end of the scale there are very low risk investments

Sibanye takes off

We have been writing about Neal Froneman and Sibanye for years now. Beginning in 2013, Froneman assembled the Sibanye group over a period of 7 years, buying up mining operations both in South Africa and America at bargain prices. Initially he bought precious metals producers, but more recently he has been diversifying into base metals like zinc and lithium which

The 16 Year Bull Trend

Since the Second World War, the stock markets of the world, including the JSE, have always tended to follow the New York Stock Exchange (NYSE) - and the NYSE is best measured by the S&P500 index (S&P) of its 500 largest companies.

For this reason, we believe it is important for private investors to constantly

CA Sales Revisited

Retailing in Africa is difficult with many of our leading retailers having attempted to open stores in countries to the North of us without notable success. These countries are often unstable and volatile politically. Getting adequate stock to branches has proved problematic and expensive.

It is not surprising therefore that a company has been

Bluetel

Bluetel (BLU) is a company involved in pinless top-ups, prepaid electricity, ticketing and universal vouchers. As such it is a company with substantial repeat business from existing customers. This type of business model is attractive to investors because it implies minimal working capital and strong cash flows.

Bluetel’s purchase

The Debtors' Book

A BIT OF HISTORY

Many years ago, in 1982 when I started this business (which became “PDSnet”), I ran advertisements in both the Rand Daily Mail (RDM) and in the Star – which were the two most widely read newspapers in Johannesburg at the time. At that time, we were a very small business and had no credit rating at all. Despite this the RDM immediately

WeBuyCars - Results

The financial results of companies show how profitable they are and give a good indication of their share’s risk and potential return. WeBuyCars (WBC) is a recent listing which came to the JSE on the 11^th of April 2024. Unlike other listed motor vehicle companies, it is a company which specialises in the purchase and sale

Choosing Winners

We are often asked how we go about selecting the shares to put on to the Winning Shares List (WSL). Right now, there are 102 shares on the list with 5 having gone down since they were added, 94 are up and 3 are unchanged. On an annualised basis, 24 of them are performing at above 100% per annum.   

As a private investor,