ARTICLES

Trump

I am a stock market analyst, not a political analyst, and I have to admit that I got the recent election in America devastatingly and horribly wrong. I honestly believed that the vast majority of Americans would never vote for Trump. My perception was that were just too many negatives – his proven and almost compulsive dishonesty, his life history of overt sexual perversion, his unashamed racism, his blatant misogyny, his cowardly disdain for the military, his well-established criminality and his octogenarian senility to name but a few. Just one of these negatives would have been sufficient to destroy any hope of winning for any other presidential candidate. 

And all this time, I have been discounting Trump’s continued political influence as a right-wing cult of quasi-religious fanatics which was affecting an unusually large minority of relatively uneducated Americans – mainly from the deep South. But, the truth is that Trump does not represent a minority at all. That fact has been brutally and inescapably brought home to all of us.  

He represents an overwhelming ground-swell rebellion, especially among the relatively uneducated, but also very much present in both women and college educated people. The rebellion is against the world’s inexorable progress towards liberal egalitarianism in all its forms over at least the last century and perhaps much longer.

Liberals generally have espoused progress towards a society where everyone was treated equally, irrespective of their age, gender, race, and sexual orientation. MAGA republicans and other right-wing people around the world have seen this as steady irreligious degradation and moral dissipation. More and more, they appear to have been hankering after the values and attitudes that existed in Cecil John Rhodes’s time.

They literally wanted to make America great again in the way that they perceived it to have been before the invention of political correctness and wokeism.

So, how does all this reflect in the equity markets of the world? The answer is, “not very much” – except, of course, that markets really do not like uncertainty, so the sharp reduction in uncertainty following the election has seen markets rise to new record levels – just as we predicted in our tweet on the 26^th of October 2024. Consider our annotated chart of the S&P500 – which by now you should be very familiar with:

As you can see the S&P 500 index is now flirting with the 6000 level and we believe it will rise above that level in the near future, probably during the Christmas rally which we have spoken of previously. There can be little doubt that the S&P is already over-valued from an historical perspective, but we believe that it will continue to become even more over-valued as the potential productivity gains of artificial intelligence, humanoid robotics and cheaper renewable energy are discounted.

We remind you of our tweet made on the 25^th of January 2024 when we said,

“So now that we are breaking new record highs on the #SP500 almost every day, it is fitting to ask how high it will go. Our calculations indicate that will reach 6458 sometime in the next two years. The upward trend will certainly be broken by corrections”.

At the time that we posted this tweet, the S&P was at 4894.17 – and the suggestion that it might go well above 6000 was regarded as radical, even absurd.

We now believe that our prediction on the 25th of January this year was highly conservative. We are now expecting the S&P to go above 10 000 before this bull trend is done. So, before you become too depressed about the prospect of another 4 years of Trump, make sure that you are fully invested.

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PDSNET ARTICLES

V-Bottom is likely

The 10% collapse of Wall Street, which is a direct result of Trump’s random policy of on-again, off-again tariffs, is very similar to what happened to Wall Street in February/March 2020 when investors tried desperately to accurately discount the impact of the COVID-19 pandemic.

Normally, corrections in the market

The Trump Correction

It is relatively unusual for the activities of American presidents or what they say to have an impact on the New York Stock Exchange, especially during their first 100 days in office. Trump, however, is the exception. His confused, on-again, off-again rulings on tariffs have rattled the market. Markets hate uncertainty and even Trump himself doesn’t appear to know exactly

Dividends

Investors know that the return on a share is made up of a capital gain plus the dividend. Private investors are mostly attracted to the prospect of making a capital gain on the shares which they buy and do not often consider the dividends. What they perhaps do not realise is that a capital gain is actually just the dividend in a different form.

Quarterlies

One of the major differences between the US equity markets and the JSE is that listed companies in America are required to report every 3 months, not every 6 months as they are on the JSE. The quarterly reports of the S&P500 companies are closely followed by investment analysts and predictions are made for their profits.

Gold's Record Run

On Friday last week, gold reached a new all-time record high of $2871.42 per ounce. Its gain in rands has been even more impressive rising from less than R1000 per ounce in August 1992 to last Friday’s close of R52864.85.

In our Confidential Report of March

Growth by Acquisition

Hudaco (HDC) is a master of growing by acquiring smaller businesses in similar fields of activity or businesses, which then complement its existing suite of businesses. It has been making these bolt-on acquisitions for many years and has developed great expertise at selecting and evaluating appropriate targets.

These bolt-on acquisitions are mostly small

The Impact of News

Old Wall Street wisdom says the following concerning news which comes out about individual listed companies:

1. Good news which is expected - causes the share price to drop.
2. Good news which is unexpected - causes the share price to rise.
3. Bad news which is expected - causes the share price to rise.
4. Bad

Karoo

In April 2018 – nearly seven years ago – we wrote an article about Cartrack. At the time we suggested that it was the ideal investment for private investors because it was a service company with debit order income and almost no working capital that was growing rapidly both locally and internationally.

Tweets

Over the Festive Season, we have been communicating with you via our tweets on “X”. The chart below shows the timing of our individual tweets and what subsequently happened to the S&P500 index.
 

Winners in 2024

2024 was always going to be a very good year for the share market. The year began with the S&P500 at 4742.83 (2/1/24) and it reached an all-time record high of 6090.27 (6/12/24) – a gain of 28,4% excluding dividends.

On the 25^th of January 2024 we made the following prediction on Twitter (X):