Thursday 22 July 2021
Good morning Voornaam,
It was really easy to make money in the markets last year, provided you bought the Great Dip of 2020. You would be terribly unlucky to have chosen companies that haven't posted decent share price recoveries since then. If you had built a diversified portfolio, you're basically guaranteed to be up.
It's much, much harder in 2021. People are learning the hard way about the importance of valuations. Streaming giant Netflix is the lead story this morning, because it is a perfect case study of why you need to look far deeper than a simple assessment of whether you like a company as a consumer.
If you want to understand why the Netflix share price has been on a sideways trend for months, I suggest you read the lead story. I wrote on this topic multiple times last year in Ghost Mail - my weekly mailer that is free to read and will really help you achieve a greater understanding of the stories you read here in InceConnect. You can sign up for it here.
Moving on from Netflix to Netstar, the vehicle tracking company got itself into the headlines by releasing interesting data on the impact of looting on supply chains. Netstar is part of Altron, which is listed on the JSE.
The supply chain theme is carried through into an update from Transnet. Large mining companies released results two days ago and the impact of issues with Transnet was clear to see in the results of companies like Kumba. If the country's infrastructure isn't working, companies can't operate properly. With exports propping up the rand, our country's currency literally depends on Transnet.
We also have a further update from Mr Price on the impact of the looting.
If you fancy a read on the luxury goods theme, one of my contributors to thefinanceghost.com wrote a great article on companies like Richemont, LVMH and Kering. Join The Creative Accountant as he unpacks this sector, including the "lipstick index" as an analysis tool that you won't find in finance textbooks.
Good luck in the markets today.
The Finance Ghost
Local and Offshore Market News
Netflix's demanding valuation is hard to watch
Netflix's free cash flow pressures have continued as I expected. Will the introduction of gaming help the company slow down the content creation treadmill? Read More
Netstar gives fascinating data on the riots
The disruption to supply chains has been laid bare and the gap between big corporates and SMEs has surely widened as a result. Read More
Transnet continues to be the fly in the soup
Port disruptions last week were understandable, but the underlying state of our rail network is creating longer-lasting problems. Read More
Mr Price gives another civil unrest update
Mr Price suffered the loss of 111 stores, which the company intends to reopen based on specific circumstances of each store. Read More

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