We have had some media-grabbing stories over the last couple of months and perhaps it is a good idea to look at what has happened since:
Late last year Markus Jooste, then CEO of Steinhoff, resigned and the share price fell 90%. The company admitted to accounting irregularities and the investigations are still ongoing. The story of the once magnificent Steinhoff reminds us of a 1987 movie, based on a true story and called “The Billionaire Boys Club”. It was the story of a group of young, over-confident and super-rich people who made some easy money and then went for the “big deal”, but lost everything and then some. If you look at Steinhoff you will see the company enjoyed fantastic growth with an exceptionally confident CEO (Markus Jooste), who lived the high life with his board of directors consisting of big names like Steve Booysen (ex-CEO of Absa), Johan Van Zyl (ex-CEO of Sanlam) and of course well-known SA billionaire shareholder Christo Wiese. One can imagine these guys sitting around a cozy fireplace in Stellenbosch drinking 100-year-old whisky and enjoying their fabulously comfortable lives – when they should have been asking Markus the difficult questions regarding the shape of the company.
After a 40% decline since the start of 2018 and a 70% fall from its all-time high in December 2017, Bitcoin has crashed like most knowledgeable people predicted. Like in any other pyramid scheme the early entrants have made a staggering amount of money but for the latecomers the results are devastating. There are still people who believe the price will go up to $91 000 over the next 2 years, from the current $8200. There is no way of knowing what will happen.
When Cyril Ramaphosa won the ANC election in December 2017 we saw a fantastic rally in our domestic shares. Over the last 12-month period, the ALSI is up 17,4% but from the beginning of 2018 it is down just over 2%. This is in line with international markets and we cannot blame our new president, but now that the party is over, we do see the markets looking past the potential and focusing on the reality. The rand is also still strong against the US$ (R11,90/$).