I have always been opposed to investing directly in Marks & Spencer. My view was simple. M&S sat in no man’s land. You had John Lewis that provided high-end goods. On the other end, there was Primark. If M&S made a few wrong calls on fashion then they would have a major slump. This did happen quite a few times. Yesterday’s news that M&S is to close down more stores came as no surprise. I strongly believe that M&S food is the ventilator that has kept the company alive. It will continue to do so. As always all you have to do is have a walk through the stores of M&S. In general, M&S Food will have the largest percentage of people. This trend will change unless M&S can appeal to the people who are inclined towards healthy but quick food but their older base that would like their traditional British meals. Will M&S be able to balance their traditional Cottage Pie with their Thai green curry? In light of Brexit, I hope they do as they are one of the iconic British brands. If one has to gain exposure to the UK today then possibly the best way to do it is through VGK. The Vanguard European Fund has about a 29% exposure to the UK. The exposure to the European markets would act as a hedge. I believe we are going through an extremely interesting time right now. I do not like making predictions but there will be a winner and a loser in the whole Brexit process. Either way, the financial markets will get affected. Overall the European markets will go up.
Disclaimer: I do not hold any shares of Marks & Spencer or VGK right now.
Filed under Brexit, England, Europe, Food, FTSE, Indices, Investments, Market Outlook, Market Timing, United Kingdom, Vanguard
Analysing this series from a pure numbers point of view and as a portfolio has been very interesting. To see my theory finally come alive has been rewarding. Although I have to admit the data entry has been a slight pain. If there are any good data base programs that can work well with excel then I will be grateful if you let me know.
This was a great series. It was extremely well fought. Sadly the final margin of victory does not reflect how close the series was. South Africa was 7.6% ahead after they levelled the series. This increased to 18.1% for the third test where both England and South Africa made changes. After the third test England was ahead by 9.3% and they ended with a lead of 31.4%. In comparison the West Indies and Pakistan series ended up with Pakistan leading the series by 9.5%. This should generally indicate that the test matches were closely fought. There may be some truth to this. The margins of victory were smaller. All of the matches were won on the fifth day. Apart from this the extra test and the margin of victory would have greatly contributed to the differential. I am not entirely convinced that the difference should be so great. The best way to check this is to create a benchmark or to average the scores.
The player of the series for England was Moeen Ali and for South Africa was Morne Morkel. This is where things get interesting. Root has the most points in the series. He leads Moeen by 1%. The question is whether the all round performance by Moeen Ali is better than the fairly consistent performance by Root with the bat and his captaincy. In my view the role of the captain is vital in cricket. Further this is Root’s first test as a captain. When tests go badly the captain is usually the first head to roll and get criticised . Before Cook and Strauss; you had Freddie Flintoff and Kevin Pietersen who lost their captaincy because of the bad performance of the team. Overall I would be tempted to give the Man of the series to Root. The performance of both Moeen and Root are too close to call.
The numbers do not support giving Morne Morkel the player of the series for South Africa. Yes he bowled beautifully and was unlucky not to have picked more wickets but a millimetre is the difference between not getting any wickets and getting five wickets just like a snick off the bat that could get a batsman out for a duck or the one that leads to a double hundred. For me it is clear that Hashim Amla is the man of the series for South Africa. After Amla the next best performer was Quinton De Kock. However a good portion of his score came from his wicket keeping role.
The top five performers are below
1) Joe Root
2) Moeen Ali
4) Ben Stokes
5) Hashim Amla
The best batsmen are below
1) Joe Root
2) Hashim Amla
5) Dean Elgar
The best bowlers are
1) Moeen Ali
2) James Anderson
5) Kagiso Rabada
De Kock has got more points for wicket keeping than Baristow. Both of them are pretty close for their wicket keeping. The role of the wicket keeper has changed. Your wicket keeper must be able to bat really well. It is in this department where Baristow excelled.
My playing eleven for this series would be as follows.
1) Alastair Cook
2) Dean Elgar
3) Hashim Amla
4) Joe Root (Captain)
5) Faf Du Plesis
6) Ben Stokes
7) Johny Baristow (Wicket Keeper)
8) Moeen Ali
9) Toby Roland-Jones
10) Morne Morkel
11) James Anderson
The only spot that could be up for debate is whether the number Rabada should be played instead of Rabada. You have experience with Rabada. Roland-Jones just started his international career. Rabada did get more points than Roland-Jones but Toby got more average points than Rabada. It would have been nice to have Bavuma in the mix but you can’t pick him over Du Plesis and Ben Stokes has to be in the side.
South Africa did a straight swap where they replaced Duanne Olivier for Kagiso Rabada. Olivier’s performance was well below standard. His economy rate was very high. His strike rate was good but you would expect it to be significantly lower. He just gave too many runs. Of course it can be argued that it really did not matter at the end of the day because South Africa had a big lead. While this could be justified for the second innings where he gave 7.5 runs per over; you really can’t justify his first innings economy rate where he gave 5.57 runs per over. These are closer to what would be acceptable in One Day Internationals and T20’s and not in tests. The result was that South Africa started 4.1% higher than where they finished.
England made a few changes. Gary Ballance was dropped and Tom Westley was brought in at number three. Michael Wood got injured so Toby Roland-Jones was brought in to replace him. Liam Dawson was dropped and interestingly Dawid Malan was brought in to replace him. These changes made the English team look better. It also removed the illusion that Moeen Ali was their second spinner. I was sceptical about Moeen Ali wearing the hat of a spinner early on in his career. However he has improved heavily over the years and definitely deserves the title of the main spinner. These changes meant that England started 22% lower than South Africa.
The headlines may have been about Moeen Ali’s hat trick but this was definitely Ben Stokes games. A fast century and a quick fire 30 along with wickets in both the innings made sure that the deal was sealed. England excelled in their batting and bowling. Westley did reasonably well. I did wish that Malan would have done better. His performance with the white ball recently has been magnificent to say the least. I do hope he is given more chances. For the bug scores England are largely dependent on Cook, Root, Stokes, Baristow and Ali. There are still problems with the opening pair. There is no serious middle order that can be spoken of. Due to the weakness in the batting, the partnership that are essential are Root and Stokes, Stokes and Baristow and finally Moeen Ali with the tail and either Stokes or Baristow.
With this victory we have another all rounder playing an instrumental role and England regain their lead and are 9.3% ahead.
Cricket at the end of the day is a game analysed by numbers and stats but lives because of passion. Moeen Ali’s hat trick was the first in the Oval. It was the third hat trick to finish a test match in the history of test cricket. The last being in 1902. It was the first where all the batsmen who got out were left handlers. History was made. This hat trick will probably be excellent of spin bowling in England because it was done by a person who has come from the Indian subcontinent. The fact that the hat trick was achieved by a spinner in England makes it more valuable than if a seamer would have achieved it.
As expected England played with an unchanged side and South Africa made quite a few changes. Du Plesis was back and captaining the side. Rabada was left out because he was banned for one test. South Africa also made one strategic choice by replacing de Bruyn who is more of a pseudo all rounder with Chris Morris who fits the term all rounder more suitably.
The result was that South Africa started 62% weaker than the English team. This compares to them underperforming England by 32.2% in the first test match. By the end of the test match South Africa was was in front by 7.6%.
Hashim Amla performed extremelly well with the bat. However once again it was an all round performance by Vernon Philander that sealed the match. Hashim Amla scored more runs than Philander. Chris Morris got more wickets than him. Philander's batting strike rate was much better than Amla's which meant that it was worth more. Morris had a better bowling strike rate but his economy rate was bad. Philander had a better bowling average. Faster runs combined with a better economy rate and a bowling average was too much for England. He seemed to be batting and bowling on a different wicket altogether.
My numbers indicate that England bowled better than South Africa. This is definetly because there were better individual performances from England but you had all of the South African Bowlers contributing. I am not too concerned about this because this actually shows the system is working. The match was won and lost in the batting department. The batting of South Africa was 3% better than the last test match. However England was 50% worse.
I am looking forward to the next match. South Africa will definetly bring back Rabada. England will most likely make changes.
(Originally posted on July 21st 2009)
One of the best feelings I get is when the “experts” from the major financial institutions comes up with the same conclusion that I have after I have realised it.Yes it is narcissistic of me but that it is the flower of my birthday and therefore it is to be expected. The latest episode was last night when one of the sports commentators on Sky said “One small step for Flintoff, one big step for England.” Earlier in the day I wrote on my Facebook “One small step towards the Urn and one big step for England.” The ASX increased by .01% today. That .01% increase can be attributed to the applause the populace at Lords gave Ricky Ponting an applause when he admitted that they were outplayed. The FTSE on the other hand has increase by over 1%. The share price of all the sponsors of the English Cricket Team have increased since yesterday. The only sponsor of the Australians who have had their share price increased is 3G. However 3G is 50% owned by Vodafone. Now what would a normal Aussie bloke do if he knew that? Does the average Aussie cricket fan know that Fosters have sold the rights to brew Fosters in Europe to Scottish and Newcastle which is owned by Heineken? In Europe the beer associated with Australia is not Australian!! Everything is not what it appears to be. Pure transparency among equity funds and hedge fund does not, will not and should not exist. If transparency did exist then everyone from a 90 years old grandmother in Timbuktu to Wall Street would be buying the same things. If that would happen then there will be no money to be made. Efficient markets cannot exist. It is the risk and uncertainty that gives rise to opportunity. All creation stories and theories begins with Chaos. Since that is the case then who are we to go against the Gods?
Matthew Lynn who is a columnist for Bloomberg wrote a very interesting article on whether the seriousness of Steven Jobs health was of material consequence to release the information earlier than when Apple actually did. I. believe that this is a grey area. A line should be drawn. However the question is where the boundary between public and personal space should start for a prominent public figure. Humans are voyeuristic in nature. This is not about which celebrity is sleeping with whom. Yes there are people who feed on this but Katie Price breaking up with Peter Andre will not have as much of an effect on the world as the health of Steve Jobs or Warren Buffett. The value of companies and funds are associated with the people who lead it. Will the successor of Apple and Berkshire Hathaway be the same without Jobs or Buffett? The performance of Absolute Capital Management fell dramatically after Florian Homm who co-founded the company suddenly walked out of the company. The point of all of this is that there is a big possibility of people losing a lot of money if something had to happen to prominent people in industry. I am not insinuating that CEO’s twitter their life but if there is any issue that will potentially influence a company or a fund then full disclosure should be made as soon as possible. As usual I have to bring cricket into the picture. The very next day after the first test match was over a public declaration was made that Andrew Flintoff had to undergo a scan on his knee. The results were not published but immediately Steve Harmison was called up as a precaution. However there were also pictures published of Flintoff practicing in the nets and the announcement by Flintoff that he was going to step down from Test cricket after this series. Flintoff is the talisman of the English side and a very important part. His departure will have a more profound effect on this series than if Andrew Strauss who is the captain on the side got injured. I do not know if Flintoff will play today but the English Cricket Board handled his situation in a significantly better way than Apple did with Steve Jobs.
The Ashes season has started. Probably it was one of the most exciting first test match of an Ashes series.Australia won the first test match in 2005. The Australian index outperformed the FTSE by 2.36% starting from the Monday before the Test match to the next Monday. In 2006 the ASX outperformed by .19%. Australia won that match too. Last week the FTSE outperformed by 2.61%. England drew the match. However Australia missed a golden opportunity to win the match. If Jenson Button had to win the German Grand Prix instead of Mark Webber then I would guess that the the difference would have been in excess of 3.0%. Ricky Ponting was furious that England used time wasting tactics. At least Nathan Hauritz was honest enough to admit that Australia would have used the same tactics. Besides I am pretty confident that had the Aussies taken the last wicket and won the match then they would have been totally pompous about it. It is not that England breached the spirit of the game but the Aussies are just sore losers.
England had a successful weekend of sports.However the markets fell and by a bigger margin that Australia. Does this mean my theory about the relationship between sport and the markets is wrong? I still stand by my theory. Twenty20 can go in any direction and it is hard to predict a result. It just does not make sense that Netherlands was able to beat England but England thrashed Pakistan who has the best T20 record. Now Test cricket is the real thing. People may think it is boring but you need a lot of talent to succeed in it. I do not know why people complain about cricket. A NFL game is made up of four quarters of 15 minutes. This one hour of actual play time takes about four hours to play. No wonder they have cheerleaders. Now equate that to a test match and it will take about 20 days to finish one game!!!
(Originally posted on June 6th 2009)
I hate discussing finance over the weekend.However I am still reeling under the shock that Netherlands beat the English cricket team. The minnows have beaten one of the giants. West Indies are currently over powering Australia. If my theory about the relationship between sport and financial markets are true then the emerging markets should do better than the developed markets on Monday. The Euronext may do better than the FTSE. It will be a close call between the FTSE and the ASX. The advantage that the FTSE has is that it has the the England and Kazakhstan match to redeem itself,the F1 in Turkey and the England vs. Pakistan match tomorrow. If Williams, McLaren and Brawn do well tomorrow then the FTSE may redeem itself. If Renault, BMW or Ferrari does well then I would be reasonably confident that the Euronext would do well. Will my theory be proved right? I cannot wait to see.