You're listening to Strictly Business Podcast with Lindsay Williams.
The JSC has closed its doors for another day, so it's time for the 5 o'clock
shadow.
And as always on a Wednesday, it's Skulk Glo,
who's a portfolio manager at PSG Wealth Old Oak in Cape Town.
No, half the week's gone, Skulk, which is good.
It's been a busy week, though.
Look at Monday.
Something called something, DeepSeek, came along and scuppered everybody's AI
aspirations.
And then yesterday...
They all bounce back again because we'll talk about that in a moment.
And I'm sure you've got opinions about that particular company and what happened.
Then we've got the U.S. Federal Reserve tonight making their pronouncements on
U.S.
interest rates.
And tomorrow we've got the South African Reserve Bank.
And so it goes on.
And also we're in the middle of tech earnings season in the United States.
So there are things going on, mainly overseas, Skulk.
Yeah, tech earnings.
Tesla, Meta, Microsoft.
Tomorrow, we've got MasterCard, Visa, Apple, Intel.
Man, oh man, it's going to be a busy, busy, a little bit more than 24 hours.
Definitely.
It really is.
So let's go back to Monday now, when DeepSeek came out.
Now, they claim to have made this company from a mere $6 million or $5.6 million,
whatever it is,
the amount need not detain us.
But the point is, it ruffled a few feathers.
When I saw it, and I was speaking to David Shapiro about it, I just said, you know,
what is this?
There's two ways you can look at this.
This can either tell you that the barriers to entry to artificial intelligence are
getting lower and
lower as people catch up.
Or you can just say that this is just a Chinese knockoff, state sponsored, of
course.
And I think the latter in this case is more true than the former.
Yeah, man, this is just crazy.
I mean.
We're talking about AI.
It's just mind-boggling.
I bought this book, and very, very quickly, she actually jumped on me now a
little bit quick.
But, I mean, I bought this book for, oh, yeah, I've got it, The Alignment Problem
by Brian Christian.
It's fascinating.
It doesn't sound like a romantic novel to me.
What is it?
No, no, no.
I don't read romantic novels.
If I want to do any of those sorts, I would go watch a movie.
I don't watch any movies.
So, yeah, the alignment problem is just that.
It's how AI has actually progressed over time.
I mean, how we've actually gone
50 years ago and started using neural networks, AI, those kind of things.
It's very, very… But over the past five, six, seven years, it's just crazy.
I mean, a little thing where you, I'm sort of digressing, we'll get back to deep sea.
But I mean, it's just crazy when you look at the whole,
it's called law system in America.
We know there's a jury and usually they decide if a person is guilty or not
guilty.
So they've actually now started to employ AI, where somebody did something.
Let's say we watch a lot of courtroom drama, so somebody killed another person.
When that person can come in,
they actually employ AI to really get all the information from that police
department.
They get all the information from the different lawyers.
And they can say, well, we can put on a, let's call it a 98% probability.
that this person is guilty.
And they can also say, well, but they can also say, well,
they could put about a 36% probability that this person would be found guilty.
And it's fascinating how they've been using this in the judicial system,
how they've been using this in medical areas,
how people can be treated already looking at some of these AI systems and they can
actually say, well,
you need to get to a doctor.
This is really serious.
Is that one of the positives of it though, the health applications of artificial
intelligence?
Because there are very many downsides, but what you've just mentioned is very
interesting to me.
It is.
If it's controlled properly, then it can be a great boon for mankind.
There we go.
You just used the biggest C word in AI for me.
It's control.
Yes.
If you're not going to control this thing, you started off this intro about barriers
to entry,
how somebody can literally come in and tap into this information with very little
resources and pretty much...
create great havoc um i'm i'm still really really worried about i i don't think
that's why i'm
reading up on you and me both but don't tell anyone because otherwise we'll be
buried by the by the fans and you know what
uh i'm sorry to interrupt but while it's still in my head i
receive i converse with a friend of mine and a year ago i received regular messages
from him
and they were just normal messages from a bloke you know and then suddenly In the
last six months,
the tone and the type of message that he sends has changed completely.
And I know exactly what's happened.
I won't say it to him, but the tone has changed completely because he's using
words that he never used before,
and the construction of his sentences are completely different.
He's using AI to send a letter to a friend.
And I find that on a very, very small microscopic scale,
I find it a little bit offensive and a little bit dangerous.
I'm not speaking to the same person.
And AI, to me, is going to change people.
It's not always for the better.
No, undoubtedly.
Undoubtedly, it's to a certain extent making it lazy.
But I understand why you say a lot of people will jump on us because do I think
this could be used for the good?
I just said it.
I do think it could really be used for the good, but this will need to be controlled.
I mean, this is something that needs to be controlled.
We can't just have this run.
in the world, because I'm really struggling because your chat GPTs and your
bots and all those
things that you see lately, you don't know if this information is really true or not,
because we've actually now found that some of the information that this AI has been
feeding is not necessarily entirely
true.
And sort of now this thing goes on and creates havoc.
But anyway, be that as it may, I mean, it's, yeah, I...
I think this deep seek is still very much in the making.
So this is going to be a very, very interesting story.
It is an interesting story.
And the one thing I don't like about it is it's obviously state-sponsored.
And if it's not state-sponsored, then it is terrified of the Chinese state.
Because if you go to deep seek and you put in a question, which I did, I don't know
why I did it,
but I was just very, very curious.
having heard all the hype and I put in does President Xi look like Winnie the
Pooh because there
was that whole scandal about Winnie the Pooh being banned in China because he
looks like Winnie the Pooh and he was walking
along with President Obama at the time and President Obama looks like Tigger in the
well-known
children's book and they're walking along and it's uncanny you've got Tigger and
Winnie the
Pooh and you've got Obama and Xi and Winnie the Pooh was immediately banned
from China.
But then the answer comes back from deep seek.
It says, I'm sorry, I can't answer that question.
And that was it.
So, yeah, we already see that some things are actually prohibited.
Yeah, this is, yeah.
It's a knockoff.
We know that.
It's like buying a Louis Vuitton bag from Shenzhen or something when you go
traveling to.
to China and you know it's not Louis Vuitton but it looks the same and it makes
you happy and it makes these the seller Happy and that's the end of it.
So yeah, but it's As you quite rightly say needs to be controlled,
but the bounce-back is in place Skull and hopefully this isn't it too late.
I mean, that's my worry Isn't it away when everybody says the I mean,
we listen to an interview of Ellen must the other day as well.
I mean and I mean he made it clear.
I mean this we need to control, we need to, you know, sort of put some regulations
on this, yet nobody's doing it.
It's just, ah, it's fine.
I'm going to censor this show, actually.
I'm going to be like the Chinese state.
I'm going to censor it, and no one's ever allowed to talk about Elon Musk on this
program ever again.
I wish we could talk about this, but, yeah, you talked about Louis Vuitton.
I mean, I don't know if you've seen this morning, their update came out, trading
update,
which will be digressing and moving back to the market.
No, no, don't worry about digressing.
We'll talk about that because luxury goods have been sharply in focus in the last
couple of months, haven't they?
Yeah, are we talking about Louis Vuitton?
Yes.
It's a luxury brand.
It's a luxury brand?
They've done so well, haven't they?
Very, very well, because we saw the update came out from Richemont last week,
and we still had the question,
will this sort of overflow to some of the other luxury brands, the LVMHs, the
Kerings, Kering,
more well-known for brands like Gucci.
And yeah, today, this morning, LVMH came out, although the turnover looked pretty
good,
the earnings did.
Very, very bad.
Really, really shocking.
Share price down 6% today.
So not a lot of change.
So because Richemont, as you said, was up like 15% last week when it came out.
One day, yeah.
Yeah, very strange.
And actually continue.
But it's actually, it's not strange.
We had this conversation in our meeting post the Richemont meeting.
It's always tend to think, well, because Richemont.
is doing well, then naturally your LVMHs should do well, your Kering should do
well, your Hermes should be doing well.
And one should always just remember, look at the brands.
I mean, look at what these companies are selling.
I mean, Richemont, for instance, they do get a lot of their sales from the Cartier
watches,
those type of things.
Your sort of more jewelry type of luxury goods.
Which way?
If you look at a Gucci and some of the other brands, I mean, it's more leather.
It's very expensive handbags and belts and those type of things.
And you should be very careful stating that because people are buying expensive
watches, a.k.a.
jewelry, they should actually, in theory, be buying these expensive handbags as
well.
Do you think it's a case that if you buy a watch, for example, It's seen as an
investment.
I mean, I never wear a watch, and I haven't for decades,
but people like to wear a watch on their wrist because it's a piece of jewellery.
But it's also an investment.
If you buy a good brand, it holds its value, whereas if you buy a bag, I don't
know if that's an investment.
So you've got to be careful in the luxury goods space and say bags versus watches
versus luxury drinks,
you know, Louis Vuitton, Moet, Hennessy, et cetera.
So you have to be selective I think, rather than a blanket buy if you see what
I mean.
I undoubtedly agree.
I mean I had a client yesterday and I know he's listened to this podcast so
I'm not going to mention his name.
But I mean he actually, because you'll understand now,
because as we went through his affairs, he went like, I just want to come clean.
I mean he started asking me about the cryptocurrencies.
I said, well, I'm quite vocal that I'm still worried.
It's not properly regulated.
It's still used by, you know, mafia bosses and those kind of I mean, it's not your
cryptocurrency,
as soon as it gets really seriously regulated and you can attach it to some
valuation method, naturally I will look at it.
But for now, I'm rather but I do like alternative investments.
I do like gold.
I mean, you know that.
I like gold.
It's hardly an alternative investment.
It's been invested in for thousands and thousands of years.
Exactly.
It's a store of value.
Do you understand what I'm doing?
People don't go and say, well, let's look at my retirement planning.
We're going to do a retirement annuity and let's go buy some Kruger coins.
This is just not something that's still seen as something that's a more
alternative investment.
I told him, I like something like Golden Whitlock Skull.
I need to tell you something.
I mean, I've sort of held out on you over the past few years.
I'm an unbelievable follower of Rolex watches.
And I went like, what?
Okay.
He's done well then.
If he's bought the right ones, he's done very well.
He pretty much is a very selective buyer.
And then he actually mentioned that when he buys, he'll buy four.
He'll buy four of these watches.
And he actually stores them.
And he says those watches, you know, the one watch, I mean, I just fell on my back.
I mean, talking about a watch, you know, a watch that he was looking for, looking
for, looking for.
And he bought the watch and it was something like 250,000 Rand.
And before the year was over, it was trading close to 400,000 Rand for that
same watch.
So, I mean, this is what I'm getting to with.
the likes of the rich ones with versus a kering's i mean you're still sitting with
something that's i mean it's made of gold
um it's it's got the jewelry valuations and people are looking for that little
badge they're looking i mean just as a
remember as i mentioned the word rolex you immediately went like he did well he did
well i mean because
the reason i say that is because there's a program on a sunday night on the bbc
called antiques roadshow and they they
very regularly have somebody who's brought in a rolex that they bought in the
1960s and their dad gave it to them and all that sort of thing and you know it
cost him 500 quid in 1963 or something it's now worth
them there you know 40 000 pounds or or something they hold their value and they
increase in value because
it's a prestigious name and they're so well made it's an investment skull
Exactly, exactly.
And because that thing has got that little Rolex badge on it or Cartier badge on it,
I mean,
you will be happily buying that at a premium because you can take this watch.
You're sitting currently, I'm sitting in South Africa.
I can put this watch on my arm.
I could go to where you're staying these days in the Netherlands.
I could step into any of your…
friends or shops and people will know exactly what is around my arm they know
exactly the valuation of that arm
of that watch no matter where i am no matter where i go so that that is a a sort
of
a a different different
luxury luxury good and as i mentioned i mean it just shows you today that you know
luxury goods all luxury goods are not
created equal definitely not lately one other watch brand that i don't want to
dwell on but
to me better than rolex not quite as uh ubiquitous as rolex but patek
philippe i've always wanted to own one of those and i will do one day maybe when you
cash out of your your giant financial
empire and you say who do i really want to bequeath some of my fortune to that's
lindsey williams because he used to give me so much wonderful exposure on the five
o'clock shadow and you'll buy me a second hand um a
vintage patek philippe i notice you've gone very quiet now
I went on mute because I just killed myself laughing.
Oh, thank you very much.
I'm back.
Okay, you're back.
Okay, let's have a look at the markets now.
Okay, by the way, don't wear a Rolex in London at the moment because there are
gangsters going around
ripping people's watches off their wrists on motorbikes.
That's another story.
That's crazy.
I mean, I had a I can't remember.
I lost your February.
I had a conference, and there was just a few individuals that came through, and
they presented.
They're actually from London.
I looked at this Breitling watch that the one had, and really, I mean, you could see
they are flashing.
I mean, it's really, really beautiful, beautiful watches.
I'm going to give it to you.
I'm not going to diss the I mean, it's really beautiful watches.
And we had a similar conference, and these same individuals actually came down again
in November.
And I kid you not, all three of them had, you know, two of them had Apple Watches.
No, sorry, all three of them had Apple Watches.
Yes.
And I made the joke.
I said, hey, guys, well done.
I can see you started training.
I mean, I can see it's health first.
And they told me exactly what you just told me.
They reside in London, just by the way.
And they said, no.
I mean, they just can't wear these watches anymore.
They can't.
I mean, it's like you just said, it's a motorcycle gang.
They literally walk in the street and they will actually, they will stab you to
death,
take your Rodex or your braking or whatever.
They sit outside restaurants and they see some bloke.
He goes into the restaurant, takes his jacket off, and he's got this flashy watch
there and they're watching.
And even though he covers it up, they'll wait for two hours very patiently.
And when he comes out, that's it.
They hold him up and take a £50,000 watch off his wrist.
violently.
Okay, that was a good story.
Dollar-Rand is 1865, Skullclaw.
British Pound against the Rand is 2317.
The Euro-Rand is 1942.
Euro-Dollar 10410.
That'll change tonight, I think, after the Fed.
British Pound against the US-Dollar 12425.
Gold price?
Hmm, what is it?
It's down about $8 to $2759 per ounce.
Platinum and Palladium.
actually they're very close to being the same price platinum 977 which is up about
three percent and palladium is
979 up about 2.6 other commodities i think we've had a bit of a oh i haven't
got my c oh yes i have got my crb index up here excuse me it's going to be showing
that brent crude oil is
77.19 which is down 0.4 west texas 73.37 which is down
just over half a percent And what else?
Silver up 1.5%, wheat up 1.9%.
There's a few others, but anyway, not so interesting.
The US 10-year Treasury bond yield, the yield has come off its highs, thankfully,
4.52% currently.
S&P 500 futures, which were at one stage earlier this week, in fact on Monday after
the deep-seek problem,
5,995.
Now 6,080, so nearly 100 points higher.
in nearly 72 hours.
And the South African 10-year bond...
what is that 9.16 bitcoin yeah 102 200 let's call it which is down very
slightly what are you seeing on the jsc today skulk ah jc it's a little bit like
lasted i mean look like
that not like lasted i mean everything seemed pretty pretty strong markets i mean
it's
it started off a little bit up and and then just the latter part of the day it
really really looked
solid I mean, they're sort of the bads.
I mean, I know you're going to mention that the worst performance, and I don't
know if this is going to reach one of the worst performers,
but Cecil, oh, my word.
I looked at the graph this morning, and over five years,
you've lost 68.5% by being invested in that company.
Yeah, yeah, yeah.
No, it's been shocking, shocking, shocking.
Well, I think last year, I'm going to look while we actually… Please do.
I like these numbers.
But, I mean, you're talking about five years.
I think you can go back one year.
I saw a graph, let's call it earlier,
it was last Friday when that good news came out.
It said that actually Sasol dropped by 58% over this one year.
So, okay, so exactly one year ago.
185 rand 185 friend was trading in in december 2023 so so basically let's call
it the
180 levels it started off
2024 right i mean and today trading at 82 rand oh man that is
that is crazy it's more than 50 percent and remember this this is a this is a
company that's been trading well over
500 rand um when we when we when 2022 this
went up remember this in covet it nearly went bankrupt and and so so here we go
2018 this this this company was trading well was going towards the 600
rand levels then in covet it dropped down and and went
below i was 15 rand there was 16 rand levels and everybody was thinking was
gonna go bankrupt if
you bought that in covet level 16 rand you You would have seen this company go 2022,
go to over 400.
Today it's back at 82.
I mean, what a disappointment.
And the most disturbing thing about that, I mean, apart from the destruction of
wealth factor,
is the extent of the destruction of wealth.
In other words, it's a well-held stock.
I mean, everyone's got Sassl.
I mean, look at the PIC.
I mean, maybe I'm talking out of turn.
Maybe they offloaded it ages ago.
But...
Every single pension fund's got this in its portfolio, Skalk.
It's not a good sign.
No, no, it's one of the, it's a private company,
but this is as close as a state-owned company.
So there's a lot of people that work, you know, through and with Cecil.
I mean, they had a horrible time, that latter part of 2019,
where Lake Charles just did not finish.
It just did not, they didn't get it on time.
They didn't go on budget.
And that nearly cost the company.
I think that was one of the main reasons why this nearly, nearly actually didn't
make it.
They did mention, well, they mentioned, the CEO mentioned that they are
considering, and this is now last Friday,
this is why the company went well over 100 grand the one day, also over 15% up.
They did mention that they are considering listing the chemical business separate.
Now, in the chemical business...
It's about 38% of the total company.
Is that Lake Charles as well, that disaster?
That's pretty much Lake Charles.
And it's a company.
It's actually now starting to do well.
They can see a lot of growth in that company, but they're sitting with debt
levels, and they pretty much can't sell anything else.
The only thing that they really can sell is Lake Charles.
So hopefully if they do a separate listing.
And very similar to what we've been talking about, Woolies, wanting to see
Woolies.
de-listing or sort of listing their Woolies food separate from the rest of the
company, that we can decide to share all this.
I mean, how many excuses Woolies are going to give, share this?
I mean, we've been talking about these excuses for years and years.
But Cecil, hopefully they can do this chemical business, have Lake Charles
separate.
In the US, then I do think that there could be some unlocking of value.
Yeah, that was the beginning of the end for Cecil.
The end just being a euphemism.
But it was just such an injudicious investment.
And they must have seen Sasol coming and said, OK, let's see what we can get out of
this.
And they sold it for a fortune.
And it wasn't worth it.
On the upside.
Sorry, sorry.
I just want to quickly just, I mean, you mentioned something.
And I just want to, well, sort of disagree with you.
The PIC is still the largest shareholder of Sasol.
So you're 100% right.
I mean, that's talking about 70% of the companies out by.
by the pac and i see ellen gray they recently um increased their holding quite
substantially they've filled the third largest
shoulder you know holding about eight percent of of sasson anyway let's look at
some more cheerful stuff because impala platinum on the
upside oh 6.2 anglo-american platinum up four and three quarters percent northern
up four and a third percent
and sandwiched in between the diggers is clicks up nearly four percent and harmony
at the bottom of the leaders
3.7 better On the downside, the ones we know, Sassell down three and a third,
Tungela down three and a quarter,
and Glencore down 3%.
What about the indices, Scal?
The indices today, as mentioned, had a wonderful day.
We had the JSE Allshare close to that, 85,315 points, up just over 1%.
Top 40, up 1.1%.
Yeah, the resources led up with the diggers, 1.61%.
Industrials 0.9% and financials over 1% up.
Even the SA property had a wonderful day.
That was up 80 basis points.
So a wonderful day on the JSC overall.
Turnover, I'm not really excited about the turnover.
We didn't see a lower than 21 billion day for the past five trading days today.
However, it didn't reach 19 billion, but still, we'll take this win.
We'll definitely take this win.
Yes, we will.
Skulk, thank you so much for your time as always.
Skulk Lowe is a portfolio manager at PSG Wealth.
Alt Oak in Cape Town, and that was the 5 o'clock shadow.
The views and opinions expressed in these podcasts are those of Lindsay Williams and
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