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 five o'clock
shadow.
And as it's a Wednesday, I speak to Skulk Lowe.
Skulk Lowe is a portfolio manager at PSG Wealth Old Oak in Cape Town.
There was something that happened yesterday which interested me and it said
across the news wires that the Nasdaq is down
because of people saying that the AI boom is overdone.
That was the sort of inference.
They didn't say it in those words, but they said they're questioning the
development of AI.
Had to happen, didn't it, Skalk?
Yeah, it had.
And firstly, you know, hello, Lindsay.
How are you doing?
I'm all right.
Yeah, it's interesting.
I mean, David Shapiro and myself, we had a conversation today.
See, I'm doing a bit of name dropping there.
We were joined in an interview,
and they asked him on a company.
Let me quickly see what's the company again called.
It was Palantir. Oh, Palantir, yeah.
They got well in yesterday, 7%, I think, and today again down two or three, I also
think.
Correct.
It's correct.
I mean, I don't know the company really.
It made me went and look because naturally this is much more.
a David Tuff company.
He loves these tech companies, these AI companies.
Yes.
And now, firstly, this drop that you just mentioned, I mean,
this wiped out $75 billion in pretty much five days.
Now it had me interested.
I had to go and look.
So this company, I mean, do you know the companies, by the way?
I know it.
I know it's high profile.
I know people sort of revere it.
There's somebody on LinkedIn.
I work for Palantir and, you know, very, very glossy.
The way I can sort of describe it is a glossy company.
It is.
But the moment I start reading this, what is that, Marty,
back to the future?
It felt going back to 2000.
And, you know, I had this exact conversation exactly a week ago.
where we talked about i mean i get this 2000 bubble feeling i mean i just get this
feeling as i read this this
company is a it builds software uh for for big analytics and most specifically
it builds it for ai um and
it's integrating all these data sets but it's a it's a high profile software
company specifically for
ai now this company um is trading at wait for it
A PE ratio of 250 times.
There we go.
The clock has automatically gone back in my head.
Exactly, exactly.
Because, I mean, and for the listeners that don't want to, you know, now go pull
up last week's interview.
I mean, Lindsay and myself, all that I said is I feel 2000 because why 2000?
2000, we went into 2000.
there was a thing called The internet and analysts and economists and every person,
even the secretaries,
mentioned that the internet is going to take over the world.
Which it has.
Yeah.
You're not going to go stand in a banking queue anymore.
You're not going to book a flight ticket going to the flight center.
You can actually do it on the internet.
This disruptor is going to see these companies,
the likes of the Microsofts and the Ciscos, because the Ciscos are 2000 to
2002,
and not just 2002, and way beyond we know what the effect was of the internet.
But the share prices, Microsoft, on that stage the largest company in the world,
dropped by 51%.
General Electric, or actually Cisco Systems, the second largest company in the
world, connecting these, it dropped 76%.
And General Electric, which built the electric boxes for computers for us to use
the thing called
the internet, dropped 56%.
The three largest companies in the S&P 500 at that stage dropped way more than 15%.
And that's...
When I read this Palantir article, Citroën Research is a research company.
They just said, they came out, I think it was something that was, I can't remember
which,
it wasn't Bloomberg, but it came out,
brought out an article or research report reporting that Palantir can't be trailing
at 250
times P.E.
I mean, it just can't.
they feel that the share price has got to...
got a fair value of 40 Rand a share.
Now, just after yesterday's drop, it's still trading around about the $158 level.
So, I mean, and so there goes the...
Yeah, you see, it's very sad that I can only name drop the name that you've
already name dropped,
namely one David Shapiro.
But I had a conversation with him and I said, David, you can,
I'll show you a graph of the S&P 500 over the last 50 years.
or since inception, since the thing started, which was, I think, in the 1950s,
so 75 years, something like that.
And I will show you these big drops.
See these drops?
See these peaks?
That was because of this, and that was because of that.
Overblown markets, I said.
We've seen it all before.
David is 78 years old.
He's seen it all before, and yet he won't get out of his NVIDIA.
And I'm not being nasty about David.
He's saying, until otherwise advised, I'm going with it.
And that's it.
And then one day, like the musical chairs analogy that you made last week,
the music stops and someone gets someone gets messed up.
And it's usually the private investor because the market will fall dramatically.
And the problem is that there are far too many things that are pointing towards, as
somebody said,
a reappraisal of the stock market.
And we can go through it.
We can go through tariffs, potential stagflation, geopolitics, etc., etc.
It goes on.
And the market doesn't care.
Extraordinary.
We'll look back and say, why didn't we short that thing?
Why didn't we buy puts when they were so cheap?
It's a question of timing.
That's all.
It's always hindsight is an absolute perfect, perfect science.
And there's listeners out there that are saying that we are now, let's not throw
you under the bus here.
Scott, you are actually up a negative.
I mean, these companies are still quality companies.
I totally agree.
I mean, here we're sitting today, and NVIDIA is the largest company in the
world, but I think the second largest, yeah,
second largest is still Microsoft.
So, I mean, if David Shapiro, and again, I hate bringing in David because he's not
here.
We should actually bring him in.
No, it's much better talking behind his back.
Go on.
David, if you listen to this, and I know you will, I love you, man.
But no, I mean, David's argument is also 100% true.
He had, hypothetically, had Microsoft back in 2000.
And here we sit in 2025.
It's still the second largest company,
and it's still going to provide a super return over a 25-year period.
Yes, it struggled for the following two years.
And yes, it took about, well, I think eight nights.
eight to ten years to actually just break even again but that said it's still super
and it's quality companies and
in most cases will still be in existence when we sit here 25 years from now but yes
microsoft will yeah it is a
stalwart it'll always be there it'll go down with with the rest of them uh but the
ones that won't bounce back are the
ones that you should be looking at now and say to yourself is palantir going to be
there is it going to be able to recover after such a big
smash I mean, look at, for example, A dimension data in the old days when it
listed,
there was an off-market print of something like R110 a share.
Where did it end up, Scott?
Where did that end up?
I recall R2 and R15.
It went all the way to R115. I think it was on one stage.
It was well within the top 10, very close to one of the largest shares on the JSE.
And eventually when it delisted, it was R2 a share.
Yeah.
And that can happen to other companies.
That was an extreme example.
But yeah, the market does look as though it's a little bit complacent and it's
vulnerable to a shock.
And the shock could be stagflation.
We exchanged a couple of messages today via WhatsApp.
And it's an interesting story because that's the greatest enemy of the investor
is stagflation.
And that's after a depression or a really deep recession.
stagflation horrible in other words you've got prices going up and growth going down
so yeah
there's signs of it that's all i'm saying exactly but i mean i think back to today's
news i mean
stagflation is still i mean this is a conversation you and i've had for for
three years and it
feels like we we on this on this train i mean and just going clackety clack
clackety clack all the way way to stack
flash.
Nothing has convinced me that...
that we're not going to see it.
Nothing, nothing.
I mean, if you look at the gold price, and that is one of the largest reasons why I'm
such a gold bull.
I haven't been a gold bull all my life.
But I mean, this recent data, or let's call it the data of the past three years,
just showing I feel that we're going towards this.
Back to where we're sitting today.
I mean, we're seeing quite a big drop in international markets.
We'll touch on them individually today, but we've seen...
specifically from the US tech stocks, a major drop.
So two reasons for that.
Yeah, I think you're right.
There's sort of a nervousness suddenly about these AI stocks.
But also, I mean, we had this conversation exactly a week ago and then a week before
that.
So that conversation is interest rates.
Interest rates, which actually came out, I think, Just after the Fed kept...
interest rate unchanged, the Fed CME tool, the CME Fed tool,
went from a probability around about 60% that we'll see a rate cut at the
17th September, which is the next Fed meeting, and then gradually moved to about
80%
beginning of last week.
Wednesday, exactly a week ago, just before the PPI numbers came out,
it went up to 99.9%.
And you and I still have the conversation.
Are we going to see a 25 basis points or what?
Or 50.
Yeah, the 50.
Here we're sitting a week later and suddenly the market is getting seriously
nervous if we're going to see any great cut.
That is now only at 85%.
I'm going to say only,
I'm saying a tongue in the cheek because most statisticians and mathematicians will
wink at me now and say, well, 85%, come on, Scott, don't be a half empty glass.
That's still pretty much done and dusted.
Yes, I still believe we're going to see a done and dusted.
But suddenly my conversation on maybe a 0.5 would be better than a 0.25
with the probabilities dropping.
I don't know.
We'll see the Fed minutes later.
We'll also see the Jackson Hole minutes next time that we speak because all the
central bankers are
converging on Jackson Hole as they do annually.
And we'll hear from J-PAL and see what he's got to say.
And I think after that, there'll be much more clarity.
Let's look at some markets now, Scott, because they're starting to become
interesting.
Dollar Rand, fairly much unmoved on the South African inflation jump today.
We saw CPI going from 3% to 3.5% annually,
and that's quite a big move.
But Dollar Rand waiting for Jackson Hole, 1770.
The Euro-Rand is 2064, and the British pound against the Rand, 2383,
with the Euro-Dollar 116.60.
That's the Euro up 0.3%.
British pound against the US dollar is 134.65.
The pound up 0.4% commodities.
Gold price doing nicely, thank you very much.
33.44, up 0.9%, we'll call it.
The platinum price, 1.75% higher, at $13.36 an ounce.
Palladium flat at 11.12.
Now, if we have a look at the oil price, it's had a bit of a jump today.
It's messing around the 65 to 67 area for a while now.
Brent crude oil, $66.48, up just over 1%.
And West Texas crude, $62.40, also just about a percent higher.
Okay, other things of interest.
The South African 10-year bond yield.
It has gone up a little bit, but not much, 9.655%.
The US 10-year was in the 4.30s yesterday, 4.28% now.
S&P 500, down a percent now,
63.70 on the September futures.
Let's have a look at the Bitcoin price, a two-month low at the moment.
It was anyway.
It's rallied a bit.
It's up slightly to just below 114,000, 113,941.
Where's the NASDAQ, please, Skulk?
As we sit here, as I mentioned, the NASDAQ is currently down 1.5%.
So it's fighting with that 21,000 mark.
So interesting.
Sharp pullback.
I mean, it's really, really a recent sharp pullback in the NASDAQ.
So just, yeah, watch this space.
Yeah, and watch the VIX as well.
Have you been watching the VIX?
It's starting to tick up, isn't it?
Correct.
That's usually a great indicator as well.
Okay, good.
What else have we got?
Let's have a look at the JSC and the movers on the JSC.
Just quickly before we look at today's stuff, we've had results out from the
banking sector.
And when you look at them, you take the traditional banks and you shunt them
aside.
And then on the other side, you've got Capitec.
It's a no-brainer, isn't it?
Or has been.
Yeah, it's one of those things where you also pull up a graph over the past.
20 years and keep on convincing yourself it was a no-brainer all the time.
But it's just a phenomenal story.
It's a phenomenal South African story.
It really is.
It's been phenomenal.
Hopefully their forays overseas don't scupper that great story, as it has done
for certain other companies, which we won't mention.
But I'm sure that there won't be any hiccups with Capitec. They're so well
managed.
I've got Tungela.
Up 4%.
Had a horrible time when its results came out, but now a little bit better.
Up nearly 4%.
British American Tobacco up 2.2%.
Investec up just over 2.5%.
Northern up 2.4%.
Investec Limited up just over 2%.
On the downside, the property company Mass, M-A-S, down 6%.
Kumba Iron ore down nearly 5%.
South 32 down 2.75%.
Life Healthcare 2.75%.
Weaker after their numbers.
And Woolies.
Down 2.5%.
Any ex-divs there, Skalk?
No, no, not that I can see.
So this is all market movements.
Okay.
In that case, just give me the closing indices on the JSC, if you would.
So the JSC today closed at 101,056 points.
It's fighting to keep itself above the 100,000.
Luckily, not a big drop in the market.
It's only 0.14%, but as we see the U.S. trading lower and lower.
this could be interesting day for tomorrow the resource index was down 27 basis
points industrial index 15 basis points
and the financial index that was down only one basis point so remain pretty much
unturned you mentioned the sa property or
property some of the property stocks uh which was um
i want to mention something something clicked when you said property stuff when
you talked about companies that's struggling abroad but
because my property index That had a phenomenal day today, 0.76 up today.
When you look at the value traded in the market, market was traded at 21 billion,
so still not a bad day.
We haven't seen a, let's call it, below 20 billion day for any day the past week.
So solid, solid trading.
Okay, and next week, if we have the time, I want you to remind me to talk about why
Trump's policies are leaning more towards China than you might think.
I mean, not towards China, embracing China, but actually embracing some of
China's policies.
And I'll tell you why next Wednesday, Skulk.
But thank you very much for your time, as always.
Skulk Lowe is a portfolio manager at PSG Wealth, Old Oak in Cape Town.
And that was the 5 o'clock shadow.
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