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Simon’s weekly wrap: Bubbles or opportunities?

This week MoneywebNOW looked at whether Naspers/Prosus has unlocked value; market bubble fears; bitcoin’s trajectory; investing in gold; and more.

Naspers continues to dominate the JSE is terms of its size, but its discount to Hong Kong-listed Tencent has long been a concern. Back in 2019 the company spun off Prosus into a European listing in an attempt to close that discount, but did it work? Schalk Louw, portfolio manager at PSG Old Oak, ran the numbers and while Naspers/Prosus have done very well the discount has actually widened, leaving the question of what can they do to reduce that discount?

One of the big debates happening in markets right now is whether or not the market is in a bubble. I spoke with Nishlen Govender from Citadel and he agrees that parts of the market, especially in the US, are looking like a bubble. However, earnings are actually very supportive of the valuations. He reminds us that the economy is not the stock market and, while 2020 was tough for the global economy, certain sectors of the market really benefitted from lockdowns.

The big crypto story this week was the news that Elon Musk and Tesla had put $1.5 billion (about 10% of Tesla’s cash) into Bitcoin. This sent the cryptocurrency to record highs at over $48 000 and is surely a defining moment for Bitcoin? I spoke with Moneyweb contributor Ciaran Ryan about the move and whether it’s a good idea for a corporate. We also touched on the energy usage concerns and whether this is a real issue or just a red herring.

Gold had a great 2020 as it traded above $2 000 but as the vaccine gets rolled out the yellow metal has come under pressure. I spoke with small- and mid-cap analyst Keith McLachlan about his preferred gold stock and whether one should continue to hold gold miners in a portfolio, even as the short-term future for gold looks less shiny.

COMMENTS   1

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1. Markets are topping out when US markets say so. All ships will ride lower. Presently the 5th Cycle is mature enough to do exactly that. A supercycle correction is very overdue.
2. Bitcoin looks to be topping Primary [3], target $29k.
3. Gold is most likely entering Intermediate (3) of Primary [5] of Cycle V of Supecycle (I).
4. Naspers and Tencent are like leaves in Autumn.

End of comments.

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