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Simon’s weekly wrap: Finding winners in the bear market

This week MoneywebNOW looked at inflation predictions, finding initially-mispriced winners, tech and consumer discretionary stock opportunities, slower-growing ecommerce, and Karooooo’s ambitions.
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I chatted with Stanlib chief economist Keven Lings about the base effect and how it works with inflation. He points out that locally and in the US petrol (gas as the US calls it) was up 50% in the June inflation numbers. For inflation to remain at current levels we need petrol to again increase 50%, whereas we have seen a modest decrease. This applies across all different products in the inflation basket and, while it’ll be slow, he is confident local inflation will be well back within the middle of the target range by the end of next year. (Read transcript)

Peregrine Capital CEO Jacques Conradie spoke about finding huge winners, especially from corporate actions that the market initially misprices. Thungela Resources is such one example: when it listed around R20, all the talk was about how bad coal was as an investment. The stock now trades some 15x higher and many of us missed this amazing run. (Read transcript)

Flagship Asset Management portfolio manager Kyle Wales was on the show talking about tech and consumer discretionary stocks as a great opportunity now. He’s not saying that they won’t go lower, nobody knows that. But he is confident that the current valuations are very attractive and worth starting to buy for great returns in the years ahead. (Read transcript)

Shopify CEO Tobias Lütke’s letter to staff announcing that 10% of them would be laid off also included a chart on the growth in online retail. During the hard lockdowns it surged, and the general view was that the trend would now reset at a higher level, but it has instead reverted to the mean of around 14% growth over year. This is still a great growth rate, but online retailers will experience some pain as they expanded during the pandemic and now have to pull back this expansion. (Read transcript)

Also this week:

Karooooo CEO and founder Zak Calisto on flourishing post-Covid. (Read transcript)

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Hokus pokus. Donr base effect me, give me basket numbers per segment of the population.

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