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A minimum wage for South Africa

I was happy to see the announcement by Deputy President, Cyril Ramaphosa, for a minimum wage in South Africa.  Minimum wages around the world are not that popular, but my honest opinion is that it is not a bad idea.  I understand that the counter-argument insofar as many domestic workers are going to be concerned is that people will say they cannot afford them, but honestly, if they cannot afford to pay R3,500 a month to hire somebody to work for them, then I believe that they can do their cleaning and house hold work themselves.  

R3,500 a month is a very small amount in international terms at approximately $261 a month - which will only be introduced in 2018.  I think it is the way to go and I think it is a fantastic decision.  I think that most people will find a way to be able to stretch their finances and afford that rate which works out at a minimum of R20 per hour.

Posted by Michael de Broglio on Monday 27-Feb-17   |  Permalink   |  0 Comments Comments Share on Facebook   Tweet It
The most popular running shoe, amongst runners is ...

My Nike shoes are fairly worn out, so I have decided that I need to go and get some new running shoes.  I struggled quite a bit with my right Achilles tendon as well as with shin splints and so I am planning to go to a running shop that has actual runners in their staff to assess what shoes I should buy.  I did a little bit of research and came across an article in the November 2016 edition of Fortune magazine which did a survey of runners who actually run marathons and I was surprised to discover that Nike ranks only fourth in popularity amongst those who would know better than most people as to what is a good running shoe.  

Nike in fact only has 9% of the runners market and is currently being comfortably beaten by Brooks, which is a leading running shoe amongst runners, followed by Saucony and then Asics.  I am a big fan of the wisdom of crowds, and while we don’t always get it right, it is the guys who are currently running 42.2km on weekends who will know best, and they are choosing three brands ahead of Nike.  I will certainly make sure I choose between those three brands.

Posted by Michael de Broglio on Friday 24-Feb-17   |  Permalink   |  21 Comments Comments Share on Facebook   Tweet It
Fitbit share price struggles

I have long been a fan of the various exercise bands that count steps and monitor your sleep, but it is interesting to see how each one of them struggles with reliability.  I gave up on the Jawbone band, named Up, because of its reliability issues, and my wife’s Fitbit recently broke.  The Fitbit share price just over a year ago was $33 and now it is at approximately $8 – which shows you that there are some concerns in the market and with investors with the company’s future.  I note that Amazon.com released a press release detailing its December sales and highlighting the sales of a Garmin smart watch.  That was taken as a negative, because Fitbit was not named by Amazon and of course the other big challenge to Fitbit and to the Up band is the fact that the Apple watch is now competing with them and most people would prefer not to have Apple as a competitor of theirs!

Posted by Michael de Broglio on Wednesday 22-Feb-17   |  Permalink   |  26 Comments Comments Share on Facebook   Tweet It
Increasing VAT would be best

As I have written many times before, with the number of Government employees that we have and the grants, compared to the income coming in, then something has to give.  That probably means that we as taxpayers will be the something – we will have to give more money to the Government.  We need to give more money to the government for all of the social grants, the massive bureaucracy we have built, not to mention Nkandla, corruption, etc.

They are really beginning to talk about this year’s budget and where we will see those increases, but to me, the obvious answer has already been suggested by Judge Dennis Davis who was asked to put together a commission for this, and did so.  He pointed out that the average VAT rate around the world is 15,5% and in that regard South Africa is charging less than the average VAT rate at 14%.  The VAT rate in the UK is 20%.  VAT or Value Added Tax is the most effective way of collecting tax and minimises tax avoidance.  It taxes consumption, and people can minimise their exposure to VAT by buying less, but if income tax rates do go up, there is no hiding for anybody who earns above the threshold.  A lot of people are in favour of all sorts of benefits, not to mention the CCMA – well, over the next few years they are now going to really start paying for them.

Posted by Michael de Broglio on Monday 20-Feb-17   |  Permalink   |  30 Comments Comments Share on Facebook   Tweet It
Sugar damages your teeth

While reading the book, “The Case Against Sugar” by Gary Taubes, I came across an interesting part that dealt with the damage that sugar does to teeth.  Apparently, those who cannot afford sugar or live in areas where there is little access to sugar, generally have far better teeth than those in more developed economies where sugar is more available.  Essentially, tooth decay is caused by bacteria living in the mouth, but when we eat sugar that improves the environment for the bacteria to live and work in.  In other words, every time you have sugar, or anything with sugar in it, you allow your teeth to come under attack again and that is why dentists often recommend that you brush your teeth straight after a meal – of course that is not as good as not having sugar in the first place, but any time you eat or drink something with sugar in your teeth are going to come under attack again.  It is the kind of advice one needs to learn now and benefit from even if our parents did not.  

The Sugar Association apparently acknowledged its role in this and internal documents and encouraged their members to find other ways to control tooth decay other than by restricting carbohydrate intake - by which they are referring to refined sugar.  It is important to realise that the sugar industry actually has funded and worked on campaigns to make sure that we do not all know this, because telling us to give up sugar and to stop eating things with sugar in it will obviously be the end of business for those that they represent.

Posted by Michael de Broglio on Friday 17-Feb-17   |  Permalink   |  35 Comments Comments Share on Facebook   Tweet It
Golfers get better

For many years everyone thought it was not possible for people to break 60 on a golf course.  The professionals are now starting to score 59 once or twice a year and we’ve already had one 58 by Jim Furyk.  This gets sensationalised in the media, but the truth is most of those better scores, and they are still exceptional, are scored on easier courses.  In other words, the same courses every year throw up the freakishly low scores.

Having said that however, there is no doubt that this generation of golfers is better than previous generations and I think that golf has become more of an athletic sport.  The men and ladies playing golf these days are spending a lot more time on strengthening their core which allows them to hit the ball far further and more consistently and so, gone are the days of fat guys, waddling all over a golf course smoking cigars and winning tournaments – the average champion these days is probably 22 or 23, lean and mean and very strong. The taller the guys are and the stronger they are, the further they hit the ball and although the older players still win tournaments now and then, we are seeing a lot more tournaments being won by players in their young twenties now than ever before.

It just shows you that even sports which people do not necessarily associate with athleticism, are changing due to far more science being used, not only in terms of how they hit the ball and seeing how the ball spins with each club and which ball does what, but in terms of the science of training for the sport.  Just about all top golfers would have their own performance trainer and would be doing very specific strength exercises for golf and would be ensuring that their core, from their upper thighs to their lower stomach, is one of the strongest parts of their body and can deliver the stability and strength that a golf swing needs.  

We will continue to see this in all sports, although one would think that to a large extent much of the improvement in swimming and athletics has already come, but no doubt times will continue to slowly improve, as will scores on the golf course.  In golf of course, technology and equipment makes a difference, but that is also no different than swimming – with all sorts of high-tech swimming costumes, etc now that reduce drag in the water, etc.  

Posted by Michael de Broglio on Wednesday 15-Feb-17   |  Permalink   |  33 Comments Comments Share on Facebook   Tweet It
Increasing that Road Accident Fund contribution

I do hope that the Minister of Finance gives some thought to increasing the contribution to the Road Accident Fund later this year.  At the moment, on every litre of diesel and petrol that is sold an amount of R1,54 goes to the Road Accident Fund.   As anyone knows, from the delays with payment by the Road Accident Fund for people waiting for payment, that is not enough.  In some respects, the problem has been caused by the Road Accident Fund who has gone out of their way to settle cases far faster now than ever before, and encouraged people to approach them to get their cases settled directly, have obviously exacerbated the financial problems.  

It did not help last year that no increase was given at all, even though the courts would typically increase most awards, if not exactly by inflation, but having regard to inflation, so that has allowed the Road Accident Fund to fall further behind in that regard.  

There is no doubt that in future, as the impact of the changes that happened on 1 August 2008 play a bigger role, the Road Accident Fund will pay out less and less, but I still believe it needs a lump sum injection plus approximately 20c to 30c per litre of petrol and diesel or alternatively, if no lump sum contribution is given to them, at least 50c per litre.  It is actually the one thing that one does get some value out of, and one forgets that the additional taxes that are placed on petrol by the government total R2,85 – and at least with the Road Accident Fund we know exactly what they are getting!

Posted by Michael de Broglio on Monday 13-Feb-17   |  Permalink   |  33 Comments Comments Share on Facebook   Tweet It
Petrol price – a prediction

I am treading on dangerous ground in this blog because 50% of all economists are proved to be wrong each year, if not more, with their predictions and I am about to make one also.  I note in particular, when it comes to predicting how the Rand will do, most of the economists in South Africa get it wrong every single year – sometimes dramatically.  It is amazing that one can get paid a fancy salary each month for making predictions and that you don’t seem to lose your job when you get it all totally wrong! 

I do think however that it is fairly safe to predict that the price of petrol in South Africa will not rise much further than where it is right now, as long as, and there is one exception, the Rand remains relatively stable.  One must remember that for much of 2014 petrol was more than R14,00 per litre, touching R14,39 a litre in April 2014 and so it is much lower now then, than we were used to a few years ago.

The reason I say that is although for many years we have all be told about how oil production is going to run out, that peak oil would be achieved in about 2010/2015 and after that the world’s oil will start to run out – and all of that has turned out to be nonsense.  More and more oil has been discovered all around the world and some companies do not care very much about the environment and are happy to allow mining and drilling for it and shale gas in America has also reduced their dependence on the Middle East for oil.  

Another threat that the oil companies face, if the petrol price, as we call it in South Africa, or gas price, as they call it in other countries, goes up, there are so many car companies that have been producing cars that use petrol more effectively and who would love to see the price of oil go up just so that they can sell more of their hybrid models and their electric cars.  In fact, their sales are being hampered by the oil price being so far below some of its previous highs.  

People in South Africa don’t really appreciate that the price we are paying relates far more to taxes and to a weakened currency than it does to actual oil prices which are, by and large, extremely low.
If you disagree with me and think that the petrol price will decrease or be much higher this year, then let us have your prediction here, below this blog, as to what the petrol price will be towards the end of 2017?  

  • The petrol price, at the time this blog was written, for unleaded 93 petrol, which is petrol I’ve always used, was R13,09.

 

Posted by Michael de Broglio on Thursday 09-Feb-17   |  Permalink   |  39 Comments Comments Share on Facebook   Tweet It
Shares I like: Tesla, Starbucks and Disney

I did promise to write a bit more about some of the shares that I own, or follow, and for many years I thought there have been more value in international markets than in South African markets.  I enjoy discussing shares, not because it is a field of my expertise – in fact, you should get your own investment advisor to advise you – but because I enjoy following what is happening with a company, what companies are going up or down, whether it is in South Africa, or it is overseas.

For example, I have always believed in Starbucks – when I have been overseas I have never ceased to be amazed at the queues for it, and although one has to have some concerns about a product that is selling so much sugar to people, at the end of the day people just don’t seem to be able to control themselves when it comes to expensive caffeine and sugar mixed together with flavours!  

I am a huge believer in Tesla motors and I believe that that is going to be one of my shares of the future, but the company has a huge number of detractors and it might well be that they fall behind with production of the cheaper model that they are bringing out, and the share is hammered later.  Tesla has also obviously been negatively impacted by the fact that gas prices around the world, and not so much in South Africa, have really gone down, and with the threat of shale gas as well as more efficient use of gas, one does not see the oil price ever really hitting the same peaks again – because if they do, those hybrid and electrical cars will then take over.  The very fact that gas, or petrol as we call it in South Africa, is so cheap overseas has stopped people moving to electrical cars.  

Disney is a share I bought after they acquired the Star Wars franchise believing that that is going to be a huge hit for them and for their theme parks.  I have been to theme parks, I don’t particularly find them exciting, although in fairness I am not a child and maybe I have always been rather boring in what I like or read about or following!  It might be boring to follow financial news, but it is certainly profitable and it has helped me invest well, but I accept that I am probably not the best judge at how much fun a theme park can be.  I don’t think there is tremendous value in visiting a Disney Resort at $100 plus per child, but tens of thousands flock to Disney Resorts around the world, and particularly in Orlando, every single day of the year and not just during holiday season and so, I have invested in that as well.

Lastly, I have invested in Amazon when its price was probably one-sixth of what it is now and after I have doubled my money I eventually sold my Amazon shares.  I don’t think however that Amazon is finished and so I have recently re-invested in Amazon, because not only is it going to become the biggest retailer in the world, if it is not already, but it is absolutely huge in cloud computing and provides the backbone of many other Stock Exchange companies, particularly those that provide videos to the public to watch via their TV’s – such as Netflix.

I would be fascinated to hear your views on any of the above companies as well as what companies you think, particularly in South Africa, are doing very well?

Posted by Michael de Broglio on Tuesday 07-Feb-17   |  Permalink   |  32 Comments Comments Share on Facebook   Tweet It
Can I bet on your horse?

This is one of the questions that drive me mad the most.  I think I have written about it to a certain extent before, but people who are not in racing generally only ask you if they can have a bet on your horse when it is in a big race, where statistically it does not have much of a chance and is at big odds – again indicating that it does not have much of a chance.  Baritone was 75/1 in the SunMet, precisely because most experts did not think he had much of a chance.  

I knew that if they went fast, which they don’t usually do in the Cape, he would come stone last and said as much.  His only chance was if they went slow – which they usually do, and it turned into a sprint in which case he would have a better chance as he can finish fast.  So, when the race began and they went fast I knew long before they reached the final straight that he had zero chance of even running a place, and in fact the only surprise to me is that he actually managed to beat three of the 15 horses home because in a fast run race he really and truly should have come last because there is reason to believe he does not see out a hard 2000 metres.  

The time to bet in racing is early in a horse’s career when it is showing potential and it is running against horses that are not as good.  Often then the profit will also be much smaller – it might be 50% or 80%, but it will be at those odds because the horse is far more likely to win and the people who have to pay you out are not fools and they are not going to just go and make their money by giving ridiculous odds!

I like to promote horseracing and encourage people to have the fun of a small bet, but truthfully the only time not to bet it is the time when most people actually do bet – on the big day when they are often fairly surprising results, particularly if you are talking about Greyville Racecourse (where the July is run) and where top horses from all over the country are running against each other for the first time and you don’t necessarily have form to be able to compare each one to the other.

When I have a bet I look out for value and I look out for a horse that I believe is going to win. So, for example, I believe that my horse Sabina’s Dynasty will win her next race out – her last run was sensational when coming from the back of the field to come second.  I also have a new horse who has not run yet, called Made to Conquer who I am told is very good and while he probably will not win the first time out, he is going to win either his second or third race and that is when I will be looking to have a bet on him.  In most of those cases one is lucky if the odds double your money – but I would rather have a winning bet and double my money than have a bet on Baritone at 75/1 (I never put a single cent on him) when I know that horseracing is not the same as a roulette table and he does not have the realistic chance in the race.

Posted by Michael de Broglio on Friday 03-Feb-17   |  Permalink   |  35 Comments Comments Share on Facebook   Tweet It
Possible replacement of Pravin Gordhan

I was disturbed to see that President Zuma continues, if newspaper reports are correct, to try and plot to remove our Minister of Finance, Pravin Gordhan.  We already saw he did to the economy, the Rand, inflation and of course the petrol price the last time he replaced a Minister of Finance without any real justification.  South Africa really cannot afford these silly games and one would wish that our President would start understanding this, as well as the devastating effect that increasing petrol prices has on the cost of basic food stuffs, which after all have to be transported back and forth in petrol-driven cars and the impact that inflation, etc has especially on the poor. When the price of maize and petrol goes up it does not affect rich people at all – it affects the middle class and especially the poor.  Replacing a Minister of Finance of course affects the wealthy in terms of those who have not diversified their money into foreign currencies – but most wealthy people will have done that in any event and hedged themselves – it again affects the middle class and most importantly the poor.  These Cabinet games our President is playing are expensive and to hear they are apparently considering bringing in Brian Molefe into Parliament, so that he can then be appointed as the Minister of Finance is disturbing.  

This is after all a man who, according to the report of Public Protector Thuli Madonsela, had very close ties to the Gupta’s.  He phoned Ajay Gupta 58 times between August 2015 and March 2016 and his cell phone records showed that he was in the Gupta’s neighbourhood at least 19 times between August and November 2015.  His only answer to that was to confirm that his cell phone does show that he was in the area of a man he has already spoken to on the telephone 58 times, but to try and suggest that he had in fact been at a shebeen – while refusing to say he had in fact been at a shebeen!   To quote him, “There is a shebeen there, two streets away from the Gupta’s.  I will not admit or deny that I have gone to the shebeen, but there is a shebeen there.”  

From a lawyer’s point of view that is just an absolute load of nonsense.  If somebody is trying to divert attention away from where he has been, but is scared that he will be exposed later as a liar if he says he was at the shebeen, so all he does, in almost a Trump-style fashion, is muddy the waters a little bit to announce that there is a shebeen in the area and then to say but he is not saying that he has been to the shebeen or that he has not been to the shebeen.  Damn right, because you were obviously visiting the Gupta’s!  Do we really need a new Minister of Finance and will we really go and appoint somebody who had to resign from Eskom as a result of his close ties with the Gupta’s to an even more important position, that of the Finance Minister of South Africa?  Can South Africa afford that now?

Posted by Michael de Broglio on Wednesday 01-Feb-17   |  Permalink   |  74 Comments Comments Share on Facebook   Tweet It
Buying shares  Google, Tesla and Disney

Evidence shows that shares, over the last 100 years or so, have pretty much out-performed most other investments.  Over the last 8 years they have been a major winner and of course, once something has become a major winner it is often a bit late to enter the market at that time.  People who have taken a conservative investment policy over the last 4 or 5 years, hoping for the market to come down, have been left behind and the best place to have had your money in recent years has been in an index fund.  Having your money in an index fund is not always exciting, and I like to choose some of my shares myself.  I of course have my losers, the biggest of which at the moment is a company by the name of Allergan.  You no doubt are hearing that name and saying no wonder he is doing badly, I’ve never heard of it, but one of its products is a product which people never see coming up with new uses for and which is used by a large number of people, particularly ladies over the age of 35 and that is Botox.  Previously, it has been a big winner for me, doubling from the original price I bought it at, but in the last 6 months it has slid quite some way.  

My biggest winner of my life so far, and which continues to do well, but not at the initial levels, has been Google.  I have always believed in their model, and I was probably the first attorney in South Africa who did advertise on Google.  I bought the shares at that time assuming that if my competitors did not take out adverts, I would score on the advertising side and if they did copy me and eventually follow me, then as Google got more business, I would make a lot of money out of the shares.  I just thought for me, and I understand there is no investing “science” behind what I am saying, I was going to win one way or the other and I certainly have when it comes to Google, particularly based on the fact that my initial investments in Google when the Rand was at R8,12 to the Dollar and then again a year later, somewhat unbelievably, at R7,20 to the Dollar.  During that time the share price has actually multiplied by four and obviously on the currency alone it has almost doubled.  I will try and write about the other shares I believe in at a later stage, and they include Starbucks, Tesla and Disney.

Posted by Michael de Broglio on Thursday 26-Jan-17   |  Permalink   |  29 Comments Comments Share on Facebook   Tweet It

Johannesburg based attorney specializing in personal injury matters including Road Accident Fund claims and medical negligence matters. My interests include golf, reading and the internet and the way it is constantly developing. I have a passion for life and a desire for less stress!
Have you been injured in a motor accident?
Recent Settlements
Lumbar spine compression fractures R2 500 000.00
Severe hip fracture requiring total hip replacements R3 305 000.00
Head injury with disfiguring facial scaring of a young female R4 000 000.00
Whiplash and compression fracture of the spine R4 000 000.00
Broken Femora R1 914 416.00
Broken Femur and Patella R770 881.15
Loss of Support for two minor children R2 649 968.00
Fracture of the right Humerus, fracture of the pubi rami, abdominal injuries, head injury R4 613 352.95
Fracture of the right femur, Fracture of the right tibia-fibula R1 200 000.00
Broken Jaw, Right Shoulder Injury, Mild head injury R1 100 000.00
Degloving injuries to the hips, legs and ankle R877 773.00
Head injury R 2 734 295.12
Fractured pelvis R1 355 881.53
Damaged tendons in left arm R679 688.03
Fractured left hand R692 164.48
Amputated right lower leg with loss of income R3 921 000.00
Fractured left foot R600 000.00
Head injury and multiple facial fractures R5 000 000.00
Head injury, compound fracture right femur, right tib and fib fracture, and injury to the spleen R4 529 672.06
Head injury, multiple facial fractures, collapsed lung and a fracture to the right frontal bone R2 890 592.77
Loss of support R5 144 000.00

 


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