By: Doug Fogel — July 21, 2020
There We Were - Surrounded By Elephants...
There, 30 yards away, were 10 elephants slowly walking north.
As my two friends and I marveled at the sight, another vehicle roared up toward us.
We waved excitedly to the people inside and pointed to the elephants.
“That’s nothing, there’s about a hundred of them back there,” the driver said, motioning behind him.
A hundred elephants!
This, of course, we had to see, so we sped off down the road in our Land Rover.
A few minutes later, there they were – legions of elephants, at least 150 of them… with more lumbering in.
Their destination was a giant man-made water tank, which dozens of elephants were now congregating around, dipping their massive trunks over the tank wall for a drink.
Others stood behind them, patiently waiting their turns.
This majestic sight was happening at Kruger National Park in South Africa, a mammoth animal preserve about the size of Israel.
My three days at the park were a highlight of a one-month trip to this fascinating country, as were the 10 days I spent sightseeing and wine tasting around Cape Town.
But the most interesting experience I had in South Africa was a night my friends and I spent on a secluded ranch about three hours west of Johannesburg.
Our host was the ranch owner, Dennis, a burly member of a South African chapter of the Hells Angels.
He was hosting a braai (rhymes with "dry"), which is essentially the South African version of a barbecue.
There are two main differences between a braai and a barbecue. For one, wood is used instead of coals. And the fire remains lit long after the food’s been cooked so people can socialize around it.
Around our braai, Dennis kept us entertained with fascinating stories about his property and the surrounding area.
He warned there were plenty of snakes here, including the dreaded black mamba – a snake so deadly you can die from a bite within 30 minutes.
There were also five species of poisonous spiders and scorpions to watch out for (we were told to never put shoes on without shaking them out first).
And there was a resident baboon Dennis was on a mission to kill, as it liked to sneak onto his property and raid his fruit trees.
My friends and I weren’t the only guests enjoying his entertaining stories.
There were also three women who had worked in various capacities for the South African government.
They told tales of their own, mainly about the many challenging issues facing their country.
The biggest, they said, was rolling blackouts – which were common throughout South Africa when I was there.
They said one reason for these power outages was years of mismanagement and corruption in the state-owned utility, Eskom.
They blamed the ruling government, the African National Congress (ANC), for much of this. They said its leaders kept siphoning money from the utility that should have been used for maintenance and equipment upgrades.
Another reason they cited was that two new coal plants were behind schedule and billions of dollars over budget.
As if all that weren’t bad enough, they said efforts to maintain the country’s power grid were continually sabotaged.
The culprits were people who kept stealing copper cables from electric poles, power lines, substations and utility storage yards.
Those thefts highlight what I see as South Africa’s most obvious problem – crime.
At busy intersections in Johannesburg, Cape Town and other cities, you’ll find scores of ragged people hawking trinkets, toys and newspapers to motorists as they wait for the lights to change.
When a red light traps you in one of these situations, you have to make sure nothing of value is in view from the outside, as stories of “smash and grab” thefts happen all the time at busy intersections.
House burglaries are also common – virtually every home I saw was surrounded by barbed wire and electric fences.
And at South African airports, you’ll find people waiting in long lines to have their luggage shrink-wrapped in cellophane in order to deter theft from unscrupulous baggage handlers.
Of course, as is the case throughout the world, the root of most of this crime is pervasive impoverishment.
According to Statistics South Africa, 55.5% of the population lives in poverty.
Unfortunately, corruption, crime and poverty aren’t the only problems facing the country. It’s also plagued by water shortages, rampant inflation and excessive immigration of refugees from other parts of Africa.
However, it’s not all doom and gloom, as the nation features a highly developed economy and advanced infrastructure.
It’s also one of the world’s largest exporters of gold, platinum and other natural resources.
And it’s easily the richest country in Africa, with established financial, legal and communications sectors, as well as the largest stock exchange in Africa, the Johannesburg Stock Exchange (JSE).
So do the country’s positives outweigh its negatives from an investment point of view?
In the short-term, I would say yes.
Right now the iShares MSCI South Africa (NYSE Arca: EZA) is on a steady uptrend, which began at the market bottom on March 23rd.
On that day EZA closed at $24.48. But by July 21st it had risen to $39.93 – a 61.3% gain in just under four months.
I think it will continue that pace and easily breach it's 2020 high of $49.48
If you agree with this hypothesis, you could simply buy the security outright.
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I’ll close this missive by saying that if you ever have the chance to go on a safari, you owe it to yourself to do so.
The three days I spent at Kruger National Park was something I’ll never forget.
Anyway, that’s it for this week.
To your financial health,
Editor True Market Insiders