WORLDVIEW: This week’s big bond issues make us even more bullish about Amazon, Tesla

There a was a time South African investors cared less about what happened to stocks in global markets. No longer. Progressive relaxations in exchange controls triggered a different line of thought. In recent times, the impact of Zumanomics has provided fresh stimulus..My own global stocks journey only began three years ago. It came after Standard Bank Online stockbrokers asked us to work on something to publicise its new Webtrader platform. Perhaps naively, I suggested we create a portfolio of stocks and provide a monthly update on their news flow..After some months of research we opted for a conservative portfolio with half invested in the S&P500 Index Fund and a close proxy, Berkshire Hathaway. Having this solid base allowed me to confidently apply Warren Buffett's tried and tested approach to some more stock picks. And to add a few potentially exponential companies whose models I understood because of my own hands on experience in the digital business..___STEADY_PAYWALL___.Two of those original holdings – Amazon and Alphabet – have performed beyond our wildest dreams, ensuring the overall portfolio has easily beaten the US market. With help from the weaker Rand and the belated addition of Tesla and Facebook, after three years the portfolio's annualised return for South Africans is over 30%..I've kept the pressure off by reiterating the portfolio is for the long-term. In Buffett style, the intended average term for purchases is "forever". But that hasn't stopped us moving out of somewhere the prospects have dimmed (Novo Nordisk, IBM), and by dropping the "safe" index and Berkshire component when new opportunities showed themselves..In recent weeks, a growing number of experts have been calling the end of what has become the stock market's second longest bull market in history (2009 – 2017). Yesterday's FT dedicated a full page to their warnings, highlighting a graph tracking US average price:earnings ratios back to 1881. This shows that only in 1929 (briefly) and in 1999/2000 American stocks were trading above the current 30 times annual earnings..This kind of analysis misses the most important fact. Something South African investors should easily absorb: that because of their divergent prospects, it makes no sense to lump all equities together in a single average. The Fourth Industrial Revolution means the US now has two very different "markets" in one – the disrupters and the disruptees. Just like the JSE where investors know there is one path for resources stocks and an often completely different trajectory for financials and industrials..In the past week, two of the flagbearers of the "disrupter" camp gave us a very clear signal that they have a lot of road left..Amazon tapped the bond market for $16bn, the fourth biggest fund raise of the year so far. Tesla used a similar instrument to raise $1.8bn, its first foray into the debt markets. The fact that both these companies decided to raise debt rather than issue new shares tells us their gifted founders – Jeff Bezos and Elon Musk – don't rate their equity as being excessively priced..I'm happy to bet on the view of the world's two best entrepreneurs long before falling for the prognostications of those paid to generate trade in stocks. And that's why we won't be listening to Wall Street's finest and "taking profits". Despite the respective gains of 265% (over three years) and 63% (in one).

WORLDVIEW: This week’s big bond issues make us even more bullish about Amazon, Tesla

Related Stories

Meet Tshepo Mahloele – Big Capitec shareholder, ABSIP’s “CEO of the Decade” now accused by Holomisa as kingpin of corrupt network

PREMIUM: Making of a great editor – the George Palmer playbook

Premium – BizNews global portfolio: ASML joins – so does Adobe as Bull takes hold again

Alec Hogg: Helen Zille predicts SA choice will be DA or EFF