Lessons from the old “two-tier” JSE get applied pretty well on Wall Street

By Alec Hogg

Preparing yesterday’s investment webinar for Biznews Premium subscribers it struck me that South Africans are better positioned than most to understand the two-tier stock market which has developed in the USA. Because for decades, the JSE was actually two “markets” in one with these streams often moving in opposite directions.

Until fairly recently there was a near even split on the JSE between weightings of resources stocks and financial/industrial counters. That’s changed with the decline in mining and the surge, in particular, of Naspers (which on its own now accounts for almost quarter of the JSE index).

But lessons from the JSE’s past can be applied to modern day Wall Street where the value of “exponential” disruptors are mushrooming while prices of old economy stocks struggle. We see this reflected in the Biznews Exponential bundle which we launched in partnership with Easy Equities in late November.

In those four months, our tightly focused portfolio has gained 23%. Our new age stocks like Amazon, Alphabet, Apple and Microsoft pulled the overall S&P500 index 9% higher, while share prices of “legacy” companies have done very little. So it’s pretty obvious where investors should be focusing their attention. And how, as with the JSE of old, they should not abdicate by simply “buying the market”.

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