Coffee as the thin edge

Pick n Pay is starting to gain some useful insights into customer behaviour and purchasing decisions at different stores. They’re using coffee as a key product to better understand who buys what, where and when.  They’re tossing out (more likely de-emphaszing) LSMs as a method of categorising customers and moving to more sophisticated measures (including […]

Implied Pension Return Assumptions and the Equity Risk Premium

When companies value pension obligations and required contribution rates, they make assumptions about the expected future investment returns. (Accounting standards require market-based rates reflecting fixed interest returns, but that’s a separate point). So what assumptions are pension funds making? The WSJ has an interesting article showing that the average US pension fund is assuming future […]

Lower interconnect not the promised panacea

Decreasing interconnect fees was supposed to lower telecoms costs, promote competition and create world peace. It’s done none of these because the logic underlying it was flawed. Analysts focused on interconnect as an expense, happily ignoring the revenue side (since it was a fee paid to another company within the industry). Never has a telecoms […]

Too Small To Succeed

According to a Fin24 story this morning, the FSB is probing smaller unit trusts. The economics of a fund manager depends entirely on growing funds under management so that revenues (based on assets under management) grow to be larger than costs (significantly fixed and at most semi-variable). Details of performance fees and the second order […]

Property investment – the value of data over opinions

Lightstone have a trick up their sleeves. Their raison d’être is collecting, analysing, understanding and packaging data for themselves and others to use to understand past, current and future property valuations. Their housing price index is more robust (and more independent) than those of the banks based off their own data and target markets. Rather […]

5 Things to Learn from Monopoly

I haven’t played Monopoly in a while (preferring Settlers of Catan, Carcasonne, Tigris and Euphrates and even Cranium), but after a recent conversation I started thinking about the game dynamics. There is surprisingly much that is relevant to the current story of our economy. 1 The Competition Commission is necessary Monopolies serve to increase prices […]