It's stockmarket silly season

Let's get straight to it. Here are the facts:

1. The stockmarket crash of 1929 took place in October;
2. 1987's 'Black Monday' crash took place in October;
3. The financial crisis of 2008, specifically October, recorded the worst ever volatility and 5 of the 10 worst point-drops in the Dow's 100 years of history...

These are NOT the facts; just interpretations* of data:

1. 'Cyclical P/Es, using 10-year earnings as the divisor, suggest the S&P is currently somewhere between 30 & 50% over-priced..' (Doug Short)
2. 'Expect markets to drop 90%; starting now.. '(Robert Wiedemer). For those of you who don't know, Wiedemer predicted the 2008 crash.
3. 'Greatest debt bubble in history..' (Harry Dent) - 'markets could fall as much as 60% in the next few months..'

With respect to these authors these few examples (of many) have been written and re-written; rehashed and remixed and interpreted in some cases, as many would argue, as a means to an end. There's nothing new here. It's the same each year. You might even call it 'cyclical negativity' or even 'Red October' (with apologies).. Even as I write this I can't help but feel a little bemused by my own interpretation of these interpretations. I can, however, predict with some confidence, that somewhere between now and the future, the markets will crash and somebody, perhaps even one from the few I've mentioned here, will have predicted the crash; accurately. Play red long enough; have enough capital and you'll be a winner, at least once and that too is a fact. 

Anglo American - a modern tragedy

I can't help but feel a little sad each time Anglo American CEO Ms. Cynthia Carroll takes the stage. By all account, she's functionally competent and in the main, a decent executive. Even so, she's not family and therein lies the rub. There's no sense of history or culture or an appreciation of the blood, sweat and tears shed by millions of South Africans on whose backbone Anglo currently strides the international sphere. It's also shameful that not a single worthy South African put up his / her hand to lead, what is ostensibly, an AFRICAN company. 

I concede that globalisation has forever changed the face of business. Companies operate across cultural nuance and geographical divide. That's true. Notwithstanding, when The Board fails to elevate or tap into the beating heart or soul of a company the management team will always under-perform. That too is a fact.

Modern management theory measures performance on the basis of an isolated evaluation of a set of financial statements. It is, however, a gross simplification, particularly in the mining industry. A superior operation is not its projection chart or its cash flow statement. It's about it's people and relationships both inter-company and inter-industry. It's also about experience; not at board level but at the coal face. It's a sense of history which drives a culture... Ignoring culture as an old-fashioned premise, at board-level, nullifies the history, negates experience, breaks down relationships and demotivates people.. *As a result production suffers, revenue falls, financial statements reflect the change, projections are cut and wholesale change is instituted from middle-management down.. ; which demotivates people, breaks down relationships, negates experience and nullifies history. Quite candidly, therefore, dismissing the CEO of the platinum division for poor performance when 30% of production is sold to crisis-stricken Europe is callous leadership and is ignorant of experience.

Applying modern management theory to Anglo American we'd note, simplistically of course, a 46% decline in eps. which is an oddity given that commodity prices have declined by an average of 20% over the same period.. There's some slippage thereabouts... I wonder why?