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 The Sharenet Daily 
Wednesday, 11 April 2012 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

Compounding for the Long Run

Most investors have heard the saying, generally attributed to Albert Einstein, that compounding is the eighth wonder of the world. Compounding is a fairly straightforward concept (making gains on prior gains) but it can be very difficult to completely grasp as its effects are only truly felt over the extremely long term (think 20 years and more).

At the beginning of this year the Seed Weekly Report looked at 2 investors that invested a lump sum into the SA market (via the ALSI) for a 10 year period. Investor B used the dividends paid out to enhance his lifestyle, while Investor A slavishly reinvested the dividends. At the end of the period Investor A had 33% more invested than Investor B. While it is obvious that Investor A is better off, there can be the argument that the fruits that Investor B enjoyed as a result of his withdrawals could equal the financial value that he lost out on.

Agreed. Over a 10 year period, while compounding is good for your investments, the added benefits do not obviously always outweigh the opportunities lost. Over longer periods, however, the added benefits become more and more obvious.

For the purposes of this article, let’s assume that two 25 year olds each inherit R 100 000 from a distant aunt. They both decide that it’s not enough that they are able to stop working, but it’s a sizable amount that they want to invest in the stock market (ALSI – as they are able to take on the full market risk). Here their 2 strategies diverge slightly (or at least they don’t think there’s much difference at the outset).

The first recipient decides to reinvest his dividends with the following mindset, “This money is a windfall to me, and I don’t need to look at it or use it until I retire. I therefore want all my dividends reinvested”.

The second recipient is disciplined in that he wants to invest the inheritance, but would like to have a bit of extra cash each year to splurge, “I’m being responsible by investing the inheritance, but it won’t make much difference if I just have the dividends paid out to me as they are declared rather than having them reinvested”.

In the first 5 – 10 years the second recipient boasts that he’s a) got an investment that has grown nicely in real terms, and b) has ALSO been able to go on a few nice holidays and buy some new gadgets. The first recipient just keeps his head down, knowing full well that the power of compounding will kick in down the line.

At age 65 (retirement) the difference in size between the two portfolios is mindboggling! The portfolio that had the dividends reinvested is now over 5 times larger than the one that had the dividends continuously withdrawn. Both men have been made wealthy by their investments, but the one that reinvested his dividends has created significantly more wealth than his counterpart. The chart below shows the difference between the two portfolios using ALSI data over the past 40 years.

Less than 40% of the difference between the two portfolios can be attributed to the money that was spent on the holidays and gadgets. The remainder, over 60%, is the opportunity cost of not reinvesting the dividends. In this example, nearly R50m extra is generated through returns on the reinvested dividends!

While we agree that money can’t buy happiness, each investor needs to assess the pro’s of instant gratification versus the con’s of the opportunity cost of missing out on the compounding effect. Further, both investors did well by investing their inheritance rather than immediately spending it on a new car (or other depreciating ‘assets’), or a trip around the world, but one just did a WHOLE lot better than the other!

Take care,

Mike Browne
021 9144 966

Wed, 11 Apr 2012
Top News
South Africa's rand weakened against the dollar on Wednesday, holding around the 8 rand level after testing 2-1/2 month lows earlier in the session during a softer trend for the currency caused by a bleak global growth outlook.  Full story

South African stocks ended slightly up on Wednesday in a volatile session were mining stocks including gold producers and ferrochrome firm Merafe helped push the market higher.  Full story
A powerful 8.6 magnitude earthquake and a series of strong aftershocks struck off Indonesia on Wednesday, sending people scurrying from buildings as far away as southern India, but there seemed little risk of a disastrous tsunami as in 2004.  Full story
Syria promised to observe a U.N.-backed ceasefire starting on Thursday, but its forces kept up fierce attacks on opposition neighbourhoods in the hours before the deadline.  Full story
President-elect Vladimir Putin urged his opponents on Wednesday to bury their differences with him for the sake of Russia's economic and political future after months of protests and elections that divided the country.  Full story
European stocks rose on Wednesday, halting a week-long slide as recently battered banks rallied, although the rebound was seen as technical and could. . .  Full story
U.S. and European equities rebounded on Wednesday after a string of heavy losses that had been stoked by fears over a weakening global. . .  Full story
U.S. stocks rose on Wednesday, bouncing back after five days of sharp losses that pushed the S&P 500 and the Nasdaq below their. . .  Full story
Britain's top share index rebounded from a three-session slide on Wednesday as a rise in banking stocks following a positive broker comment and. . .  Full story

European stocks ended higher on Wednesday, halting a week-long slide as recently battered banks rallied, although the rebound was seen as technical and. . .  Full story
Gold steadied on Wednesday, after rising for four days straight, as the intensifying euro zone debt crisis threatened to undermine the euro and. . .  Full story
U.S. stocks extended gains on Wednesday, pushing the Dow average up more than 1 percent as the market rebounded after five days of. . .  Full story
U.S. stocks bounced back at the open Wednesday after five days of losses on the S&P 500 that brought the benchmark index down. . .  Full story
SA Business
Growth in South Africa's manufacturing output outpaced expectations in February, adding to signs that domestic demand is recovering and backing the. . .  Full story
South Africa's Standard Bank plans to as much as quadruple its branch network in Angola by the end of this year,. . .  Full story
South Africa's competition authority said on Wednesday it had given an unconditional green light to global miner Anglo American's $5.1 billion. . .  Full story
South Africa's rand recouped some of its losses against the dollar on Wednesday but could remain under pressure as a negative. . .  Full story

Anglo American plans to build a 450 MW power plant in South Africa to supply electricity to its platinum subsidiary Anglo American Platinum, the Business Day newspaper reported on Wednesday.. . .  Full story
Company News
Holders of Vukile linked units ("linked units") are referred to the vendor placement announcement released on SENS today, 11 April 2012,. . .  Full story
Shareholders are advised that, further to the SENS announcement released on 30 March 2012, Investec Ltd has obtained the requisite SARB. . .  Full story
INL INPR INL. . .  Full story
Holders of Vukile linked units ("linked units") are referred to the circular issued by Vukile on 31 January 2012, the general. . .  Full story

Keaton reported substantial across-the-board production increases from its South African operations in the financial year ended 31 March 2012. The company's Vanggatfontein Colliery in Mpumalanga province delivered 955 376t of washed 4- and 2-Seam thermal coal to power utility Eskom between. . .  Full story
Shareholders of the company are advised that the European benchmark ferrochrome price has been settled at USD1.35 per pound for the second quarter of 2012, an increase of 17% from the USD1.15 per pound price in the first quarter of 2012.. . .  Full story
Company Results
Investment income for the year ended 29 February 2012 soared to R63.7 million (2010: R22.8 million). Operating activities climbed to R342.1 million (2010: R283.3 million), while profit for the year increased to R334.6 million (2010: R259.1 million). Furthermore, headline earnings per share jumped to 30.7cps (2010: 18.9cps). Dividend A final ordinary dividend of 4cps (2011: 4cps), in respect of the financial year ended 29 February 2012, was declared on 7 March 2012 and paid on 2 April. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0033632.7615.020.04%
JSE Top 4017:0029669.8433.840.11%
JSE Gold17:002316.7353.852.38%
JSE Financial17:0024815.444.840.02%
JSE Industrial17:0037892.68-152.48-0.40%
JSE Indust 2517:0031763.99-139.93-0.44%
JSE Resource17:0048693.67339.280.70%
DJ Futures19:4612760.0057.000.45%
DJ Ind19:4512841.00125.070.98%
SP 50020:001372.7114.121.04%
FTSE 10017:355634.7439.190.70%
All Ords08:474327.30-46.40-1.06%
NZSE 5007:463465.39-2.59-0.07%
NameTimeRPMove% Move
Gold/R kg20:0042527131850.75%
Brent Crude19:46120.51.110.09%
Rand / Dollar19:587.9786-0.0091-0.11%
Rand / Pound19:5512.66370.02230.18%
Rand / Euro19:5510.46070.01020.10%
Rand / NZD19:576.53610.01930.30%
Rand / AUD19:558.23280.03530.43%
Yen / Dollar19:5881.03000.33600.42%
Euro / Dollar19:550.7626-0.0015-0.20%
Dollar / Euro19:581.31060.00240.18%
Pound / Dollar19:550.6284-0.0018-0.29%

Click here for the Sharenet Spot Price page
The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 ANOORAQ  3683811.52.%10800
2 MRHLD-N  1060606.00.%714247
3 TELEMASTR  11554.55.%93660
4 METAIR  25161054.36.%802833
5 CMH  1100434.07.%3873
6 LITHA  338134.00.%67016
7 STEFSTOCK  1150423.79.%4280
8 SAPPI  28921003.58.%4304650
9 TREMATON  17563.55.%105000
10 INVICTA  64002003.23.%32878
11 DRDGOLD  550173.19.%744645
12 ANGGOLD  268237943.05.%2046163
13 PBT  19052.70.%1920
14 SENTULA  23562.62.%1544681
15 S-OCEAN  20552.50.%12000
16 OLDMUTUAL  1969442.29.%44526136
17 ARROW-B  521112.16.%60876
18 MMG  37982.16.%16500
19 GROUP-5  3110601.97.%81709
20 GFIELDS  103301981.95.%5285537

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Major Moves Down
SharenameSaleMove% MoveVolume
1 ROLFES  335-25-6.94.%18930
2 ONELOGIX  181-13-6.70.%41100
3 OANDO  110-7-5.98.%65835
4 MAS  1055-65-5.80.%10
5 CALGRO  445-25-5.32.%406
6 ILIAD  580-30-4.92.%49200
7 SOVFOOD  525-25-4.55.%642950
8 EASTPLATS  304-14-4.40.%92914
9 FAIRVEST  110-5-4.35.%23
10 WINHOLD  115-5-4.17.%27450
11 EXCELL  130-5-3.70.%14600
12 CLOVER  1500-50-3.23.%417100
13 OCTODEC  1612-53-3.18.%477429
14 EHSV  2700-83-2.98.%11100
15 AECI  8921-249-2.72.%412679
16 HOSP-B  410-11-2.61.%1772177
17 TRUSTCO  115-3-2.54.%152400
18 COAL  730-19-2.54.%636594
19 PHUMELELA  1050-25-2.33.%52241
20 MVELAGRP  337-8-2.32.%60515

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New Highs
SharenameSaleHighMove% MoveVolume
1 MRHLD-N  10601205606.00.%714247
2 TREMATON  17517563.55.%105000
3 MMG  37937982.16.%16500
4 WBHO  13780138581801.32.%75906
5 SANLAM  34303438401.18.%3207387
6 AVENG  40604079150.37.%2573964
7 JSE  80108043100.13.%194514
8 STEINHOFF  28142865-17-0.60.%6560898
9 EXCELL  130139-5-3.70.%14600

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New Lows
SharenameSaleLowMove% MoveVolume
1 OANDO  110110-7-5.98.%65835
2 COMAIR  143142-2-1.38.%11840
3 ANGLOPLAT  5102950944-471-0.91.%206479
4 WESIZWE  1241140.249641
5 ANOORAQ  3683253811.52.%10800

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Index Summary
Index NameRPMove% Move
Top 4029,669.8433.840.11%
Mid Cap48,231.85-150.92-0.31%
Small Cap36,120.46-46.21-0.13%
Resource 2048,693.67339.280.70%
Industrial 2531,763.99-139.93-0.44%
Financial 159,401.5310.890.12%
Financial & Ind. 3035,313.74-93.37-0.26%
All Share33,632.7615.020.04%
Oil & Gas 27,505.43149.080.54%
Mining 31,365.22230.680.74%
Gold Mining2,316.7353.852.38%
Platinum Mining57.29.070.12%
GENERAL MINING7,959.6837.940.48%
Oil & Gas Producers 14,789.1680.150.54%
Basic Materials 26,880.10201.860.76%
Chemicals 14,865.52-260.63-1.72%
Forestry & Paper 14,021.32270.421.97%
Industrial Metals 29,916.53292.530.99%
Industrials 33,297.83-256.49-0.76%
General Industrials 90,254.29-1102.68-1.21%
Consumer Goods 32,860.84-224.43-0.68%
Automobiles & Parts 5,697.38237.774.36%
Household Goods184.95-1-0.60%
Health Care 40,876.67-133.43-0.33%
Beverages 107.68-1.12-1.03%
Index NameRPMove% Move
Food Producers 59,543.55-352.44-0.59%
Personal Goods 486.60-1.00-0.21%
Consumer Services 65,539.76-115.12-0.18%
General Retailers 54,344.04-389.85-0.71%
Travel & Leisure 3,713.60-43.90-1.17%
Media 97.89.370.38%
Support Services 2,377.90-27.99-1.16%
Telecommunications 65,960.08-138.75-0.21%
Financials 24,815.444.840.02%
Banks 46,830.77-225.37-0.48%
Non-life Insurance 42,239.25237.350.57%
Life Insurance 20,274.61268.841.34%
General Financial 2,312.875.680.25%
Technology 28,096.99-122.33-0.43%
SHARIAH TOP40 3,006.14120.41%
FTSE/JSE SHARIAH ALL3,127.66100.32%
COAL MINING28,351.361460.52%
FTSE JSE Fledgling 5,411.88-2-0.03%
FTSE/JSE Alt X 1,276.11-9-0.72%
CAPPED PROPERTY 330.05-0.54%
RESOURCE 26,908.841900.71%
DIVIDEND PLUS197.05-0-0.22%
FTSE/JSE RAFI 407,026.30140.20%
Capped Top 4015,666.56150.10%
Capped All Share17,014.3370.04%
JSE TABACO 5,069.64-38-0.75%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
16 Apr 2012MASNovember 2011 (Q)
16 Apr 2012PSGFebruary 2012 (Final)
16 Apr 2012PSGFIN PREFFebruary 2012 (Final)
17 Apr 2012DCENTRIXFebruary 2012 (Final)
18 Apr 2012AFEAGLEDecember 2011 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
VIVIDEND12-04-0512-04-2512-05-07R 0.2450
ARROWB12-04-0412-04-1912-04-30R 0.0309
ARROWA12-04-0412-04-1912-04-30R 0.0500
SHFINV-PREF12-04-0312-04-1312-04-23R 3.7400
CADIZ12-04-0312-04-2512-05-07R 0.5000
Ex Div**
Share NameDec-DateLDTPay-DateAmount
SASOL12-03-1212-04-0412-04-16R 5.7000
CASHBIL12-03-2012-04-0412-04-16R 2.9600
BIDVEST12-02-2712-04-0412-04-16R 2.8000
AECI12-02-2112-04-0412-04-16R 1.7900
WBHO12-02-2012-04-0412-04-16R 1.1000

Upcoming AGMs**
CodeCompany NameDateStatus
CILConsolidated Infrastructure Group Ltd.16/04/2012Confirmed

Stock Exchange News Service
11/04/201217:52NEDB - Nedbank Limited - Issue of Share Instalments
11/04/201217:50 Vukile - Vendor Placement Results Announcement
11/04/201217:42 Old Mutual Plc - Notification of Transactions of Directors/Persons
11/04/201217:41 Old Mutual Plc - Notification of Transactions of Directors/Persons
11/04/201217:41BEG/BEGP2 - Beige Holdings Limited - Hearing before the takeover Special
11/04/201217:40 OLD Mutual Plc - Notification of Transactions of Directors/Persons
11/04/201217:32GND/GNDP - Grindrod Limited - Dealings in securities by a director.
11/04/201217:01WHLNIG - Nedbank - Dividend distribution announcement in relation to the WHL
11/04/201217:01 Rare - Resignation of an Independent Non Executive Director
11/04/201217:00INPR - Investec Limited - Non-redeemable non-cumulative non-participating
11/04/201217:00 Rare Holdings Limited - Trading Update
11/04/201216:49 Exxaro Resources Limited - Trading of Exxaro ordinary shares on behalf
11/04/201216:45 Exxaro Resources Limited - Trading of Exxaro ordinary shares on behalf
11/04/201216:41 Exxaro Resources Limited - Trading of Exxaro ordinary shares on behalf
11/04/201216:38 OneLogix Group Limited - Dealing in securities by a director
11/04/201216:13SHPIHD - Investec Warrants - Retracted interim dividend announcement on Shoprite
11/04/201215:55 Pallinghurst - Release of Annual Report and Notice of Annual General
11/04/201215:48KSP004 - Kagiso Sizanani Capital (Proprietary) - Interest Rate Reset
11/04/201215:41 Exxaro - Exercise of Conditional Awards granted in terms of the Long Term
11/04/201215:40 Exxaro Resources Limited - Exercise of matching awards in terms of the
11/04/201215:08BIFR1 - FirstRand Bank Limited - Interest Rate Reset Announcement
11/04/201215:07BIFR1 - FirstRand Bank Limited - Partial Capital Redemption
11/04/201214:53GFC04 - Group Five Construction Proprietary Limited - New Financial Instrument
11/04/201214:52GFC03 - Group Five Construction Proprietary Limited - New Financial Instrument
11/04/201214:50 Vukile Property Fund Limited - Vendor placement of Vukile Property Fund
11/04/201214:33RACP - Recm And Calibre Limited - Disclosure of Quarterly Portfolio as at 31
11/04/201214:31BIIVU - iVuzi Investments Limited - Listing of Tap Issue
11/04/201214:18MND/MNP - Mondi - Mondi Group increases its shareholding in Mondi Swiecie S.A.
11/04/201214:00 Capricorn Investment Holdings Limited - Clarification announcement:
11/04/201213:20MND/MNP - Mondi Limited/Mondi plc - Employee share plans transactions in
11/04/201212:58SHPIHD - Investec Warrants - Declared interim dividend announcement on
11/04/201212:19BIIVU - iVuzi Investments Limited - Full Capital Redemption
11/04/201212:13 Telemasters Holdings Limited - Withdrawal of decision to delist
11/04/201211:40VN - Sabvest Limited - Correction announcement - Last day to trade
11/04/201211:37 Pinnacle Technology Holdings Limited - Dealing in securities by a
11/04/201211:00 Palabora Mining Company Limited - Further cautionary announcement
11/04/201211:00GEN - General - Consultation process on proposed changes to Listings
11/04/201210:51 Invicta Holdings Limited - Trading statement for the twelve months
11/04/201210:51SBR003 - The Standard Bank of South Africa Limited - Interest Rate
11/04/201210:50OMLNII - Nedbank Limited - Special dividend distribution announcement in
11/04/201210:49OMLNII - Nedbank Limited - Dividend distribution announcement in relation to
11/04/201210:48OMLNNA - Nedbank Limited - Special dividend distribution announcement in
11/04/201210:47OMLNNA - Nedbank Limited - Dividend distribution announcement in relation to the
11/04/201210:37 Keaton Energy Holdings Limited - Substantial across-the-board
11/04/201210:33BIDEN - Denel SOC Limited - Full Capital Redemption
11/04/201210:00 Ferrum Crescent Limited - Change of name of nominated adviser
11/04/201208:30 Merafe Resources Limited - Second quarter 2012 ferrochrome price
11/04/201208:00 Lonrho Plc - Lonrho`s Oceanfresh Partners with Costco in the USA to supply
11/04/201208:00STXDIV - Satrix Dividend Plus Portfolio - Listing of additional securities
11/04/201207:10 British American Tobacco p.l.c - Transaction in own shares
11/04/201207:06NEDB - Nedbank Limited - SENS announcement issue of share instalments
11/04/201207:05 Gold One International Limited - 2012 March Quarter Group Gold
11/04/201207:05 BHP Billiton Plc - Initial funding approved for Mad Dog Phase 2

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