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Thread: Why money is tight

  1. #1
    Site Caretaker Dave A's Avatar
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    Why money is tight

    Take a moment to read this story on Sasol holding on to cash. This bit in particular highlights where I'm heading
    Sasol ended December 2008 with cash of R22.7 billion, an eightfold increase compared with the end of December 2007.
    although the whole article tells a story. Despite wholesome profits and plenty of cash reserves, Sasol does not even plan to pay its dividend in cash, rather considering issuing shares instead.

    So how much of the local credit crunch is due to the GFM?
    What are the cumulative effects of big corporates like Sasol sitting on bigger cash reserves and putting capital projects on hold?
    The trouble with opportunity is it normally comes dressed up as work.

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    Silver Member Graeme's Avatar
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    So many of the really big companies are either not paying a dividend, or reducing them - Anglo American has just passed its dividend for the first time in 70 years! They all seem to want to hoard cash. One possible (but not stated) reason is that there could be some juicy mergers or take-overs of cash strapped companies being planned for some future date. Back in the 1930's when circumstances were similar here was a huge flurry of these take-overs.

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    Site Caretaker Dave A's Avatar
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    And pulling back on spend and payout is making those potential targets even more cash-strapped!

    So if this is such good strategy, why did the Sasol share price drop on the news? In the medium term Sasol's prospects should be looking even stronger.
    The trouble with opportunity is it normally comes dressed up as work.

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    Silver Member Graeme's Avatar
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    SASOL is widely traded on bourses overseas and all manner of considerations come into play, not the least of which is the price of crude, the extent of reserves of petrol/diesel in various countries and the value of the Rand. Trying to make short-term predictions on the share price of a huge and complex company like SASOL is rather like trying to make accurate short-term predictions of the weather.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Graeme View Post
    Trying to make short-term predictions on the share price of a huge and complex company like SASOL is rather like trying to make accurate short-term predictions of the weather.
    Compared to predicting seasons?

    Your preference for strategic investment rather than speculation shows
    The trouble with opportunity is it normally comes dressed up as work.

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    Silver Member Frankincense's Avatar
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    @Graeme
    "One possible (but not stated) reason is that there could be some juicy mergers or take-overs of cash strapped companies being planned for some future date. Back in the 1930's when circumstances were similar here was a huge flurry of these take-overs."

    As if they would mention they are doing it again....It's commonly known that these Giants withold all good things to drop others to thier knees and buy them up at a song. Just look at money supply in the 1930's and the crimes of the Federal reserve - OMG -they're still doing it......moving along...)

    I'm so pleased you reffered to the 1930's...that has been such a Cornerstone of the current New World Order finalisation. A remarkable achievement and any group of wealthy men wishing to control a planet with some people on it can take a leaf outta the Fed's hat. The USA Fed really perfected thier Sh*t on that one....and the current GFM is business as usuall...

    Sasol is but one of the many communicating participants in the GFM..they are all together in this...it's not a USA or Europe thing that we may feel or maybe not....it's the same folk controlling the same stocks & boards...

    Actually the Global Financial Meltdown is a farse....as the same people who are making the most money, continue and are making trillions off it..nothing of thier Finances melted down at all!

    I'd say the GFM is the deliberate meltdown of National Indepence of currencies as we are being forced to unify currencies into ONE...with ONE Government and one Financial system with everybody on it....

    Sasol...I got you

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    Site Caretaker Dave A's Avatar
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    I am sitting here pretty much speechless.
    The trouble with opportunity is it normally comes dressed up as work.

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    Abundance

    Just sitting here and pondering if resources/ cash is really so scarce? True, the "recession" is biting all of us, but...Sasol is cash flushed, Sars a few percentages short of it target, R600 billion plus, but 3 years ago it exceeded its target of R300billion, my maths might not be accurate, but thats not the issue. Issue is some companies/ establishements are actually doing well in the "recession"(read Rhema's earnings). Truth is, we living in a world of abundance, trillions ($) circulate the globe daily. Food is in abundant supply, and the world, Africa especially, has untapped resources. Problem is, cash, minerals and food is controlled and hoarded, in the wrong hands mostly, of corporations and governments, that could not care a hoot about the rest of us...
    Sean Goss We all are scared, but only few are brave.
    www.sgafc.co.za

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    Dave A (03-Apr-09)

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    Site Caretaker Dave A's Avatar
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    Aha! Now that's thinking this through.

    Think about it. An economy is about the flow of money which is something rather different to the amount of money in the system.

    Value is driven by sentiment - so we understand why value has gone walkabout. But cash is another story.

    Is the problem that the money has gone, or is it simply getting stuck?
    The trouble with opportunity is it normally comes dressed up as work.

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    My Economics I , teaches," Inflation is too much money chasing to few goods".

    Reality is: To little money( tight, ) chasing to many goods!

    Who is lying? Who reduces the money in circulation? Ask the banks, ask SARS, who stubbornly refuses to settle refunds of taxes, and break their own laws, by refusing to pay interest on arrears if they do indeed settle. You right Dave, that "flow" or lack of it,is killing economies...
    Sean Goss We all are scared, but only few are brave.
    www.sgafc.co.za

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