Wal-Mart Is on Safari for Customers in South Africa

Jul. 13, 2011 2:06 AM ET
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Contributor Since 2013

John Thomas is a 50-year veteran of the financial markets. He spent 10 years as a financial journalist, ten more years trading for a major investment bank, and another decade running the first dedicated international hedge funds. Seeing the incredible inefficiencies and severe mispricing offered by the popping of multiple bubbles during the Great Crash of 2008, and missing the adrenaline of the marketplace, he returned to active hedge fund management.

With The Diary of a Mad Hedge Fund Trader, his goal is to broaden public understanding of the techniques and strategies employed by the most successful hedge funds so that they may more profitably manage their own money.

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In his free time, John Thomas climbs mountains, does long distance backpacks, practices karate, performs aerobatics in antique aircraft, collects vintages wines, reads the Japanese classics, and engages in a wide variety of public service and philanthropic activities.

His career has taken him up to 20,000 feet on Mount Everest, to the edge of space at 90,000 feet in the Cockpit of a MIG-25, and to the depths of a sunken Japanese fleet in the Truk Lagoon.

Why they call him "Mad" he will never understand.

It looks like the next “blue light special” will be offered in South Africa (EWA). Apparently, the retail giant, Wal-Mart (WMT), got the memo that the country is a great place to invest (click here  for “On Safari for Trades in South Africa”). It’s $4.3billion bid for retailer Massmart is a huge vote of confidence for that emerging nation.

My old friend, Carl Van Horn, the former chairman of JP Morgan Investment Management, taught me a golden rule a long time ago that has proved invaluable over the decades. Follow the money. Go to the industries and countries where the big companies are making their direct investments, because the stock market always follows.

What is Wal-Mart seeing in South Africa, with unemployment at 25%, and a simmering race war percolating just below the surface? Perhaps it believes that skyrocketing prices for the gold and diamonds, the beleaguered country exports will trickle down to the main economy, cutting the jobless ranks and accelerating development. Booming economies tend to have a salving effect on social problems too.

That would be a boon for retailers selling not only to a rising middle class, but to the rest of emergent Africa as well (click here for “Feel Like Investing in a State Sponsor of Terrorism”). Wal-Mart is not alone in this leap of faith.

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