JSE Top 40 - Long-run Technicals Seem to Point to a Fall

In one of my previous posts I looked at how much value we can buy with one share of the JSE Top 40 Index. The numbers I ran seem to suggest that while index prices were going up, the value we're able to buy is trending down. This is bad for stocks, but understandable due to the high prices of commodities.  

For today's posting I decided to open the technical analysis/charting toolbox again, this time considering the JSE Top 40 index. What does the technical chart suggest? It suggests that the local market may be heading for a downturn. 

Just to be clear, this is not set in stone.  Technical analysis is not always right, and there is much debate on whether it works. I like to look at technical charts in context of the market fundamentals.  

So what do we know about the markets at this point? Here are some things to consider. 

1) The Eurozone is in trouble ...

2) The US expanded its M1 money supply from about 800 billion to about 2.4 trillion USD since 2008, basically keeping their economy alive on debt... this makes high inflation very likely.  
3) US debt burden is massive; see US debt visualized
4) Global GDP growth appears to be slow ...

5) Commodities showed strong growth and money follows growth ...  

Technicals suggest a crash is likely ...

With that out of the way, let's consider the following Technical monthly chart of the JSE Top 40 Index.  I applied a long term Moving Average Diversion Conversion Indicator (MACD - basically an indicator that measures momentum - the strength of a market uptrend or downtrend):

Click to expand

Remember, we are only considering a technical chart for information on probable market moves. Some things are evident: The index has tested the current resistance level, the highest red diagonal line, (a price ceiling) for some time and is trading in a trading range, between current support and current resistance lines.

The Crash of 2008

Consider the descriptive comments on the MACD indicator before the crash of 2008. It is likely that the previous strong bull run (an upward market move) started in 1998 and gained momentum in 2003 after a short consolidation (look for the red downward pointing arrow below the label "bull market 03 -08" on the chart.

Consider what the Top 40 Index did at the arrow labeled with "Crash! 08". Most certainly we all remember what happened in 2008 when the market crashed, crazy times.

Important to look for is the cross over of the black line over the blue line in a downward direction on the MACD indicator (The crossover occurs at the arrow labeled with "MACD Bearish Signal!"). Such MACD crossovers are commonly regarded as signals of a changing market movement.

The market confirmed the indicator with the recession of 2008 where the index lost a lot of points.

MACD Bullish Signal and Price Recovery


The chart suggests that the price recovery and upward trend started in Mid 2008. Notice that the MACD confirmed the recovery and upward trend with another crossover; where the black line of the MACD crossed over the blue line in an upward direction.

Current MACD Bearish Signal

At the end of 2011 the MACD experienced another MACD crossover (look for "MACD Bearish Signal NB!'). This crossover suggests that a strong and lengthy downward move is probable.

Historic support levels are indicated on the chart at Support 1 and Support 2 (there is another potential support level at around 23000 points not indicated on the chart). Support levels are like mattresses that break the fall; these are levels in the market where bottom buyers are expected to halt the decline of prices. In the 2008 crash the market found support at the level denoted by the label "Support 1".

If/when we experience the next big downtrend; I expect the market to find support at either around 23000 points (best case scenario); Support Level 1;  or support level 2 (worst case scenario). Such moves would entail massive losses.


Conclusion

So, the technical chart, I considered, shows that it is probable for the market to experience a crash in the long run. Since Technical Analysis is not always correct, I decided to do some additional research on the Top 40 Index.  I considered historic PE ratios and earnings, I'll cover these in my next posting.

Read my next post to see what that research suggests.

Any thoughts or comments, please share below.

Posted by Gerhard van Onselen (follow me on Linked In and Twitter)

________________________________________________________________

Disclaimer:

I am not a professional financial adviser. Information presented is intended to be solely conversational and educational, please don't make investment decisions based on just one source, do your own research, and consult a registered financial adviser.

While I tried my best to present accurate information and numbers in this posting, I cannot guarantee the accuracy of any information presented.   

SA Property Market - Your house now buys much less coffee, gold and oil

A friend asked me earlier this week what I thought about the property market in South Africa. 

Indeed, that is a complicated question.  After scanning a number of articles online, it seems like the prevailing expectations for SA's property market is that it will keep going up. 

One website I looked at expects a compounded growth rate of 11.25% until 2050 for our property market.  

If that is correct, the price of the average home in SA should grow with R 112,500.00 each year for the foreseeable future (assuming the average home cost R 1 million ZAR and excluding the complexities of compounded growth averages). 

So, it seems to me like many if not most people expect house prices to keep going up. Some may expect some weakness, but overall the expectation is that property prices never go down.  

Consider the following chart I have compiled from nominal house price data on the average south African home, obtained from http://housepricesouthafrica.com/. 

Looking at the chart, it is not hard to see why most people expect house prices to keep going up, staggering growth is evident. 

Click to expand

A common reason suggested for continued growth is that South African property was traditionally under priced when compared to the rest of the world. It sounds logical, that being the case, prices should keep going up until some form of fair value is reached, economics 101! 

Talking about fair value. I think it is important to realize that even if things go up in price, it doesn't necessarily mean they are going up in value.  To illustrate my point, I took the average house prices above and divided them with historic commodity prices since 1995 (commodity prices were obtained from indexmundi.com). 

This tells a different story. It appears that if you were to trade your house for cash, and convert that cash, into commodities, you'll actually be losing a lot of value.  

Consider maize for example: 

In 2005 the average house was worth 1081 tons of maize. Today it is worth only 510 tons of maize.   

Soybeans: in 2005 the average south African house was worth 513 tons of soybean; today it is worth only 326 tons.

Robusta Coffee: in 2005 the average home was worth 258492 pounds of coffee. Now, at the end of 2011 it is worth only 129385 pounds of coffee.  So compared to past value, your house is worth much less in cappuccino today! 

Crude oil suggests a similar story. Trading your house for crude oil? Bad idea, in 2004 you would have received 2366 barrels of crude oil for the average South African home, today priced in oil, you'll only get about 1489 barrels of crude for the same house.   

What story does gold tell us? The trend appears to be similar. In 2005 you could purchase 248 oz gold with the average home.  Today, the average home will buy only about 86 oz of gold.  

If I am reading the info correctly (correct me if I am wrong); in value, the high point for the South African property market occurred in 2005. 

Now rising house prices do not necessarily lead to increased value (it probably reflects only US and European monopoly money circling the globe).  

Assume you bought the average house in 2000 for R 310,686-00 cash, and held it until 2005. In 2005, based on the data, the house would have been worth about R 704,353-00 in nominal terms. Let's say you sold the house in 2005 and switched to gold.  In 2005 you could have purchased 248 oz's of gold with the average house.  

If you held 248 oz's of gold since 2005 of gold and sold at today's market price, you could have sold your gold for R 3,290,454.08. 

So, by staying in the property market, has the average property investor lost the opportunity to make and additional R 2 million rand since 2005 on the average house, by not switching to commodity investments?     

Why will house prices keep going up? 

Much credit to the economist Peter Schiff for bringing this basic question to my attention.  The questions that Schiff has for people assuming that house prices will always go up are:  

1) Why should people buy when they can rent more cheaply? And, 2) which fundamentals are going to drive house prices higher?  

Also what is the premium on ownership worth? Is it the premium on ownership that will drive up house prices? If so, was the premium on ownership really worth more than the lost opportunity to pocket and additional R 2 million on the average SA house since 2005? 

The Cash Flow Argument

Yes, but what about cash flow? Gold does not pay you rent does it, you may wondering? True, I agree wholeheartedly that properties with good cash flow are some of the best investments out there. 

Yes, but most residential property investors I know do not own cash flow positive properties. Look at our family home as an example. 

Our house was last valued at R 1,250,000.00 million. Let's say I win the lotto and purchase the house cash. I'll then only be able to rent it out for about half its bond repayment value, say about R 6000-00 to R 7000.00 (not sure, I am assuming here).  

So, conservatively my annual rental income yield is only 5.76% (R 6000 x 12 = R 72 0000/R1,250,000 = 0.0576). Assuming, of course, that nothing on the property breaks and I don't have to pay taxes, rates, etc. 

Since, I cannot buy a home cash at this point I'll have to mortgage the home. I'll then have to pay a deposit of 10- 20 % and my bond will cost me about R 11,500.00 per month (roughly estimated at 1% of purchase price). With rental of R 5000, R 6000 or even R 9000, it does not really produce cash flow positive investment, does it? 

So all I can hope for is capital gains and hoping for capital gains is not the best strategy.   

Let's take an even more preposterous position, let's say I am a ga-zillionaire able to buy each and every house in SA at average prices. Since I cannot stay in each and every house I bought, I'll have to rent them out. 

Then, I'll still only get in order of 5.67% rental income from my investment (excluding all the added costs associated with ownership). How many ga-zillionaire investors will settle for a return of 5.67% or less? That does not even beat CPIX inflation.  

So, for prices to go up in the residential property market, sellers would have to find buyers who'll pay even more for a negative cash flow asset. Maybe I am missing something, but that's just crazy.  

So, now I ask again, why should the prices keep going up? That charts above show us that houses are actually falling in value when measured in gold and other commodities. 

My concern is that the masses in the South African (and global property) market are going to start to question the current premium paid for home ownership, which appears to be very very high, when measured in lost opportunity.  

Mortgage Lending Graph

Another concern I have is that mortgage lending growth has slowed ... a lot! Check out the following graph taken from the Exceed Group's market report September 2011.

   

Assuming that the graph above is correct, mortgage lending growth has contracted to levels below those in 2000! Doesn't that suggest that the supply of money to buy houses at the current prices is severely restricted?  If so, shouldn't house prices be coming down, instead of going up? 

Sellers may be trying to sell at legacy prices, they were used to in 2005 - 2006, but are those prices realistic? 

It seems to me like the free market does have a solution for restoring to property/rent income yield; 1) by raising rents, or 2) through falling property prices.

A drastic drop in commodity prices should restore value. 

If rent increases are often controlled by contracts, and if all the quantitative easing money printed since 2008 continue to drive up commodities, then why should we expect property prices to keep going up?        

To tell you the truth, I won't be entering the property market just yet. Seems to me that there is very little true upward price pressure, and much more downward pressure.  Assuming that prices will always go up is a highly dangerous position often found near the top of a bubble.

The SA Property market may have been undervalued, but it is also very possible that the global property markets were overvalued. If that is the case, we might be screwed!

Thanks for reading. Please share your insights below.

________________________________________

Disclaimer:

I am not a professional financial adviser. Information presented is intended to be solely conversational and educational, please don't make investment decisions based on just one source, do your own research, and consult a registered financial adviser.

While I tried my best to present accurate information and numbers in this posting, I cannot guarantee the accuracy of any information presented.    

Posted by Gerhard van Onselen (follow me on Linked In and Twitter)

My take on the JSE Top 40 Index - why I ran from stocks

I am back with yet another very bearish take on the stock markets, this time a bit closer to home, this time I am looking at the JSE Top 40 index and I am considering the possibility of a severe pull back in the market in the coming years.  

In this posting I am hoping to show that the current gains we had on the JSE since mid 2008 were merely a smoke screen, and that in fact, the Top 40 Index has already crashed when measured in value.  We just have not caught up to the idea yet. While the index has not dropped in price, what appears to be eroded is what we can purchase with our stocks.      

In my previous two postings I looked at the the US SP500 index (a technical view) and some predictions for the global economy in 2012. Both these predictions were very negative.    

This led me to investigate the matter further, a bit closer to home. I decided to run some numbers for myself.

So, with information obtained from Standard Bank Online share trading and Index Mundi, I considered the prices of 5 important commodities, in relation to the Top 40. The main question I looked at was how much value one share of the JSE Top 40 will purchase as measured in commodities.     

Put in a more simple way; how much stuff does 1 share of the Top 40 currently buy? Why is this important? Well if we cash out our stocks, it does not help us if we can buy less with the proceeds.  

Let's begin by considering the following chart of the Top 40 Index. This represents annual closing prices of the index at the end of every year since December 1995.

Click to enlarge

If you look closely, you'll see that the index closed at 26250 at point 1 in December 2007 just before the big crash of 2008.


That is our first reference point. During the crash of 2008 the index closed at 19201 points (December 2008). Since December 2008 we had a price recovery.

Now consider point 2 on the chart (our second reference point): the closing prices for December 2010 and December 2011, these are 28558 and 28487 index points respectively. Also notice the sideways movement. The index recovered and closed even higher than it was in 2007 before the crash, only 2828 points away from the all time high in 2008. 

[Note: the index reached its highest level on the 23 May 2008 at 31315 index points, from there it fell to a low of 15905 on 20 Nov 2008, this is not reflected on the year end chart). I had limited information, so I had to use closing prices. See the last technical chart for the monthly closing prices.   

So, we had a crash on 2008, recovered, and now the index is close to its all time high. But, does this tell the entire story. I don't think so.

Most savvy investors know that they have to account for inflation.  In order to make a real profit in the stock markets, you have to be able to buy more stuff than before with your proceeds or dividends, logical isn't it? Your growth must beat inflation.    

With that being said, how much commodities could we buy with 1 Share of the Top 40 in 2007-2008.

To calculate this I divided the index points of the Top 40, with the prices of commodities. That should give an indication to the Top 40's buying power per share

We'll consider maize, soybeans, crude oil, gold and coffee for this analysis. Wheat and maize underlies much of the world's food supply, so maize is up first.

Maize:

Click to enlarge

The chart above seems to suggest that before the crash it, near the previous high of 08, it was possible to purchase between 25 and 20 tons of maize with one share of the Top 40. As at the end of December 2011 we could only purchase 12.77 tons with 1 share (even with the index near its previous high); amounting to about 10 tons less.

Soybeans:

Click to enlarge

Soybeans seem to tell a similar story. Before the crash of 2008, it was possible to purchase up to 13.24 tons of soybean with one share of the Top 40. Now, near the index top, we can only buy about 8 tons of soybean; about 5 tons less.

Coffee (Robusta):

Click to enlarge

With coffee, the trend seems to be the same.  Before the crash of 2008, we could purchase about 5138 pounds of Robusta coffee with one share of the Top 40, now we can only purchase about 3237 pounds; about 1900 pound less with one share.

Crude Oil:

Before the crash of 2008, your one share of the Top 40 purchased about 57 - 58 barrels of crude oil. Now that same 1 share buys only 40 barrels; approximately 17 barrels less.

Gold:

Click to enlarge

How about gold? Before the crash of 2008 you could buy about 5.5 to 5.8 oz's of gold with one share of the Top 40. Now one share buys 2.2 oz of gold.

Logically, the drop in purchasing power of the Top 40 owes to the increase in commodity prices. So we seem to have a scenario where the index went up and commodity prices went up. Does this increase seem to suggest a dilution in real purchasing power?

My wallet seems to agree. This explains, to me, why it lately felt like everything had become so much more expensive in South Africa.

We have to confront the possibility that we are experiencing a silent market crash, where the market moves sideways, or even goes up in price, but drops in value when measured in commodities.

Why is this bad?

One thing I am sure of is that the markets 'live' to find fair value. And, in order to restore value, I think only one of two options are possible; deflation of commodity prices or a drastic drop in the markets; both options are scary.

It is more than likely that the inflation of the commodity prices, we have seen, is directly related to the quantitative easing (money printing) the US has done since 2007.

Economists tell us that when too much money chases the same goods and services, we have inflation. Printed money also runs up investment prices, this I believe is reflected in the increase of the Top 40. But, printed money also dilutes the purchasing power of every rand or Dollar.

A problem may arise when more people invested in the markets realize that their stock portfolios will buy less than before.  That realization may generate a mass exodus from the markets, a run on real assets, and a subsequent market crash

(Click here to see what gold has done up to now)

Personally, I am no longer invested in the stock market. Am I missing out on opportunities? Maybe I am, no one can predict exactly what the markets will do. But based on real value the Top 40 seems to me to be declining in value, for now, I'll rather be a bear sitting in cash and metal.

I am just not willing to carry the inherent risk of stocks in a declining value scenario. Still, the markets may even go up in price this year, the question is will it go up in value?    

What to take away from this? 

• Consider that the markets may be declining in value when measured against commodities, you may want to ask your financial advisers about this. 
• To restore value, the markets may eventually correct/crash or, commodity prices may fall, which may suggest a decline in aggregate demand for goods and services (also bad!) 
• It may be pertinent to investigate some ways of hedging against a potential market collapses.  
• Remember that proper diversification should cover both stocks AND other asset classes. Often, the gold guys love gold, the stocks guys love stocks, real estate guys love real estate. However, falling in love with one asset class may prove fatal in this economy.    

As Promised earlier in the post, here  is the monthly chart of the JSE Top 40, I've included some technical analysis to the chart which I will explain in my next posting.

JSE Top 40 Index Monthly Chart, click to enlarge. 

____________________________________________________

Disclaimer: 

I am not a professional financial adviser. Information presented is intended to be solely conversational and educational, please don't make investment decisions based on just one source, do your own research, and consult a registered financial adviser. 

While I tried my best to present accurate information and numbers in this posting, I cannot guarantee the accuracy of any information presented.     

Posted by Gerhard van Onselen (follow me on Linked In and Twitter)

Some Thoughts on the Economy in 2012 - Still Very Bearish

If you're a successful entrepreneur, you've probably made some money over time and you are on your way towards building wealth. More than likely, you have given some thought to protecting your wealth.

If you are following the global economy, you probably have a feeling in your gut that everything is not right with the global economic recovery, and you might be right! I don't like to be a doom and gloom preacher, but among some of the economists I follow, the consensus is that 2012 may be a highly 'volatile and dangerous market', which is very bad for our investments. 

Many big economic terms may used to explain the problem; but the way see it, the problem is centered around four things: 

1) The world 'swiped' its 'credit cards' a couple of times too many and global debt is mounting to unprecedented levels (we accept this as a problem on a consumer level but it seems to be acceptable macro-economic policy - why?),

2) Pumping too much money, through ever increasing bailouts, into the global economic system dilutes the power of money to stimulate growth and creates new problems (specifically a slumbering inflation monster) (see the following chart displaying cash and electronic cash in the US  http://mises.org/content/nofed/chart.aspx).

3) The world shares a bed with the US, and the US debt problem is massive to say the least.

4) Fiat currencies are linked to nothing and the USD is a fiat currency.   

Refer to the following website for an illustration of the US debt.  

Keep in mind that all currencies are linked to the USD, which in turn is linked to NOTHING but promises. The US dollar serves as the world's reserve currency and the current EU crisis led money flowing from the EU to the USD, this lifted the US markets and depressed the gold price. somewhat.

Many think this is only a short term euphoria, I can only agree.  

The question really is, how long can the global economic 'house of cards' be propped up artificially through things like money printing, austerity measures, or whatsoever financial 'voodoo' the 'smart guys' running the show can come up with?      

Another scary thing to think about is the implication of fractional reserve banking and the possibility of bank runs. Wikipedia explains that with fractional reserve banking only a portion of the banks total deposits are kept in reserves. 

Basically, through this system, banks can lend out more money than it actually has in the vaults. This system works reasonably well, except in times of panic when everyone wants to withdraw their cash, which could actually bankrupt a bank (see bank-run).

The world economy is being kept alive using debt on steroids. I could never solve my own money problems by going into more debt. Yet, this seems to be what the world is doing.   

Now I ask you this ... are we living in a time when the probability of a global bank run is becoming more, or less likely? Are you willing to bet all your own money on your answer? It might just come to that.  

Micheal Maloney in his excellent book Rich Dad's Advisors: Guide to Investing In Gold and Silver explains the problem from a bird's eye view. 

All nations begin with real money, linking their currencies directly to gold, sliver and other real assets (this was the case with the US too). Then, governments essentially 'dupe' the population into accepting paper/token placeholders linked to real assets (we know this as paper money).  


The final step is to uncouple money from gold, silver and real assets creating a fiat currency (decreeing the backed-by-nothing money to have value). Fiat currencies ALWAYS go bust at some point, just ask these guys in history: 

The Roman Empire

The Weimar Republic, Germany

And recently, Zimbabwe, Southern Africa.

Why am I telling you this? I think that as business owners and investors we have to give serious thought to capital preservation. But even more than capital preservation, we have to focus on this preservation of value/purchasing power.

If all currencies were to go bust, what will happen to your investment portfolio? Remember that educated investors can make money when markets go up and when markets going down.  

I really feel it prudent to be cautious in 2012 and thereafter.  I tend to agree with guys like Mike Maloney of goldsilver.com, it is highly likely that the world is moving from a paper assets to physical assets cycle. That requires a shift in our investing mindsets.  

The structure of the global economy may also experience distinct metamorphosis in the coming years. The phrase 'adapt or die', may be even more relevant.  Let's keep our eyes open!

After reading some articles on bloomberg.com yesterday, I found that some optimism has returned to the US markets. Italy's bond auction went better than expected. However, I do not think any of the real underlying problems were solved. The markets love short term chatter, this time, I am not buying it!   

If you would like to add anything,  please leave your comments below.

Some sources I found to be insightful:

1) Debt Collapse by Mike Maloney (1.5 hour video, very large download)
2) Rich Dad's Advisors: Guide to Investing In Gold and Silver (Book available from Amazon.com, Kalahari.com, audible.com)
3) Mike Maloney Schools Bankers on Deflation (Youtube)
4) Nouriel Roubini: Perfect Storm Coming for Global Economy in 2013 (Youtube)
5) Milton Friedman - Debunking the Myth of the Great Depression - Part 1 to 3 (Youtube)

______________________________________________________________
Disclaimer: I am not a registered financial adviser. Please consult with personal financial advisers before making decisions regarding your personal finances.

My take on the US S&P 500 Index is not Pretty - Why I am VERY Bearish

Today I am posting something out of character for this blog, I am posting my technical view on the US SP500 Index. Note: I am not a professional investor or financial advisor; I follow the markets as a hobby, so please do not base your financial decisions on this view. 

I am merely asking some questions that have to be asked. If you want, maybe you could take this view to your financial advisors to discuss it with them.  

Most agree that the state of the US economy directly affects the rest of the world including South Africa. That's why it is prudent to follow the US economy. And if this technical perspective is correct the US economy may be heading for a massive reversal (crash).  

Take a look at the following chart I compiled from MSN Money, it is a long-run technical view on the US S&P 500 index; one of the largest stock exchanges in the US. This index is widely considered to be a proxy for the US economy. 

My Take on the US S&P500 Index - 19 December 2011

Being an investor, not a trader, I like to take a long-run perspective on the markets. When considering the S&P 500 from 1955, we clearly see the formation of a possible triple-top reversal pattern (note peaks 1, 2 & 3) on the chart (1995 to date). We also find a possible head-and-shoulders reversal forming from August 2009 to date (look for the H,S,H in the chart). 

Both the head-and-shoulder and triple-top patterns are very bearish signals. Many of the technical guys see the Head-and-shoulders as a reliable technical signal. When two bearish patterns are combined the position should be regarded as even more bearish.

The possible downward movement is usually projected from the top of the pattern (point 2) to the neckline (line AB on the chart). In this case,  if a bear trend starts, the DECLINE MAY BE MASSIVE! 

Another thing technical analysts look for is declining or increasing volume. In the chart,volume appears to be declining along with the formation of the Head-and-Shoulders. It is a highly bearish signal when the HSH pattern goes up and volume goes down (what appears to be happening in the chart). 

Also note that peak 3 on the chart is lower than peak 2; another very bearish signal! 

So, what I am telling you? 

I think that it is time to re-evaluate our stocks and portfolios. We had a nice run since 2008 and the US economic sentiment has improved a bit lately. But, this may just be short-term noise locking us in for the proverbial "bear falling out of the window" if I am right (hope I am not), the fall will be massive! 

Don't agree with me? I would really like to hear your view. Please comment below.

Don't lose sight of the kid in you! A tip for Innovation

Well, it's been a while and the past month or two was quite hectic (hence the low number of posts to this blog). I completed my MBA final year exams and started on a new project distributing Tree Lucerne (also known as Tagasaste), see http://www.treelucerne.co.za if you're curious about what we're doing.

Enough about me, let's talk about something fun, let's talk about the Super Soaker Water gun. You know, the water gun that really took the world by storm in the 1990s.


I remember it well, the soaker took water gun battles to a whole new level.  What's better than a really powerful water gun? And the soaker was, and still is, just that.  

One thing that you may not know about the soaker is that the guy who invented it is actually a real life rocket scientist with a degree in nuclear engineering. Yes, this is according to the August 2010 edition of Popular Mechanics. Lonnie Johnson invented the Super Soaker after he had an idea of a pressurized water gun that would be safe for children.

The idea came to him while he was working on a heat pump. 

What can we learn from this story? Alan Duggan of PM neatly extracts three lessons for entrepreneurs and innovators:

1. Be alert to possibilities - good ideas may enter our minds while doing something completely unrelated.

2. Success requires faith, staying power, and persistence - the Super Soaker was preceded by  many failed prototypes before achieving success. We see this trend with many successful people.

3. Never lose sight of the little kid inside of you - your childhood interests and dreams often provide valuable insight into your destiny. Sometimes we have to listen to the kid inside of us.

I think that the best ideas, innovators can have, are those that make you feel like a kid all over again. This certainly worked for Lonnie Johnson; the Super Soaker is estimated to have produced retail sales of more than 8 Billion ZAR.

What a cool story! Happy innovation. 

Finding work that needs doing – Preserving the environment

Good morning everyone! I trust the previous posting, where we took a brief look at the constructive use of technology was interesting and made you think differently about the impact of technology on people and their career and life development. We are sticking to the same broad topic – Finding work that needs doing – but will move along to the second area identified by Hansen, which talks to preserving the environment.

I am sure some of you will immediately conjure up images of Greenpeace, who have an interesting core values statement. On their website, Greenpeace state that their work is based on key principles, which are used to guide their actions. These core values are “bearing witness”, “non violence”, “independence”, having “no permanent friends or foes”, and “promoting solutions”. Some of us may think of their campaigns and actions as being of little consequence, others may think that Greenpeace is contributing to the greater good. I prefer to think of them as an (extreme) example of the attitude we all need to have when it comes to thinking about the impact we have on ourselves, our fellow man, and the physical and spiritual world around us.

In terms of the ILP approach, reference is made to the introduction of so-called new-paradigm thinking about preserving the planet. Hansen refers to the work of theologian Matthew Fox, economist Hazel Henderson, and Peter Plant, a Danish career development specialist. I will strongly recommend a visit to the websites of the above individuals, since their way of thinking is echoing the very typical ILP sentiments…if I may call it that!

To give one example of their work would be an injustice, but to then there is probably nothing wrong with whetting the appetites! Amongst other descriptive words, Hazel Henderson is defined as an independent futurist, advocate for and consultant on equitable ecologically sustainable human development and socially responsible business and investment. Now, if you have been following my blog postings, you will agree that the above description resounds of the ILP model. If one starts reading more of her work, you will see that Hazel Henderson is someone who is very critical of traditional economics and the Western focus on GDP. Take one moment and turn to current news…At this time, there are hundreds (perhaps thousands) of protestors occupying Wall Street in New York City. Why? Read the following quote taken from the “official” website of the “Occupy Wall Street” group:

We demand that Barack Obama ordain a Presidential Commission tasked with ending the influence money has over our representatives in Washington. It's time for DEMOCRACY NOT CORPORATOCRACY, we're doomed without it.

I think the parallels between ILP’s principles, the work of Hazel Henderson, and Occupy Wall Street is clear.

Before I forget, another at-this-moment occupation is also taking place in front of St. Paul’s Cathedral in London…reason? Pretty much same as the above. Again, if you have some time and interest, read an article posted by a freelance journalist who is part of the occupation in London.

I'll admit I'm no full-on radical subversive - indeed I'm solidly middle-class, thanks to my parents' hard work and commitment to their children (both were teachers, and they managed to raise three of us to have better prospects than they enjoyed). But, I am also part of the 99 per cent - those excluded by the current capitalist system and whose economic mobility is pretty much zero.

Those of us living in South Africa have also very recently seen an example of another (peaceful) march. The ANC Youth League’s March for Economic Freedom took place a short while back and has been described as successful by some because of the March taking place without any incidents of violence.

This is really an interesting topic – considering how our actions are impacting on the world we live in. When I started writing this posting, I was planning to introduce you to the topic of Preserving the Environment – which is a subtheme of our discussion on finding work that needs doing – and move along to the next topic…but alas, it is so interesting and topical that I have decided to dwell some more on the issue. In the next posting I will take some time to introduce you to the work of Danish career specialist, Peter Plant with the intention of showing how his work has also influenced thinking encountered in the Integrative Life Planning model.

Until we meet again, take some time to think how peaceful (and sometimes not so peaceful) demonstrations are impacting my / your / our worlds!

Based on the work of Sunny Hansen: Integrative Life Planning: Critical Tasks for Career Development and Changing Life Patterns