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Another Airline Myth : American Airlines will find your joke about being an Al Qaeda operative hilarious. FALSE. A 14-year old girl was interrogated by police after tweeting her joke. See details below.

Forward this to your friends to subscribe & they'll get a R50 flight discount voucher

Nightowls rejoice! Fastjet are switching to midnight flights from JNB to DAR. Precision Air used to do this, and it worked well.
Type in the promo code flymetoLondon & you may get a 5% discount on your SAA flight to London. Try your luck! This week only.
Cape Town-Southampton on MSC Opera: last minute - cabin prices slashed! 28 Apl - 17 May 2014
From R4819 Inside pps*
From R5919 Ocean view pps*
From R8119 Balcony Cabin pps*
Passengers boarding a South African Airways flight

Fastjet Midnight Flights

Up to 5% discount on South African Airways

From R4819 Inside pps*

*Subject to change. Limited availability

*Subject to change. Limited availability

*Subject to change. VERY Limited availability

Mango Airlines Happy Days Sale

OK, looks like our suspicion last week that the Mango Happy Days Sales are switching between Tuesdays & Wednesdays every week is correct. Last week it started on a Wednesday, this week it is starting at 9am on Tuesday the 15th April 2014. We didn't have the end date when we went to press, but it usually runs for 36 hours, so probably until 9pm on the 16th April 2014.

New seats on Mango Airlines planes with more legroom

Pro Tip : Get an Edgars Card & a Nedbank Card!

If you fly Mango regularly, all I can say is get an Edgars card! Here's what a Mango Airlines happy day sale looks like when you log in with an Edgars card. NB: The prices could well have change from that below when you look at them (that's the nature of the airline industry). As you can see, on the days when there are no happy days sales you get 10% off! The trick is to secure the price by logging in with your Edgars card, but to pay with a Nedbank credit card. The reason for this is that if you pay with your Edgars card then you get charged an 8% transaction fee, whereas if you pay with your Nedbank credit card you earn Greenbacks which can be used to discount your next Mango flight even more!

Mango Airlines Happy Days Sale when you log in with an Edgars card (10% discount)

As you can see above, on a lot of days the Edgars 10% discount came out to cheaper than the Mango Happy Day sale!

Cheapest one-way Airfares

*To avoid having to get out the kleenex at the end of the newsletter, please note that there was very limited availability for all the below airfares, and that prices may have changed (perhaps even by the time you read this). Check whether the below fares are still available on your dates at Mango.

  • CT to Johannesburg OR Tambo from R925* (very limited availability, we only saw on the 1st, 2nd and 8th May).

  • Johannesburg OR Tambo to GRJ from R885* or 16,000 South African Airways Voyager Miles (same as last week).

  • Johannesburg Lanseria to CT International Airport from R825* (only saw it on the 8th and 13th May).

  • CT to BFN from R845* or 15,000 Voyager Miles.

  • CT to Durban King Shaka International Airport from R845* (only saw it on the 6th, 7th, 14th & 19th May).

  • Joburg to Port Elizabeth from R995* (only saw availability on the 3rd, 17th, 24th & 31st May)

Our pick of the week : Lanseria to Cape Town with Mango from R825*.

The Purple Shall Rule!

The tweets which American Airlines did not find funny at all:

American Airlines Al Qaeda twitter threat - responses

American Airlines twitter threat III

Views expressed here aren't those of SouthAfrica.TO's.

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The bottom line: It's been a long time since we've had something truly financial in the "the bottom line". Today, we've got a guest post from We've secured a special offer to SouthAfrica.TO subscribers of R600 for a year's subscription or R1500 for 5 years. Just email him. to get on the mailing list, before the end of April 2014.

Bull with the words

Allowing for Potential Interest Rate Increases in South Africa

There’s a surprisingly large number of people who base their investment decisions on unadjusted PE ratios – this is a suboptimum strategy in lots of cases. If we have a pretty good idea of factors which will change earnings going into the future, we should “normalise” earnings to take these into account. Today I’m sharing some thoughts on the impact of expected changes in interest rates on owner earnings & share valuations. In particular, the thought that normalised earnings should reflect normalised interest rates, and not current short-term rates.

Do you agree with the following statement? “To maintain inflation at 4.5% over the long run the reserve bank would need to have an average repo rate of around 7.5% to 8.5% (5.5% currently). In the short term there’s the issue of our struggling economy. However, with South Africa’s fiscal & current account deficits, if we don’t raise rates soon we will get hammered when the United States of American pick up momentum with raising its base rates”.

One of many questions this raises, is to what extent will the US be able to raise rates:

  • the economy is still relatively indebted, so rate increases have a bigger impact than usual.

  • And then there’s the small matter of a possible slowdown in China and its repercussions on the rest of the world. Will the US be able to merrily increase increase rates with that type of fallout?

That’s problem number 1 with interest-rate forecasts: I may have a feeling for the direction in which things are heading; however except in extreme situations there are lots of ifs and buts.

Then we get to problem number 2 with interest-rate forecasts : the traders at the coalface know exactly the same and probably more than I do about the financial health of world economies, and if I’m worried about China, so are traders and they’re thinking about it a lot more, and probably factoring it better into their decision-making process than me. So, how am I to compete with them? The answer is I don’t – I have zero interest in trading the forex markets, and I’ll rarely attempt to trade the fixed interest markets.

Market interest rates are my Estimates

If you can’t beat ‘em, join ‘em. Generally speaking, the government bond interest rate markets are so efficient, that the best knowledge of where things are heading is probably already in the price, and is a far better estimate of where things should be than I’m able to make. Realising this, and relying on government bond yields saves me a lot of work.

Short-term rates are an exception to the rule

Short-term rates are sometimes an exception to the general thought of the interest rate market being efficient. Governments can keep short-term interest rates artificially low (or high) over the short term, but if rates are kept artificially low in the short term then inflation will rear its ugly head, and in the long-term interest rates will need to be adjusted upwards to keep the inflation beast under control.

The argument could easily be made that in South Africa rates are artificially low : CPI inflation is 5.9% but the repo rate is only 5.5%. However, the yield on a longer term bond like the R209 is 8.85% (28 March 2014), which probably reflects an underlying belief that yields are going to have to rise up to about that level and beyond (using the argument that long yields should equal the sum of yields over shorter periods).

Adjust for Expected Change in Interest Rates

If we believe that short term interest rates are going to have to rise about 3.5% (9% minus 5.5%), this means that:

  • the interest burden on short-term debt is going to increase by some 3.5%

  • the interest earned on short-term savings is going to increase by some 3.5%

The debt/investments of the company need to be studied to check whether any adjustments need to be made to “normalise” them, in our calculation of owner earnings.

If others aren’t carrying out the adjustments there’s a possibility ofcompanies with positive net cash balances being undervalued and companies with negative net cash balances being overvalued.

Discount Rate

Another (bigger) area in which interest rates are used in share valuations is in discounting future cashflows. An approach to figuring out the worth of a share is discounting its net after tax estimated future cashflows to an investor, by the net after tax required return (to compensate for risk taken).

As the net after tax required return varies from investor to investor, this means that the value of a share differs between investors with different tax statuses! This is one of the many sources of volatility in the share market.



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Due to regulations, our emails and our entire website should be considered as having been set up for entertainment purposes alone. Expect errors and omissions. Investment in shares should be conducted by professional investment experts only. Any use of the information on our websites and newsletters is at your own risk, and by using it you agree that the owners of, authors and associated parties wont be held liable for any losses suffered as a result of using the information. None of the information should be construed as being advice. Our newsletters, articles, discussions and website are not an offering for any investment. It represents only our and others' opinions, which are often wrong. Any views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest. Illustrations, forecasts or hypothetical data are not guaranteed and are provided for illustrative purposes only. There are risks involved in buying or selling a financial product. Past performance is not indicative of future performance. Any investment values given are not guaranteed. Investment returns can be volatile. When investing there is the risk of losing all or a substantial amount of your investment, as well as the risk of illiquidity. There may be advertisements on some pages on our website and newsletter, and we may earn income from these advertisements. We cannot attest to the accuracy of the material presented here, and opinions expressed may be changed without prior notice. 

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Until next time!
Karen, Rob & the rest of the SouthAfrica.TO team