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Ronald, Reanimated

Appointed in March, McDonald's new CEO, Steve Easterbrook, has already done much to innervate a culture that had long risked growing ossified. As the company's latest quarterly reports attest, investors may be cautiously optimistic that this new management's focus has come to bear.

Till recently, however, it would appear that this change had gone largely unnoticed. While in the US, McDonald's same-stores sales topped expectations by 1%, globally, same-store sales grew 4%, more than double what consensus expected. This resurgence can, at least in part, be attributed to...

November in review

US stocks rose over the last month, buoyed by comments in the Fed's most recent meeting that conditions for a rate rise may "well be met" come December. Attention now turns on Fed Chair Janet Yellen's speech to Congress on the 3rd December. Meanwhile, the S&P 500 rose 0.1%. While the US seeks to tighten, remarks by Mario Draghi that policymakers would "do what they must" to raise inflation led investors to expect a boost to monetary stimulus. The Stoxx 600 rallied 2.7% over the month. In Asia, Japan slipped back into recession. Nevertheless, the Bank of Japan maintained their view that the inflationary trend is improving. The Japanese Topix was up 1.4% over the month. Following a meeting of the IMF's executive board, from October 2016 the Chinese yuan is to be added to the SDR basket of reserve currencies, with a weight of 10.9%, topping that of the yen and pound sterling.

Click below for the latest factsheets.

Credo publishes "Running the distance" edition

Chasing Clouds

In our last piece, we noted that our strategy of not rebalancing our portfolios has worked to our clients' advantage as weak positions, by virtue of their weakness, are diminished over time. The opposite may be said of successful companies, whose continued successes are compounded as the position grows in the portfolio.

Microsoft is one such company; held since the inception of the Best Ideas Portfolio, it has been the largest single contributor to investors' return. However, it had an image problem. For young investors, Microsoft was more redolent of dreary IT lessons playing with Clippy (the feckless, animated Office Assistant) than the complex computing company which today services almost...

CNBC Africa

Will US Non-Farm Payrolls move the Fed to hike interest rates?

Deon Gouws, Credo's Chief Investment Officer, joined CNBC Africa to discuss the likelihood of the United States Federal Reserve imposing a rate hike and what the impact would be on the South African market.

October in review

Over the last month, corporate earnings season in the US has now begun in earnest, with 66% of companies beating analyst estimates. Meanwhile, the S&P 500 rose 8.3%. Following the September decision on interest rates and recent stabilisation of the Chinese economy, speculation over a December rate hike is mounting. In Europe, though policy remained unchanged, comments in October by Mario Draghi, the ECB president, fuelled hopes of further easing when the council reconvenes in December. The Stoxx 600 gained 8.0% over the month. The Chinese economy grew an estimated 6.9% in the third quarter, leaving it on track to meet its full-year growth target of around 7%. Meanwhile, the Chinese National Bureau of Statistics warned that the pace of economic reform must be accelerated, providing scope for further stimulus measures. In the meantime, the Shanghai Composite Index rose 10.8%.

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Finweek - Collective Insight

The bliss of ignorance

CredoNews #

South African financial publication Finweek publishes a tri-annual supplement named Collective Insight focusing on the investment community at large. The latest edition, published in October 2015, highlights Financial Education - Changing Investor Behaviour and features Ainsley To, analyst on the Multi-Asset team at Credo.


Rate rise may boost share prices

Leading South African business website Moneyweb recently held an interview with Credo CIO Deon Gouws, discussing inter alia the company's Best Ideas Portfolio as well as some views on the market.

In conversation with Bob Skinstad

CredoNews #

Credo has recently hosted a lunch at The Zoom Restaurant with special guest Bob Skinstad, who shared his views about the Rugby World Cup.

CNBC Africa

The Stock Market Scrum

The article that Deon Gouws recently wrote about the Springbok bubble has not only been very well received, but it has also led to a number of follow-up interviews in the South African media. In the most recent one (this time with CNBC Africa), Deon discusses the similarities between the stock market and the Rugby World Cup.

The Money Show

Material Decisions

In his most recent memo to investors, Howard Marks (Chairma of Oaktree Capital Management) borrowed from Charlie Munger in recounting the only absolute truth in investing: it's not supposed to be easy, and anyone who finds it easy, is stupid.

Which brings us to Credo's holding of Anglo American plc (AAL) within our Best Ideas Portfolio (BIP). It may appear to some that a decision to sell out of the company should have been an easy one over the last few years: the commodity cycle has been unwinding, the news flow emanating from the company has been tepid, and the momentum of the share price has been negative. At various points in time we did consider our position, but on each occasion we came to the conclusion that...

The Springbok bubble - Lemmings overpaying, soon to sell?

In 2003, Deon Gouws wrote and published a piece about the fluctuating emotions of South African rugby fans during a rollercoaster Rugby World Cup (where the Springboks eventually lost to the All Blacks in the quarter-final). Twelve years later, the facts and statistics have been updated for more recent developments in this re-published piece (even though the gist remains unchanged)... The more things change, the more they stay the same?

Aberdeen Asset Management

Aberdeen Asset Management is a global investment management group which is a member of the FTSE 100 with a market capitalisation of GBP 3.9bn. The group is based in 26 countries with 36 offices, employs over 750 investment professionals and around 2,700 staff overall. Aberdeen manages investments across multiple jurisdictions and asset classes, with a bias to Emerging Markets and has GBP307.3bn assets under management (AuM). It is known for its focus on...

September in review

In the US, the Federal Reserve opted to keep interest rates unchanged, further delaying the path to policy normalisation. Meanwhile the S&P 500 fell -2.6%. In Europe, Volkswagen's share price plunged over 30% following revelations that the carmaker cheated on US emissions tests. Concerns that others would be implicated led to sector wide losses. The Stoxx 600 lost -4.1% over the month. In the periphery, the subdued Greek crisis threatens as an emphatic victory for Syriza in the general election thwarted the troika's hopes of a more compliant government to implement the terms of the bailout package. Following August's resurgent volatility, the Shanghai Composite Index continued to slide, ending down -4.8% while weak manufacturing data added to concerns about China's slowing growth.

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Credo CEO and CIO interviewed by leading financial journalist

CredoNews #

Alec Hogg is a media entrepreneur who runs and is arguably one of the best known financial and business journalists in South Africa. Throughout his career he has sought out and produced new and often disruptive opportunities in his sector.

Alec recently spent a month in the United Kingdom, seeking out a number of successful entrepreneurs and business people in and around London. In the below interview and podcast, he speaks to Roy Ettlinger (founder and CEO of the Credo Group) as well as Deon Gouws (CIO of Credo Wealth).

CNBC Africa

How will the US Fed reserve rate decision impact Africa?

Jarrod Cahn, Credo's Director, joined CNBC Africa to discuss the likelihood of the United States Federal Reserve imposing a rate hike and what the impact would be on Africa's markets and currencies.

Chubb: Unexpected Titan

Established in the 8th Century BC, the Oracle of Delphi was famed for a prescience market forecasters can only aspire to. The trick, however, was that her pronoucements were shrouded in ambiguity. The tyrants of the time followed her advice, but their hubris proved their downfall: the Oracle's advice proved true, yet not in a manner they expected. In later years, the Oracle pronounced Socrates the wisest of all men, for he knew his own ignorance. It goes without saying that, at Credo, we favour the latter approach. A few months back we added Chubb to our portfolios based on...

Credo publishes "Rugby World Cup" edition

August in review

Volatility in China's currency triggered a sharp sell-off in commodities, and added to mounting global deflationary pressures, prompting speculation that the Federal Reserve may refrain from raising rates in September, despite improving US economic data. Subsequently, on Monday 24th August, global markets erupted. In China, the Shanghai Composite Index fell -8.5% and was soon followed by the S&P 500, the FTSE 100 - down -4.0% and -4.7%, respectively - and other major indices. The turmoil that ensued was sufficient to earn that day the moniker "Black". Yet the rout proved short lived: by the end of the week, the S&P 500 and FTSE 100 were both up 1.0%. Nevertheless, global markets fell over the month: the Shanghai Composite Index ended down -11.7%, while the S&P 500 and FTSE 100 suffered more modest tumbles of -5.3% and -5.9%, respectively.

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CNBC Africa

SARB to step in to address rand's plunge

Credo's CIO, Deon Gouws joins CNBC Africa to discuss the outlook for South Africa's battered rand which recently touched 14 year lows against the greenback. The reserve bank released a statement saying the institution would step in to curb volatility should the situation deteriorate further.

Blood on the streets?

The last few weeks have seen some of the most volatile times in markets in recent history. Whilst the weakness to date cannot (yet?) be compared with the global financial crisis of 2008, all major indices have now seen double digit declines. What this means is that we are now officially in "correction" territory; if markets slide further and register declines in excess of 20% from their highs, it will for evermore be referred to as the Crash of 2015. Against this background, we understand that many clients will be concerned about the state of their portfolios. In particular, what should one do in times like these?

When the facts change

Regular readers may have noticed that at Credo, our perspective peers through the lens of long-term value. Low turnover of our portfolios is an essential part of this approach. However, we continuously review our positions and no commitment is ever safe from scrutiny. From time to time the facts change and, to borrow from Keynes, when the facts change, we change our opinions. After Monsanto made an offer for Syngenta, the facts changed. On balance, we viewed the risk as skewed to the downside and we decided...


Sainsbury's is a UK household name and supermarket with a market capitalisation of GBP 5bn, and is a component of the FTSE 100 Index. Sainsbury's was founded in 1869 and today operates over 1,200 stores, which employs around 161,000 people. Sainsbury's has recently issued a hybrid perpetual with a...

July in review

Though revisions to US GDP data pared 0.1% off real annual GDP growth since 2012, continuing low unemployment claims suggest ongoing improvement in the labour market. While some blue-chip companies reported underwhelming earnings, 77% have beaten estimates, and the S&P500 closed 1.3% up over the month. Gold slid -6.8%, hitting a new five-year low, as expectations of a US rate hike left investors unwilling to take large positions in the metal. Fervent musings over Grexit faded from the headlines as Athens reached a partial resolution with her creditors. Though sentiment surrounding Greece improved, corporate earnings results were mixed. Nevertheless, the DAX and CAC 40 were up 1.2% and 4.1% over the month, respectively. In the UK, speculation over the timing of interest rate hikes and the tumbling gold price weighed on stocks, however, the FTSE 100 ended up 1.3% over the month. While weak economic data prompted renewed concerns over China's growth, continued government stimulus measures supported stock markets.

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CNBC Africa

Will weak US jobs data halt Fed rate hike?

Jarrod Cahn, Credo's Director, joined CNBC Africa to discuss whether the United States Federal Reserve will hike interest rates despite weak employment data and what this could mean for markets.


You can feel a bit better about the rand

The mathematics of currency movements may appear simple, but they can be confusing. The following piece by Credo CIO, Deon Gouws, has been published on Moneyweb and clarifies the matter.

Finweek - Collective Insight

Who should call the shots?

South African financial publication Finweek publishes a tri-annual supplement named Collective Insight focusing on the investment community at large. In the most recent edition (published July 2015), the business of Asset Management was put under the microscope. Two out of the seven articles published were written by professionals at Credo. In the second, Deon Gouws (Chief Investment Officer at Credo) explains why he believes that independent investment firms enjoy certain structural advantages compared to their institutional counterparts.

Finweek - Collective Insight

Lessons from the 18th century

South African financial publication Finweek publishes a tri-annual supplement named Collective Insight focusing on the investment community at large. In the most recent edition (published July 2015), the business of Asset Management was put under the microscope. Two out of the seven articles published were written by professionals at Credo. In the first, Ainsley To (analyst on the Multi-Asset team at Credo) provides a historic overview and traces back the origins of mutual funds to the 18th Century.

Citywire Wealth Manager

Deon Gouws participates in the Citywire Wealth Manager Investment Committee

Credo Wealth was recently invited by the influential Wealth Manager magazine (published by Citywire in the UK) to participate in a virtual Investment Committee consisting of senior professionals from different firms in order to discuss asset allocation views. This panel debate takes the form of a series of opinion pieces, the first of which was this one by Chief Investment Officer, Deon Gouws (published in mid-July):

The Final Act?

The architects of ancient Greece used a technique called entasis - whereby all major vertical and horizontal lines are slightly curved - to create the illusion of a perfect geometry. Likewise, in order to sell the bailout terms to the Greek parliament, Tsipras may have to...

June in review

Overall it has been a quiet second quarter, with the S&P 500, the FTSE 100, and the Euro Stoxx 50 all largely flat. Yet amid this broad market inertia, attention has been focused on the closing chapters of the Greek debt crisis, where intransigence at the negotiating table has forced Tsipras' hand. A snap referendum has been announced for 5th July while Tsipras has offered a tentative agreement to bailout terms. However, considerable uncertainty persists as the consequences of a rejection of the bailout terms remain unclear. Nevertheless, in the face of a more robust Eurozone, fears of contagion appear muted. In Japan, signs of life are coming from the beleaguered labour market, as job openings per applicant hit a 23-year high. However, a sustained wage price spiral remains elusive. Intervention by Beijing soothed fears of a Chinese equity market collapse following an extended rout that wiped an estimated $2tn off the market capitalisation across Shenzhen and Shanghai.

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Pershing Square Holdings

Pershing Square Holdings (PSH) is Bill Ackman's listed hedge fund that has recently come to the market with an investment grade bond issuance of $1bn. Credo participated in the equity initial public offering in October 2014 of $6bn of permanent capital for the strategy, listed on Euronext Amsterdam and recently have included the bond issue within...

The Beauty of Boring

The Merchant of Venice would have been a far less interesting play had Antonio the wit to insure his cargo. Nowhere is Shakespeare's adage "all the glisters is not gold" more true than insurance: the interesting, high growth companies like AIG were exciting until suddenly, in 2008, they weren't. Rather, when it comes to investing in insurance, boring is beautiful. Today, comparative advantage comes not from heady growth numbers but from the boring reality of operational focus, modern data, and optimization. Within this elite cadre, Chubb is perhaps the most...

Credo International Conference in London

CredoNews #

Credo Wealth held its second annual International Client Conference at the Royal College of Physicians in Regent's Park, London on Thursday the 11th of June 2015. Roy Ettlinger (CEO) introduced proceedings with a business overview, followed by Jarrod Cahn (Director & Senior Portfolio Manager) providing a perspective on the global oil market and Deon Gouws (Chief Investment Officer) delivering a keynote address in accordance with the theme "Keep Calm & Carry On".

May in review

In the UK, inflation has tipped into deflation for the first time since 1960. While this has been attributed to a fall in air fares, it has placed further pressure on the Monetary Policy Committee to delay any prospective rate hikes. By contrast, US annual core inflation came in at 1.8%. Speculation over the timing of an interest rate rise is once again fomenting, after Janet Yellen said in a speech that an appropriate normalisation in monetary policy could begin "at some point this year". Following comments from the ECB that the pace of bond purchases would increase in the coming months, the euro fell 1.8% against the dollar. While European exporters may glean the benefits, the broader economic picture remains uncertain. Against this backdrop the Greek drama may be nearing its final act, as politicians have warned that Athens may be unable to make its next debt repayment, due on 5th June. In the face of ongoing stalemate, a deus ex machina remains to be seen.

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Deon Gouws on the case for UK equities in 2015 and beyond

Credo's Chief Investment Officer, Deon Gouws, recently participated in a televised debate, co-hosted by Citywire and Invesco Perpetual, on the case for UK equities in 2015 and beyond. The discussion was led by Michael Wilson, celebrated British television presenter and former Business Editor for Sky News. Please click here for an edited and summarised version of the debate.

Little England?

Following his election to Parliament, Edmund Burke, viewed by many as the founding father of Conservatism, famously argued that an MP is not the mere delegate of his electorate, rather: "your representative owes you not his industry, but his judgement; and he betrays, instead of serving you, if he sacrifices it to your opinion". So much for election promises in the 18th Century. Today, however, there is one election promise that ought to weigh heavily in the minds of investors: a referendum on...

April in review

Despite escalating rhetoric surrounding a Greek default, European yields have continued to fall. German Bund yields are negative out to the 9-year maturity, and the 10-year Bund is currently testing the zero threshold. However, positive first quarter earnings results have provided ample distraction from the unfolding Greek drama. According to data compiled by Thomson Reuters, 61% of European companies have met or exceeded earnings expectations. Economic data releases, however, have remained mixed, though industrial activity in Germany and the peripheral Eurozone countries has continued to accelerate. In the US, underwhelming economic data, including a third successive week of increasing jobless claims, were overlooked by markets as earnings results have been particularly strong. In a move designed to ease credit conditions and stimulate the Chinese economy, the People's Bank of China cut the reserve ratio requirement by one percentage point. In spite of this, the manufacturing purchasing managers' index fell to 49.2, indicating continued contraction.

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Back to the future

According to Pythagoras, the ancient Greek philosopher, "after certain periods of time the things that have happened once happen again and nothing is absolutely new". While Pythagoras was considering the universe's life-cycle, M&A activity in the oil and gas industry offers an abridged version, spanning mere decades...

Phoenix Group

Phoenix Group Holdings has a premium listing on the London Stock Exchange and is a member of the FTSE 250 index with a market capitalisation of GBP 1.8bn. The Group operates primarily in the United Kingdom, and is the largest closed life assurance fund consolidator that specialises in the management and acquisition of closed life and pension funds. The Group has over 5 million policyholders and GBP 57bn assets held by their life companies, including stock lending collateral...

March in review

The US equity market fell during the month, as mixed economic data fuelled uncertainty surrounding the timing of the Fed's first interest rate rise. For example, US durable goods orders fell while consumer spending was the strongest (since 2006), providing investors with ample uncertainty concerning the world's largest economy. European stock markets were up slightly over the month, as US interest rate speculation and instability in the Middle East dented the momentum of what has been the region's largest stock market rally in five years. Bond markets took a heavy toll with the start of the much anticipated ECB quantitative easing programme, with German Bund yields approaching their record low. Despite much touted worries of deflation, a nascent recovery in industrial activity supported by a weakening euro suggests such pressures are likely to abate. Oil prices, a major driver of deflationary pressures, were afforded temporary relief as ongoing political conflict in Yemen has driven up prices. In China, recent PMI releases indicate a contraction in manufacturing, raising hopes of further stimulus from the Chinese government.

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Credo publishes "Spring 2015" edition

Ensuring success

The surprise announcement last week that Prudential's CEO Tidjane Thiam would be stepping down after six years at the helm came as a shock to many. No one can doubt that "it is better to be vaguely right than exactly wrong" and throughout his stewardship, Mr Thiam's strategy proved "vaguely right". His shareholders did not always agree, however, blocking his GBP 23.5bn tilt at acquiring Asian insurer AIA in 2010. With the benefit of hindsight, the ill-fated venture made a lot of sense: for instance, AIA's market capitalisation has nearly doubled in the subsequent five years. For his successor, Prudential's future hinges on holding fast to Mr Thiam's proven model...


London listed Glencore is one of the world's largest diversified natural resources group that combines a large portfolio of assets and mining projects with an extensive third party marketing business. The activities of the group are organised around three main business groups: Metals & Minerals, Energy Products and Agricultural Products, which are in turn sub-divided into several commodity departments. These departments are responsible for managing the production, sourcing, hedging, logistics and marketing activities relating to their respective commodities. In 2013, the pro-forma unaudited revenues of the combined Glencore group were $232.7bn...

February in review

Equity markets in the US rallied over the month, as sentiment was buoyed by the minutes from the Fed's latest meeting, which indicated policymakers are concerned about the impact of raising rates too soon. Labour market conditions continued to improve, with jobless claims falling 21,000 in the week to 14th February and Wal-Mart, the largest private employer, announcing a wage increase. The manufacturing sector also saw gains, with a preliminary PMI reading of 54.3, up from 53.9 in January. Despite becoming embroiled in a resurgent Greek crisis, European equities have enjoyed an upbeat start to the year, returning 8.1% on a year-to-date basis. Across Europe, PMI readings indicated faster expansion in both the manufacturing and services sectors, while a pickup in the rate of job creation further supported investor sentiment. Following their latest meeting, the Bank of Japan left policy unchanged, confident that their QE programme has been exerting the intended effect. This positive sentiment was reflected in the equity market, with the majority of companies reporting better than expected profits.

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Citywire - Wealth Manager

The wealth world in 2020. Roy Ettlinger gets his crystal ball out

Citywire asks Roy Ettlinger to highlight how he expects the industry to look in five years time.

"Over the next five years we expect significant consolidation. Compliance and regulatory costs will continue to rise, having a disproportionate effect on smaller businesses as larger firms are protected by economies of scale. Compliance will also flow over into portfolio construction, leaving the notion of the 'bespoke' portfolio somewhat hollow..."


There's a big world out there

As part of the recent South African Budget Review (published on 25 February 2015), it was announced that the offshore investment allowance for private individuals will be increasing from R4mil per year to R10mil per annum � representing a big opportunity for Credo clients to further increase their international exposure. The following commentary piece was published by Credo Chief Investment Officer, Deon Gouws, on leading financial website Moneyweb a day later.

January in review

It has been an unsteady start to the year for US stocks as numerous economic headwinds, not least US dollar strength, dampened the earnings season. In Europe, by contrast, the announcement of additional stimulus by the ECB drove equities to deliver the highest monthly return in nearly four years. Commodities have continued to slide, with oil falling to $48 by the end of the month. However, the decline has not been limited to oil: from copper to corn, commodities have continued to fall. As volatility has reared its head, investors have moved into safe-haven assets. This month alone, gold has rallied 8.4%, and US 10-Year Treasury yields have fallen to 1.66%. Across developed markets, deflationary fears abound. In the Eurozone, headline inflation is expected to drop -0.6% year-on-year. On the back of this, the ECB has embarked on a new era by announcing a 60bn euro a month programme of quantitative easing. This will largely be comprised of Eurozone sovereign debt. While this has driven the euro's depreciation, falling 6.7% against the US dollar, it has helped boost confidence across the beleaguered currency bloc.

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FA News

Time to shine for developing markets as oil turns ugly

... Jarrod Cahn, Portfolio Manager at Credo Capital, pointed out that this is not doing the commodity any favours. Supply is currently outstripping demand, so the current situation is a supply led shock rather than a demand led shock...

Scorched oil tactics

Following the extended rout of oil over the past six months and the media frenzy surrounding it, investors would do well to remember the dictum of 19th Century French economist Frederic Bastiat: in the sphere of economics there is always "ce qu'on voit et ce qu'on ne voit pas" - what we see and what we don't see. We may see the rise of shale in the US, and OPEC's refusal to cut production, but the impact of high shale depletion rates, the end of cheap money for shale producers, and budget breakeven levels for OPEC members are hard to quantify. As ever, the law of unintended consequences will likely apply.

Finweek - Collective Insight

Aligning assets with their owners

South African financial publication Finweek publishes a tri-annual supplement named Collective Insight focusing on the investment community at large. The topic of interest in the most recent edition (published January 2015) is the growing trend of Goals Based Investing. Ainsley To (analyst on the Multi-Asset team at Credo) shares his views on how framing investing from a goals based perspective can impact the way in which we currently make investment decisions.

Credo hosted an International Client Conference in five different cities around South Africa during the last week of January 2015

CredoNews #

Conference team after the final event in Cape Town. From left to right: Deon Gouws, SJ du Preez, Natalie Ledwick, Christelle Coetzee, Jarrod Cahn, Roy Ettlinger, Dean Noik, Rupert Silver and Alan Noik.

Roy Ettlinger (Group CEO) kicked off proceedings with a brief business overview. This was followed by Jarrod Cahn (Senior Portfolio Manager) providing an in-depth analysis of recent movements in the oil price, after which Deon Gouws (Chief Investment Officer) did a more general market overview focusing specifically on the current deflation debate. Alan Noik (MD of Credo Capital) wrapped up with a product overview.

How the shippers stole Christmas

In 'The Consolation of Philsophy', Boethius tells us that constancy is foreign to the character of Fortune; misfortune strikes indiscriminantly. Such sentiments, however, would provide little solace to the millions of consumers who went without last Christmas, as inclement weather and inadequate infrastructure caught UPS and FedEx off-guard. Their misfortune was the concurrence of an unusually late Thanksgiving and surging levels of online shopping, which overwhelmed shippers' distribution networks.