Perspectives

Some of you may be familiar with the Greek myth of Odysseus. Below is a classic painting by John William Waterhouse of Odysseus and his men.  After victory in Troy, Odysseus sets off on his journey home (the Trojan horse was his idea). Odysseus was renowned for his brilliance, versatility, self-restraint and cunningness. On the way to Ithaca, they had to pass the island of the Sirens before facing the six-headed monster Scylla and the whirlpool Charybdis. The Sirens were bird-like creatures with female voices that lured sailors to their death.

It is not easy to provide a perspective when we have been saying the same thing the last several months. Nothing has really changed and everyone remains worried about their savings and the political rhetoric. This is perhaps why the seasoned investors keep on referring to temperance. It is our ability to manage our behaviour when things do seem odd and out of control, while ignoring the alluring schemes such as a Bitcoin, a Sharemax, switching to cash, or whatever comes next. 

The use of screening tests in medicine is a well-established practice.  Depending on your age and gender, most of us have undergone some form of screening in the past. Examples of medical screening tests are a glucose test, cholesterol test or a mammogram. The goal of a screening test is to detect a potential health disorder or disease where there might not necessarily be any symptoms. Included are perhaps some screening questions that might help you assess whether you have an underlying “financial health” concern.

When all goes well, we often forget how good we have it, or what a scenario might look like if something goes “off the rails”. It is classic comfort and complacency. This week a substation blew in Paarl and started a fire that left a large section of our town without power for 3 days.

For some reason greed and power is part of humanity. Not long ago I read about the bankruptcies of both Boris Becker and Johnny Depp (not even to mention Naas Botha). It makes you wonder what we need, or how much we need?

Reading, or only hearing about Berkshire Hathaway and the Oracle of Omaha is vastly different from experiencing the atmosphere at the Century Link Centre in Omaha this past May. There is a good reason why 40,000 investors across the planet book their annual pilgrimage to hear Mr Warren Buffett and Charlie Munger share their thoughts and opinions at the Berkshire Hathaway shareholders’ meeting.  Being there was a huge privilege and surely a lifetime event that I will always remember.

During the last 50 years, South African equity returns exceeded the returns of bonds and cash by roughly 6% compounded per annum. This outperformance came with significant volatility; i.e. ups and downs in financial markets. There are periods where shares in listed companies will underperform bonds and cash, as has happened in South Africa during the last 3 years. In the long run however, stocks as well as listed property will outperform all other asset classes.

With this quarterly perspective, we would like to reflect on some major milestones of 2016. What it possible could mean for the near future and how do we intend to adjust our investment strategies, or not?

“All man’s miseries derive from not being able to sit in a quiet room alone".  Blaise Pascal (19 June 1623 – 19 August 1662) was a French mathematician, physicist, inventor, writer and Christian philosopher. Truly a multi-faceted man; read more on the Web here.  Maybe philosophers are better than anyone else at sitting alone in quiet rooms (I suppose it is part of their job description). They read something; think about it while they stare out of windows.

We enjoy advertising campaigns of fund managers and other financial institutions.  It is compressed, creative and entertaining.  For example a story about a blind doctor who cares for his patients (by Coronation); re-visiting the great Ali versus Foreman fight in Kinshasa (by Sanlam); re-uniting with a loved one after the fall of the Berlin wall (by Allan Gray).  We all could make an emotional connection with many of these stories, but what information do they provide us about the underlying investment(s) in order to help us decide if I should use or invest with them?