NUUSBRIEF PSG Wealth Pretoria-Oos

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1 JANUARIE I FEBRUARIE 2015 NUUSBRIEF PSG Wealth Pretoria-Oos Ekonomiese oorsig Februarie 2015 Die afgelope jaar was op die oog af n redelike goeie jaar vir die JSE. As ons dit egter van naderby bekyk, sien ons dat die JSE sedert April 2014 feitlik geen groei aangeteken het nie en sedert 28 Julie 2014 met bykans 7% gedaal het. Europa en groter aanbod onder andere uit die VSA, druk die prys van olie selfs laer. Grafiek 2: Olieprys Dawie Klopper Billiton: 36.13% Anglo: 35.50% Kumba: 38.43% Implats: 35.45% Kommoditeitsaandele is grootliks verantwoordelik vir hierdie daling. Sedert 29 Julie 2014 het van ons kommoditeitsaandele as volg gevaar: Sasol: 40.4% Grafiek 1: JSE Uit n portefeuljekonstruksieoogpunt moet onthou word dat n portefeulje se samestelling anders lyk vir n olieprys teen $50 per vat as vir n olieprys teen $100 per vat. Aspekte wat verander is byvoorbeeld MTN se blootstelling aan Nigerië, dalende inflasiekoerse (en gevolglik ook laer rentekoerse) en hoër genoteerde eiendomspryse. 2. Europese ekonomiese toestande en deflasie Die vraag kan seker gevra word wat aanleiding tot hierdie situasie gegee het. Uit n makro-ekonomiese oogpunt is daar n paar verduidelikende aspekte wat oor die volgende paar maande steeds n rol, positief of negatief, sal speel: In Europa is ekonomiese groei onder druk, met veral Griekeland wat swaarkry. Daarmee saam sukkel die Europese Sentrale Bank om inflasie aan die gang te kry en is daar vrese dat deflasie besig is om in Europa pos te vat. Grafiek 3 dui aan dat Duitse inflasie skerp aan die daal is. Grafiek 3: Duitse inflasie 1. Die olieprys Die olieprys het oor die afgelope ses maande skerp gedaal. Dit is klaarblyklik veroorsaak toe ISIS olie op die markte gestort het teen feitlik enige prys, ten einde hulle aanvalle in die Midde- Ooste te befonds. Daarna het Saoedi-Arabië aangekondig dat hulle nie produksie sal terugsny nie en dit het daartoe gelei dat spekulante en doodgewone vraag- en aanbodoorwegings die mark verder kon afdruk. Uit n vraagkant blyk dit dat China se ekonomiese groei afplat en dit, tesame met stadige groei in JANUARIE I FEBRUARIE

2 3. Amerikaanse ekonomiese groei en die moontlikheid van rentekoersverhogings In die VSA word die werkloosheidskoers fyn dopgehou en word dit amper as die belangrikste barometer gesien van die gesondheid van die Amerikaanse ekonomie (Grafiek 4). Grafiek 4: Amerikaanse werkloosheid maak dit egter moeilik om hierdie situasie te bevestig. Dit is egter n feit dat die Chinese aankoopbestuurdersyfers (PMI) oor die afgelope jaar tot op 50.1 verlangsaam het en dit dui op laer groei. Nog n bevestiging van hierdie situasie, natuurlik met behulp van n paar spekulante, is die verloop van die koperprys (Grafiek 6). Grafiek 6: Koperprys Aanvanklik was die doelwit van die Federale Reserweraad (Fed) en Amerikaanse beleidsmakers om werkloosheid tot by 6% af te bestuur. Tans staan die syfer op 5.6% en laat dit vrae ontstaan oor wanneer Amerikaanse beleidsmakers rentekoerse gaan verhoog. Iets wat hierdie argument egter op sy kop keer, is die verloop van sake in die Amerikaanse staatseffektekoers. Grafiek 5 dui die Amerikaanse 10-jaar-staatseffektekoers aan. Grafiek 5: VSA 10-jaar-staatseffekte Die koperprys was nog altyd n leidende aanwyser ten opsigte van ekonomiese aktiwiteit, aangesien koper so n kardinale produk in produksieprosesse is. n Laer koperprys sal dus op laer ekonomiese aktiwiteit dui, terwyl die omgekeerde ook waar is. Die onlangse skerp daling dui egter ook op die betrokkenheid van spekulante in die mark. Alhoewel daar onlangs n mate van paniekverkope te bespeur was in baie kommoditeite en daar elemente van n oorverkoop toestand bestaan, is ek van mening dat kommoditeitspryse in die afwesigheid van sterk Chinese groei vir eers laag sal bly. So kan verwag word dat olie vir die volgende twee jaar miskien vanaf $50 per vat sal styg maar nie veel verder as $65 per vat nie. Teen n rand/$ waarde van R11.50 is Sasol dan nou, as ons n toekomstige PV van 12 gebruik, op die beste reggeprys. Dieselfde argument kan bv. vir ysterertspryse gebruik word. Dalk is kommoditeite nou oorverkoop maar `n V-vormige totale herstel word nie voorsien nie. 5. Die Switserse sentrale bank se skokbesluit om rentekoerse tot 0.75% te verlaag en die ontkoppeling met die euro Die prentjie is allesbehalwe bemoedigend en dui geensins daarop dat rentekoerse op die punt is om verhoog te word nie. 4. Stadiger groei in China en die impak daarvan op kommoditeitspryse Switserland se sentrale bank het die wêreld geskok met die aankondiging dat hulle die koppeling van die Switserse frank aan die euro op SF1.20 teen die euro gaan losmaak, en terselfdertyd het hulle ook die repokoers tot 0.75% verlaag. Die gevolg hiervan was n onmiddellike verstewiging van die Switserse frank teen al die belangrikste geldeenhede in die wêreld. Teen die rand het die Switserse frank oornag met 20% verstewig (Grafiek 7). Dit is nou al vir n geruime tyd duidelik dat ekonomiese groei in China moet verlangsaam. Die kwessie van sentrale beheer in daardie ekonomie en gebrekkige ekonomiese data uit China JANUARIE I FEBRUARIE

3 Grafiek 7: Switserse frank teen die rand Ons kan ons markvooruitskouing dus as volg opsom: Geldmarkkoerse kan weer begin daal. In die effektemark het kapitaalmarkkoerse heelwat gedaal, maar dalk is die geleentheid daar vir eers benut. Genoteerde eiendom het ook reeds die meeste van hierdie goeie nuus ingeprys, maar sou nog verder kon beweeg. In die plaaslike aandeelbeurs moet daar dalk onderskei word tussen hulpbronaandele en die res van die mark. Teen die huidige randprys van olie sou Sasol dalk steeds te duur wees. Dieselfde faktor kan egter ondersteuning bied aan kleinhandelmaatskappye. Die Switserse aandelebeurs het onmiddellik met omtrent 8% verswak. Die besluit het Suid-Afrikaanse beleggers op verskeie maniere, positief en negatief, raak: Richemont se aandeelprys daal met 8%, nadat die maatskappy reeds swak derdekwartaalverkope bekend gemaak het. Nadat die wisselkoersbeweging hier in berekening gebring is, dui dit op n baie skerp negatiewe beweging in Richemont se aandeelprys. Mediclinic, met sy belang in Hirslanden, styg met 8% en Nestlé, nadat voorsiening vir die rand se beweging gemaak is, styg met omtrent 12%. 6. Eskom, beurtkrag en Zuma In Suid-Afrika veroorsaak die verwagting van beurtkrag oor die langtermyn onsekerheid en kan dit ekonomiese groei aan bande lê. Die laer olieprys, daarenteen, dra by tot n skerp verlaging in die brandstofprys, wat n stimulant vir verbruikersbesteding kan beteken. Dit sal ook tot n laer inflasiekoers lei, wat kan veroorsaak dat rentekoerse daal eerder as styg soos wat allerweë verwag word (Grafiek 8). Grafiek 8: FRA 3-maande-koers oor ses maande Vir beleggings in die buiteland moet twee belangrike aspekte in ag geneem word, naamlik die wisselkoers en in watter buitelandse aandele om te belê. Die rand is op koopkragpariteit steeds te swak teen die VSA dollar, en die redes hiervoor is die Eskomkrisis en die swak leierskap van die president van die land. Beide faktore is vir eers hier om te bly. Europese aandele is baie goedkoop, maar soos hierbo genoem, sukkel die Europese ekonomie. Die swak eurowisselkoers kan egter n drywer vir maatskappywins wees en dit moenie misgekyk word nie. In die VSA is die mark reg geprys, maar daar word steeds verwag dat maatskappywinsgroei (uitgesluit energiemaatskappye) goed sal vaar en dat dit die mark selektief sal ondersteun. Sê nou jy het net op die slegste tye belê? Is dit nou n goeie tyd om te belê? is n vraag wat ek gereeld teëkom, veral by mense wat aftree met n pensioen- of voorsorgfonds en vir die eerste keer verantwoordelikheid moet neem vir hulle finansiële sake. In ons aanbiedings en gesprekke met kliënte bestee ons heelwat tyd daaraan om te verduidelik dat Leon Ferreira n mens nie moet probeer om tydsberekening toe te pas ten einde beleggingsbesluite te neem nie. Volg eerder n langtermynbenadering, waar jy nie op die korttermynwisselvalligheid reageer nie en in die mark bly. Dis dalk nooit presies die regte tyd om te belê nie, maar mettertyd is n belegging nooit n slegte besluit nie. Hierdie standpunt is onlangs in n interessante artikel van die finansiële ontleder, Ben Carlson, op sy blog, Wealth of common sense, onderstreep. Hiervolgens verwag die mark dat rentekoerse in die nabye toekoms met 50 punte kan daal. Dit verklaar waarom genoteerde eiendomstrusts so sterk is en ook waarom effektefondse so goed vaar. Dis dalk nooit presies die regte tyd om te belê nie, maar mettertyd is n belegging nooit n slegte besluit nie. Hy vertel die storie van Bob, die wêreld se swakste belegger wat tydsberekening betref, wie se loopbaan in 1970 op ouderdom JANUARIE I FEBRUARIE

4 22 begin het. Sy plan was om $2 000 n jaar te spaar en die bedrag dan elke dekade met $2 000 te verhoog, totdat hy teen einde 2013 uittree op die ouderdom van 65. Hy het die eerste $2 000 in n bankrekening geplaas en teen die einde van 1972 reeds $6 000 gespaar. Sy probleem as belegger was egter dat hy slegs die moed gehad het om in die aandelebeurs te belê nadat die mark baie mooi presteer het. In 1973 belê hy toe al sy geld in die S&P 500 en die mark val net daarna met 50%. Ongelukkige Bob het sy geld op die toppunt van n bulmark belê, net voor n groot ineenstorting. Die enigste goeie ding wat hy as belegger wel gedoen het, was om nooit sy aandele te verkoop en uit die mark te tree nie. Hy het maar vasgeklou, want hy was te bang dat hy dalk met die verkoopsbesluit ook verkeerd kon wees. Ná hierdie terugslag het Bob eers weer na n reuse bulmark in 1987 gemaklik gevoel om die $ wat hy oor 15 jaar gespaar het, in die S&P 500 te belê. Onnodig om te sê, val die mark kort daarna met 30%. Hy behou egter weer eens die aandele wat hy gekoop het. Bob se selfvertroue was teen dié tyd seker al aan flarde, maar in 1999 lok die ongelooflike vertoning van tegnologie-aandele hom om n verdere $ te belê, waarna die mark weer met 50% tuimel. Met sy selfvertroue feitlik vernietig, besluit hy om een laaste groot belegging te maak voor sy aftrede. In Oktober 2007 belê hy $64 000, reg voor die 50%-daling as gevolg van die finansiële krisis. Hierna besluit hy om verder in die bank te spaar, maar hy behou steeds al die aandele wat hy deur die jare gekoop het. Die totale bedrag wat hy belê het, is soos volg: Datum van belegging Daaropvolgende dalings Bedrag belê Desember % $ Augustus % $ Desember % $ Oktober % $ Totale belegging $ So wat was die resultaat van hierdie katastrofiese tydsberekening, met aankope net voor reusedalings in die mark? Hy tree af as n miljoener met $1.1 miljoen. Hoe is dit moontlik? Carlson wys daarop dat Bob n getroue spaarder was en dat hy die bedrag wat hy gespaar het, gereeld verhoog het. Verder het hy sy belegging blootgestel aan die wonderlike krag van saamgestelde groei, deur nooit uit die mark te gaan nie. Dit moes sielkundig baie moeilik gewees het om die vreeslike verliese te sien en steeds te volhard. (Dis nou waar n goeie finansiële adviseur n belangrike rol speel.) Die skrywer meld dat as Bob maandeliks in die aandelemark belê het, hy uiteindelik heelwat meer sou gehad het ($2.3 miljoen), maar dan sou hy nie Bob, die wêreld se slegste tydsberekenaar gewees het nie! Volgens Ben Carlson is die volgende lesse te leer: 1. As jy beleggingsfoute gaan maak, maak seker dat jy aan die optimistiese kant foute maak en nie die pessimistiese nie. Langtermyndenke is nog altyd beloon. Hy haal Winston Churchill aan: I am an optimist. It does not seem too much use being anything else. 2. Verliese of kapitaalvermindering is maar deel van belegging in aandele. Hoe jy reageer op die verliese is die grootste bepaler van jou beleggingsprestasie. 3. Om meer te spaar, langtermyn te dink en om saamgestelde groei te gebruik om vir jou te werk, is die grootste bepalers van welvaartskepping. n Beleggingsaak vir Gilead Sciences Martin Strauss 2014 is verby en die wisselvalligheid in die mark oor die afgelope jaar het weer eens bevestig dat ons, as beleggers, nooit te gemaklik kan raak nie. Oor die kort termyn is markte dinamies, gedryf deur sentiment en nie altyd rasioneel nie. Buitengewone opbrengste of verliese is nie volhoubaar nie, en oor die lang termyn moet dit tog weer normaliseer, of só sê die wetenskap vir ons. Maar beleggingsbestuur is nie n wetenskap nie; dit is n kuns. Daarom sal daar aanhoudend verandering in die denkwyse en die strategieë van n portefeuljebestuurder wees. Hy moet aanpas vir wesenlike en strukturele veranderings in die ekonomiese omgewing, en terselfdertyd korttermyn -geraas uitfiltreer. Die samestelling van sy beste idees kan dus ook soms verander. Vir ons is Gilead Sciences, n biofarmaseutikamaatskappy, so n nuwe idee. Gilead is op die NASDAQ genoteer. Die maatskappy ontdek en ontwikkel medisyne vir die behandeling van lewensbedreigende siektes, en spesialiseer in die behandeling van lewersiektes soos hepatitis C, kardiovaskulêre siektes en MIV. Kenners sal dalk produkte soos Sovaldi (lewer), Letairis (kardio) en Stribild (MIV) herken. JANUARIE I FEBRUARIE

5 Biofarmaseutikamaatskappye bestee uiteraard n groot som van behoue verdienste aan navorsing en ontwikkeling (N&O), en Gilead is geen uitsondering nie: Wêreldgesondheidsorganisasie skat dat daar ongeveer 180 miljoen mense is wat aan hepatitis C ly, en die meerderheid besef dit nie eens nie. 3. Goeie ontluikende markblootstelling en winsgroeipotensiaal Gilead het verlede jaar groot kontrakte met vervaardigers van generiese produkte in Afrika aangegaan om weergawes van Sovaldi in Afrika te verskaf. Daar is meer as 100 miljoen mense op die kontinent met die siekte. Dit kan tot groot omsetgenerering vir Gilead lei. Die maatskappy is ook teenwoordig in ander ontluikende markte. 4. Goeie waardasies relatief tot sy eweknieë Bron: Seeking Alpha Hierdie grafiek wys die afgelope jaar se N&O-koste (blou) en die N&O-koste relatief tot omset (oranje). Dit is duidelik dat die maatskappy se bedryfskoste gestyg het met inflasie, maar die relatiewe verhouding tot omset het sterk gedaal as gevolg van die buitengewone groei in omset. Dit word omgeskakel in goeie winsgenerering en die maatskappy het uiteindelik meer geld om aan verdere N&O te spandeer, wat lei tot nuwe produkte. Boonop het Gilead n 58%-bedryfswinsmarge oor die afgelope 12 maande gehandhaaf. Beleggers het dit raakgesien en Gilead se aandeelprys het die afgelope jaar ongeveer 33% gelewer. NAAM GilleaD Inc AbbVie Inc Amgen Biogen Pfizer Abbot Laboratories KODE GILD ABV AMG BIIB PFE ABT Bron: S&P Capital IQ MARKET CAPITALISATION NORMALISED PRICE/ EARNINGS FORWARD PRICE/ EARNINGS PROJECTED EARNINGS GROWTH $ B % $105 B % B % $80.71 B % B % $67.46 B % Gebruik die regte beleggingsvoertuig om jou beleggingsdoelwitte te bereik Bron: S&P Capital IQ Redes waarom ons Gilead tot ons portefeuljes bygevoeg het: 1. Ongeëwenaarde pryskrag Gilead lewer topgehalte medisyne vir dodelike, seldsame siektes, en dit regverdig die hoë premies wat hulle vra vir hierdie produkte. Sovaldi, wat vir die behandeling van hepatitis C gebruik word, kos ongeveer $ per behandeling. Daar is nie veel alternatiewe nie, en die vraag is, kan n mens regtig n prys op gesondheid sit? 2. Fokus op kroniese en globale siektes Gilead se pasiënte is regoor die wêreld teenwoordig. Daar is op hierdie stadium mense wat Sovaldi gebruik. Die Die begin van die 2016-finansiële jaar is om die draai en dit is dus weer tyd om oor uittreeannuïteite (UA s) te praat. n UA bly steeds n baie goeie manier om te spaar vir aftrede, en die groot voordeel is natuurlik dat die Ontvanger jou help om te spaar. UA s en polisse het oor die jare n baie slegte reputasie in die industrie gekry, Eugenie Borcherds en met goeie reg. Die makelaar van ouds het vir sy kliënt n illustratiewe uitkeerbedrag voorgehou en daar het die gesprek gestop. Wat nie mooi verduidelik is nie, is dat n polis en UA bloot n voertuig is die opbrengs wat die belegging uiteindelik gaan behaal, word bepaal deur die boublokke (onderliggende fondse) wat in die voertuig gebruik word. Markomstandighede verander en hierdie beleggingsboublokke moet dus bestuur en gemonitor word. Die makelaar is vergoed deur aanvangskommissie wat betaal is die dag toe hy die polis aan die kliënt verkoop het. Daar was geen aansporing om die produk te monitor en aanpassings te maak nie (aanpassings JANUARIE I FEBRUARIE

6 was in baie gevalle nie eens moontlik nie). Die kliënt kon dus moontlik aftree met n produk wat n nie-gekwalifiseerde makelaar, gedesensitiseer deur sy kommissie 20 of 30 jaar terug, afgemerk het op die aansoekvorm. Tot die kliënt se ontnugtering is die uitkeerbedrag toe nie naastenby die illustratiewe waarde nie. Selfs al sou hy gedurende die periode met n bietjie huiswerk agtergekom het dat die belegging nie voldoende blyk te presteer om die doelwit te bereik nie, was daar reuseboetes betaalbaar (tot vandag toe nog) om uit die belegging te kom, bydraes te stop of veranderinge te maak. Wetgewing en regulasies is vir niemand lekker nie, want dit veroorsaak meer papierwerk en administrasie kortom, n beslommernis. Maar ons as n besigheid voldoen aan die wetgewing en regulasies van ons bedryf, al maak dit nie altyd sin nie en raak ons soms gefrustreerd as dit voel of ons gestraf word vir die sondes van ander. Aan die ander kant is daar reusevordering in die bedryf gemaak, juis danksy regulasies. Daar is tans nuwe generasie uittreeannuïteite en polisse wat geen boetes het nie, volkome bestuurbaar en deursigtig is, en wat deurlopend gemonitor kan word teen lae en sinvolle koste. Tans is die bestuurskoste van n gewone effektetrustportefeulje en n identiese portefeulje in n polis of uittreeannuïteit dieselfde. Al die voordele van die PSG-beleggingsoplossings en -fondse kan in n UA of polis verpak word. n Polis het natuurlik die volgende addisionele voordele: 1. Die belegger hoef nie belasting te betaal op enige kapitaalwins, rente of dividende nie 2. Rente en dividende vir individue word in die polis belas teen 30% 3. Kapitaalwins word in die polis van n individu belas teen n effektiewe koers van 10% 4. Die belegger kan n begunstigde nomineer; dus spaar hy eksekuteursfooie by afsterwe Die nadeel van n polis is natuurlik likiditeitsbeperkings in die eerste vyf jaar. n UA het die volgende voordele : 1. 15% van n persoon se nie-pensioendraende inkomste (soos bonus, motortoelaag, huurinkomste, kommissie en dies meer) is belastingaftrekbaar 2. Daar kan nie op n UA beslag gelê word deur skuldeisers nie 3. n Begunstigde kan genomineer word en daar is nie eksekuteursfooie of boedelbelasting betaalbaar op n UA nie 4. Alle opbrengste in n UA is vry van kapitaalwins sowel as inkomstebelasting Soos by n polis, is likiditeitsbeperkings hier ook n nadeel wat nie noodwendig n nadeel is nie, want baie van ons het beskerming teen onsself nodig! Om verdere volledige voor- en nadele van die verskillende beleggingsvoertuie en vergelykings te bespreek, kontak gerus jou finansiële adviseur. Dra betyds by tot jou bestaande UA. Afhangende van die administrasiemaatskappy wat gebruik word, moet die bedrag en die ondersteunende dokumentasie in meeste gevalle reeds n paar dae voor 28 Februarie beskikbaar wees. Neem ook kennis dat die voorgestelde wetswysiging, naamlik dat jy voortaan 17,5% tot jou UA kan bydra, wat 1 Maart 2015 in werking sou tree, uitgestel is tot Jy sal volgende jaar dus steeds net n maksimum van 15% van die nie-pensioendraende inkomste kan bydra. Waak teen voorspellings Aan die begin van n nuwe jaar word daar altyd voorspel waar die beste opbrengste verwag word, hetsy verskillende bateklasse, aandeelmarkte of spesifieke aandele. By PSG Pretoria-Oos het ons gewoonlik aan die begin van die jaar n kompetisie, waar elke persoon sy aandeelkeuse vir die nuwe jaar moet gee en moet voorspel waar die JSE Marzél Swart gaan eindig. Oor die jare het ons egter besef dat nie een van ons die wenners of die opbrengs van die JSE in n spesifieke jaar korrek kan voorspel nie. Hier en daar was van ons al gelukkig om goeie keuses te maak, maar om dit jaar na jaar reg te kry, is onmoontlik. Selfs met die wete dat die mark totaal onvoorspelbaar is, kry ons steeds jaarliks die vraag wat gaan die beurs vanjaar doen? Wat kommerwekkend is, is dat baie beleggers meegevoer raak deur korttermynvoorspellings en dan langtermynbeleggingsbesluite daarvolgens neem, ondanks bewyse dat voorspellings onbetroubaar is. Regoor die wêreld is daar faktore wat n wanbalans in die pryse van hoërisikobates veroorsaak Beleggers se emosies word jaarliks getoets deur aandeelmarkskommelings en berigte in die media, en daar sal ongetwyfeld ook vanjaar uitdagings wees. Regoor die wêreld is daar faktore wat n wanbalans in die pryse van hoërisikobates veroorsaak, onder andere die waarskynlike rentekoersverhoging deur die Federale Reserwebank in Amerika, beoogde verdere stimulus deur die Europese Sentrale Bank om deflasie te beveg, baie trae globale ekonomiese groei (behalwe in Amerika) en heersende geopolitieke risiko s. Die lae olieprys is wel positief vir verbruikers en ekonomiese aktiwiteit in die algemeen, maar olieproduserende lande soos Saoedi-Arabië, Nigerië en Rusland voel die impak. Dat dit weer eens n wisselvallige jaar gaan wees, is byna al voorspelling wat met sekerheid gemaak kan word. Die enigste manier om jouself te beskerm, is om vir die lang termyn te belê, en wel deur diversifikasie. In wisselvallige markte is die versoeking groot om te koop en verkoop. Dit is gewoonlik eers ná n daling in aandele JANUARIE I FEBRUARIE

7 wat beleggers wil verkoop en ná n skerp styging wat hulle wil koop. Navorsing deur die batebestuursmaatskappy JP Morgan het bewys dat beleggers wat die tien beste dae op die S&P 500-indeks tussen 1993 en 2013 misgeloop het, baie welvaartskepping verloor het. Beleggers wat oor die 20 jaar net vasgehou het aan hulle beleggings, het n jaarlikse opbrengs van 9,2% in dollarterme gegenereer. Hierteenoor het die beleggers wat die tien beste dae misgeloop het, slegs 5,4% gegenereer, hoofsaaklik omdat die krag van saamgestelde groei verlore gegaan het. Volgens JP Morgan word van die slegste dae op die beurs soms gevolg word deur van die beste dae. Enersyds kan n belegger seker verlig voel omdat sy kontant veilig is wanneer die mark getuimel het, maar andersyds kan hy dalk ook van die beste dae op die beurs misloop. Histories is dit bewys dat deur n langtermynsiening te handhaaf, dit wil sê vyf jaar en langer, die risiko s van wisselvalligheid verminder word. Die onderstaande grafiek toon die prestasie van n $ belegging in die S&P 500-indeks tussen Desember 1993 en Desember 2013, asook die impak as n belegger van die beste dae sou misloop. BELEGGINGSSEMINAAR SPREKERS Dawie Klopper, Leon Ferreira, Chris Wehmeyer, Johan Borcherds en Leon Mostert DATUM 4 Maart 2015 TYD 10h30 PLEK Hyatt Oubaai Hotel, George DATUM 5 Maart 2015 TYD 18h00 PLEK Crystal Towers Hotel, Kaapstad DATUM 12 Maart 2015 TYD 09h00 of 18h00 PLEK WNNR, Meiring Naude straat, Brummeria, Pretoria RSVP Besprekings is noodsaaklik pretoriaoos@psg.co.za Onlangse navorsing deur Old Mutual wys dat n R1-belegging in die JSE Algehele Indeks sedert 1960 R6 566 werd sou wees teen einde Slegs R600 van die opbrengs is as gevolg van prysbewegings; die balans van R5 966 is afkomstig van rente, dividende en distribusies. Dit bewys weer eens dat dit onnodig riskant is om prysbewegings na te jaag. In goeie tye is ons geneig om die waarde van diversifikasie te vergeet. Dit is eers wanneer dit moeilik gaan of wanneer n goeie maatskappy soos Sasol se aandeelprys drasties daal, dat ons diversifikasie weer ernstig opneem. Wie sou ooit kon voorspel dat die olieprys gaan halveer en dat Sasol se prys binne ses maande met 40% gaan daal? Beleggers moet waak teen voorspellings van aandeelprysbewegings en eerder hulle tyd en aandag vestig op die lang termyn. Raadpleeg jou finansiële adviseur en maak seker jou portefeulje is n samestelling van goeie aandele, sodat die krag van saamgestelde groei vir jou kan werk. PRETORIA-OOS Crestway Kantoor, Blok E, Hotelstraat 20, Persequor Park, 0020 Postnet Suite 96, Privaatsak X025, Lynnwoodrif, Menlo Park, 0040 Tel: Faks: pretoriaoos@psg.co.za psg.co.za/pretoriaoos Die opinies in hierdie dokument is dié van die skrywer en nie noodwendig die van PSG nie. Dit verteenwoordig nie advies nie. Alhoewel hoë sorg geneem is in die navorsing en voorbereiding van hierdie nuusbrief, kan geen verantwoordelikheid geneem word vir enige optrede gebaseer op inligting in hierdie nuusbrief nie. PSG Wealth Financial Planning (Pty) Ltd is n goedgekeurde finansiële dienste verskaffer. FSP 728 JANUARIE I FEBRUARIE

8 JANUARY FEBRUARY 2015 NEWSLETTER PSG Wealth Pretoria East Economic and market overview Dawie Klopper On the face of things, the past year was a fairly good year for the JSE. If we take a closer look, however, we can see that the JSE recorded virtually no growth since April 2014 and since 28 July 2014 dropped by about 7%. This drop is largely due to commodity shares. Since 29 July 2014, some of our commodity shares performed as follows: Subsequently, Saudi Arabia announced that they would not cut back on production, causing the market to plunge further as a result of speculation and ordinary demand and supply considerations. On the demand side, China s economic growth seems to be levelling off. This, along with slow growth in Europe and a greater supply from, among others, the USA, is pushing the oil price even lower. Graph 2: Oil price Sasol: 40.4% Billiton: 36.13% Anglo: 35.50% Kumba: 38.43% Implats: 35.45% One can well wonder what led to this situation. From a macroeconomic viewpoint, there are a few factors that account for this and that will continue to play a positive or negative role over the next few months. Graph 1: JSE From a portfolio construction viewpoint, bear in mind that a portfolio s composition will look different for a $50 per barrel oil price than for a $100 per barrel oil price. Aspects that will change are, for example, MTN s exposure to Nigeria, dropping inflation rates (and therefore lower interest rates) and higher listed property prices. 2. European economic conditions and deflation In Europe, economic growth is under pressure, with Greece in particular going through a hard time. Moreover, the European Central Bank is struggling to boost inflation and there are fears that deflation is gaining in Europe. Graph 3 indicates that German inflation is dropping sharply. 1. The oil price Over the past six months, the oil price has dropped sharply. It was clear that this was caused by ISIS dumping oil on the markets at just about any price to fund their Middle Eastern attacks. JANUARY I FEBRUARY

9 Graph 3: German inflation Graph 5: USA government 10-year bonds 3. American economic growth and the possibility of interest rate increases In the USA, the unemployment rate is being watched closely and it is seen as possibly the most important barometer of the health of the American economy (Graph 4). Graph 4: American unemployment The picture is far from encouraging and does not in the slightest indicate that an interest rate hike is imminent. 4. Slower growth in China and its impact on commodity prices It has been clear for some time now that economic growth in China had to slow down. Owing to the issue of central control over that economy and inadequate economic data from China, it is difficult to confirm this situation. The fact remains that the Chinese PMI figures have slowed down to 50.1 over the past year and that this indicates lower growth. This situation is also confirmed with the help of a few speculators, for example, the course the copper price has been taking. (Graph 6). Graph 6: Copper price The initial objective of the Federal Reserve Board (the Fed) and American policymakers was to manage unemployment down to 6%. The figure is currently 5.6%, raising questions about when American policymakers will increase interest rates. However, this notion is countered by the direction the American government bond yields are taking. Graph 5 outlines the American 10-year government bond yield. The copper price has always been a leading indicator for economic activity, because copper is such a key component in production processes. A lower copper price will therefore indicate lower economic activity, and the converse also applies. The recent sharp drop also indicates that speculators are active in the market. 5. The Swiss National Bank s shock decision to lower interest rates to 0.75% and unpeg from the euro Switzerland s national bank sent out a global shock wave with the announcement that the Swiss franc would be unpegged JANUARY I FEBRUARY

10 from the euro at SF1,20 to the euro, at the same time lowering the repo rate to 0.75%. Hence, the Swiss franc immediately soared against all major currencies. The Swiss franc strengthened overnight by 20% against the rand (Graph 7). Graph 7: Swiss franc against the rand The market resultantly expects interest rates to drop by 50 points in the near future. This explains why listed property unit trusts are so strong and why equity funds are doing so well. We can now summarise our market forecast as follows: Money market rates may start to drop again. In the equity market, capital market rates have dropped considerably, but that window of opportunity may be closed for now. Listed property has priced in most of this good news, but could still show further movement. In the local stock exchange, one should perhaps distinguish between resource shares and the rest of the market. At the current rand price of oil Sasol may still be too expensive. However, the same factor may support retail companies. Two important aspects must be kept in mind for foreign investments, namely the exchange rate and selecting foreign shares. The Swiss stock market immediately fell by 8%. The decision had several positive and negative effects on South African investors: Richemont s share price dropped by 8% after the company had previously announced poor third-quarter sales. After factoring in the local exchange rate movement, it indicates a very sharp negative movement in Richemont s share price. Mediclinic, with its interest in Hirslanden, goes up 8% and Nestlé, after making provision for the rand s movement, about 12%. 6. Eskom, loadshedding and Zuma In South Africa the spectre of loadshedding over the long term is causing uncertainty and can restrict economic growth. The lower oil price, on the other hand, contributes to a sharp drop in the fuel price, which could stimulate consumer spending. It will also lead to a lower inflation rate, causing interest rates to drop instead of rising as is the general consensus (Graph 8). Graph 8: FRA 3-month rate over six months On purchasing power parity, the rand is still too weak against the US dollar, owing to the Eskom crisis and the poor leadership of the president of the country. Both factors will remain in force for the time being. European shares are very cheap, but as mentioned earlier, the European economy is struggling. The weak euro exchange rate could be a driver for company profits and should not be overlooked. The market is priced right in the USA, but companies profits (except energy companies) are still expected to grow well and to support the market selectively. What if you only invested at the worst times? Is now a good time to invest? I encounter this question regularly, especially from people retiring with a pension or provident fund who have to take responsibility for their financial affairs for the first time. In our presentations and discussions with clients, we devote considerable Leon Ferreira time to explaining that one should not apply timing to investment decisions. Rather, follow a long-term approach without reacting to short-term fluctuations and remain in the market. While it may never be exactly the right time to invest, in the long run deciding to invest is never a bad choice. The financial analyst Ben Carlson recently wrote an interesting article emphasising this viewpoint in his blog, Wealth of common sense. JANUARY I FEBRUARY

11 While it may never be exactly the right time to invest, in the long run deciding to invest is never a bad choice. He tells the tale of Bob, the world s worst investor as regards timing, who began his career in 1970 at the age of 22. His plan was to save $2 000 a year and to bump up that amount by $2 000 each decade until he could retire at the end of 2013 at age 65. He put the first $2 000 in a bank account and at the end of 1972 had $6 000 saved up. His problem as an investor was that he only had the courage to put his money in the stock exchange after a huge run-up in the market. In 1973, he invested all his money in the S&P 500 and the market dropped 50% almost at once. The hapless Bob had invested his money at the peak of a bull market, just before a massive crash. The only thing that saved his bacon as investor was that he never sold his shares and left the market. He held on, because he was too scared of making another mistake with his sell decision. After this setback, Bob did not feel comfortable about investing again until 1987 after another huge bull market, when he put the $ that he had saved over 15 years into the S&P 500. Needless to say, the market promptly fell by 30%. He nevertheless kept the shares he had bought. Bob s confidence must have been in tatters by then, but in 1999 the incredible boom in technology shares emboldened him to invest another $68 000, promptly followed by another 50% market crash. With his confidence just about rock bottom, he decided to risk another large investment before he retired. In October 2007 he invested $64 000, immediately before the market plummeted 50% in the financial crisis. He then decided to keep his savings in the bank, but also kept all the shares he had bought over the years. The total amounts that he invested are reflected in the table. Date of investment Subsequent crashes Amount invested December % $ August % $ December % $ October % $ Total investment $ So what was the end result of such catastrophic timing, with buys just before huge market crashes? He retired as a millionaire with $1.1 million. How did he do it? Carlson points out that Bob was a diligent saver and that he regularly increased the amount he saved. Moreover, by never quitting the market, he allowed compound interest to work its magic on his savings. It must have been psychologically very hard to suffer such terrible losses and to keep on persevering. (This is where a good financial advisor plays an important role.) The author remarks that if Bob had invested in the stock market every month, he would eventually have had more ($2.3 million), but then he wouldn t have been Bob, the world s worst timer. Ben Carlson lists the following lessons: 1. If you are going to make investment mistakes, make sure you err on the optimistic side and not the pessimistic. A long-term mindset has always paid off. He quotes Winston Churchill: I am an optimist. It does not seem too much use being anything else. 2. Losses or shrinking capital are part and parcel of investing in shares. Your reaction to the losses is the biggest determinant of your investment performance. 3. Saving more, thinking long-term and making compound interest work for you are the biggest accelerants for wealth creation. An investment case for Gilead Sciences Martin Strauss 2014 is over and the market s fluctuations over the past year once again confirmed that we as investors can never become too comfortable. Over the short term, the markets are dynamic, driven by sentiment and not always rational. Exceptional returns or losses are not sustainable, and should normalise again over the long term. That is what science (or theory) would have us believe. However, investment management is not a science; it is an art. The thinking and strategies of a portfolio manager will therefore change constantly. He has to make adjustments for material and structural changes in the economic environment and at the same time filter out shortterm noise. Hence, his basket of best ideas may also change sometimes. For us the biopharmaceutical company Gilead Sciences is such a new idea. Gilead is listed on NASDAQ. The company discovers and develops medication for treating life-threatening diseases, specialising in the treatment of liver diseases such as hepatitis C, cardiovascular diseases and HIV. Those in the know might recognise products such as Sovaldi (liver), Letairis (cardio) and Stribild (HIV). JANUARY I FEBRUARY

12 Biopharmaceutical companies obviously invest large amounts of retained earnings in research and development (R&D) and Gilead is no exception: 3. Good exposure to emerging markets and potential for profit growth Last year, Gilead entered into large contracts with manufacturers of generic products in Africa to supply versions of Sovaldi in Africa. More than 100 million people on the continent suffer from the disease. This could generate large turnovers for Gilead. The company is also present in other emerging markets. 4. Good valuations relative to its peers Source: Seeking Alpha This graph illustrates the past year s R&D costs (blue) and the R&D costs relative to turnover (orange). It is clear that the company s operating costs rose in line with inflation, but the relative ratio to turnover dropped sharply due to the exceptional growth in turnover. This generates good profits and the company then has more funds to spend on further R&D, again leading to new products. What s more, Gilead maintained a 58% operating profit margin over the past 12 months. Investors spotted this and Gilead s share price yielded approximately 33% over the past year. NAME GilleaD Inc AbbVie Inc Amgen Biogen Pfizer Abbot Laboratories TICKER GILD ABV AMG BIIB PFE ABT Source: S&P Capital IQ MARKET CAPITALISATION NORMALISED PRICE/ EARNINGS FORWARD PRICE/ EARNINGS PROJECTED EARNINGS GROWTH $ B % $105 B % B % $80.71 B % B % $67.46 B % Use the right investment vehicle to achieve your investment objectives The start of the 2016 financial year is almost here and it is therefore time to talk about retirement annuities (RAs). An RA remains a very good way of saving for retirement, and the great advantage is of course that the taxman helps you to save. Source: S&P Capital IQ Reasons why we added Gilead to our portfolios: 1. Unparalleled pricing leverage Gilead supplies top-quality medication for deadly, rare diseases, which justifies the high premiums charged for these products. Sovaldi, used for treating hepatitis C, costs about $ per treatment. There are not a great many alternatives, and the question is, can a price really be put on good health? 2. Focus on chronic and global diseases Gilead s patients can be found all over the world. At this stage, there are people using Sovaldi. The World Health Organization estimates that approximately 180 million people suffer from hepatitis C, and most of them do not even realise it. Over the years, RAs and policies developed a bad reputation in the Eugenie Borcherds industry, and with good reason. Way back, a broker would present the client with an illustrative maturity value and that was as far as it went. What was never explained properly, is that policies and RAs are just vehicles in the end, the return on the investment will be determined by the building blocks (underlying funds) used in the vehicle. Market conditions change and these investment building blocks therefore have to be managed and monitored. The broker was remunerated through the initial commission paid the day the policy was sold to the client. There was no incentive to monitor the product and make adjustments (in many cases, adjustments were not even possible). The client could thus retire with a product that was ticked off on the application form 20 or 30 years earlier by an unqualified broker, desensitised by his commission. The client got a rude awakening when the maturity value was nowhere near the JANUARY I FEBRUARY

13 illustrative value. Even if he had done some homework in that period and realised that the investment was not performing well enough to achieve the objective, there were enormous penalties to pay (even nowadays) to exit the investment, stop contributions or make changes. Legislation and regulations are not pleasant for anyone, because they entail more paperwork and administration in short, they are a nuisance. However, we as a business comply with the legislation and regulations of our industry, even though they do not always make sense and though we sometimes become frustrated, feeling we are paying for others sins. On the other hand, the industry has made enormous progress thanks to those very regulations. There are now new-generation retirement annuities and policies that are penalty-free, fully manageable and transparent, that can be monitored continuously at low and meaningful rates. Currently, the management costs of an ordinary unit trust portfolio and an identical portfolio in a policy or retirement annuity are the same. All the benefits of the PSG investment solutions and funds can be packaged in an RA or policy. Of course, a policy has the following additional advantages: 1. The investor need not pay tax on any capital gain, interest or dividends 2. Interest and dividends for individuals are taxed in the policy at 30% 3. Capital gain in an individual s policy is taxed at an effective rate of 10% 4. The investor may nominate a beneficiary; this saves on executor s fees at death Conversely, the disadvantage of a policy is the limit on liquidity in the first five years. An RA has the following advantages: 1. 15% of an individual s non-pensionable income (such as bonus, car allowance, rental income, commission, etc.) is tax-deductible 2. Creditors cannot seize an RA 3. A beneficiary can be nominated and no executor s fees or estate tax are payable on an RA 4. All returns on an RA are exempt from capital gain as well as income tax 5. Here, just as with a policy, limits on liquidity are also a disadvantage and yet not necessarily a disadvantage, because many of us need protection against ourselves! Do not hesitate to contact your financial adviser to discuss and compare all the pros and cons of the different investment vehicles. Start contributing to your current RA before it is too late. Depending on the administration company employed, the amount and supporting documentation in most cases have to be available at least a few days before 28 February. Moreover, please note that the proposed statutory amendment, namely that you may in future contribute 17,5% to your RA, and which would have come into effect on 1 March 2015, has been deferred to You may therefore still contribute only a maximum of 15% of the non-pensionable income next year. Beware of forecasting The beginning of a new year always sees forecasts of where the best yields are expected, either in different asset classes, share markets or specific shares. At PSG Pretoria East we usually have a competition at the beginning of the year, with each person choosing a share for the new year and predicting where the JSE will end. Marzél Swart Over the years, though, we have come to realise that none of us can correctly predict the winners or the yields in a specific year. Here and there, some of us have been lucky with good choices, but it is impossible to do so year after year. Despite the knowledge that the market is totally unpredictable, the same question pops up every year what is the stock exchange going to do this year? What is disturbing is that many investors get carried away by short-term forecasts and base long-term investment decisions on them, despite proof that forecasts are untrustworthy. There are factors worldwide that cause imbalances in the prices of high-risk assets. Every year, investors emotions are tested by stock market fluctuations and media reports, and there is no doubt that there will be challenges this year as well. There are factors worldwide that cause imbalances in the prices of high-risk assets. These include the probable interest rate increase by the Federal Reserve Bank in America, the further stimulus envisaged by the European Central Bank to combat deflation, extremely slow global economic growth (except in America) and current geopolitical risks. Although the lower oil price is positive for consumers and economic activity in general, oil-producing countries such as Saudi Arabia, Nigeria and Russia are feeling the pinch. The only thing that can be predicted with certainty is that it is going to be another year of ups and downs. The only way to protect oneself is to invest for the long term, and specifically to diversify. In fluctuating markets, the temptation is strong to buy and sell. Investors generally want to sell when share prices drop, and when prices rise, they want to buy. Research by JP Morgan Asset Management has shown that investors who missed the ten best days on the S&P 500 between 1993 and 2013, lost many opportunities to increase their returns. Investors who stayed fully invested over the 20 years, generated a 9,2% annualised return in dollar terms. Conversely, the investors that missed the ten best days only generated 5,4%, mainly because the power of compound growth had been lost. According to JP Morgan, some of the worst days on the market are sometimes followed JANUARY I FEBRUARY

14 by some of the best. Such an investor might be relieved that his cash is safe when the market drops sharply, but may also miss some of the best days on the stock exchange. It has been proven historically that maintaining a long-term view, namely for five or more years, reduces the risks of volatility. The graph below illustrates the performance of an investment of $ in the S&P 500 index between December 1993 and December 2013, as well as the impact if an investor missed some of the best days. CLIENT FUNCTION INVESTMENT SEMINAR SPEAKERS Dawie Klopper, Leon Ferreira, Chris Wehmeyer, Johan Borcherds and Leon Mostert DATE 4 March 2015 TIME 10h30 PLACE Hyatt Oubaai Hotel, George DATE 5 March 2015 TIME 18h00 PLACE Crystal Towers Hotel, Cape Town DATE 12 March 2015 TIME 09h00 or 18h00 PLACE WNNR, Meiring Naude Street, Brummeria, Pretoria RSVP Bookings are required pretoriaoos@psg.co.za Recent research by Old Mutual has shown that an investment of R1 in the JSE All Shares Index from 1960 would have been worth R6 566 at the end of Only R600 of the return is due to price movements; the balance of R5 966 comes from interest, dividends and distributions. It proves once again that it is unnecessarily risky to chase price fluctuations. In the good times we tend to forget about the value of diversification. Only when times are hard or when a good company like Sasol s share price drops sharply do we take diversification seriously again. Who could ever have foreseen that the oil price would halve and that Sasol s price would drop by 40% within six months? Investors should be wary of predictions of share price movements and rather focus their time and attention on the long term. Consult your financial adviser and make sure that your portfolio contains a mix of good shares, so that compound growth can be leveraged for you. PRETORIA EAST Crestway Office, Block E, Hotel Street 20, Persequor Park, 0020 Postnet Suite 96, Private Bag X025, Lynnwoodrif, Menlo Park, 0040 Tel: Fax: pretoriaoos@psg.co.za psg.co.za/pretoriaoos The opinions expressed in this document are the opinions of the writer and not necessarily those of PSG and do not constitute advice. Although the utmost care has been taken in the research and preparation of this document, no responsibility can be taken for actions taken on information in this newsletter. PSG Wealth Financial Planning (Pty) Ltd is an authorised financial services provider. FSP 728 JANUARY I FEBRUARY