Behave and Save

Vestact - Money with a dash of funny

“By saving say 10% of your income you create a very handy buffer so the next time you have an emergency, instead of tapping into your savings (or worse into debt) you can just divert that buffer to the emergency expense. Another benefit is that you get used to living on less, so if the unthinkable happens where you no longer have a job, your savings last you that much longer. A more rosy alternative is that living on less gives you the freedom to change from the job that you are not too keen on?”

To market to market to buy a fat pig After a red start to the day the All Share finished the day in the green, up a little over 0.5%. Banks recovered from being down over 1.5% to finishing in the green for the day. Most of the gains though came through our dual…

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Complaining about Black Tax ain’t going to help anyone…

The Gradidge Patch

Black Tax is real. I know because I pay it. The hashtag #blacktax has a way of making an appearance on Twitter reasonably often. It is one of those topics that never seems too far away from the discussion, especially among Black South African millennials and Generation Xers.

However, as much as we South Africans like to think that we are somehow unique or special, the reality is that Black Tax is a global phenomenon known elsewhere as the ‘Sandwich Generation’.

What is Black Tax?

Black Tax (BT) refers to those extra expenses that Black people have primarily as a result of being Black in South Africa today. It specifically refers to the money that we have to spend on our extended families; in the form of a monthly stipend to multiple households, or paying for the education a number of children that are not ours, or having to contribute…

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Ngifundani On Valentines?

Here are is what I am reading this morning:

Apple Shares in Record Territory

Apple Shares Hit All-Time Closing High as Investors Await Next iPhone


For those who aren’t subscribed to WSJ Don’t worry Moneyweb’s got your back:

Apple shares hit record close on optimism for next iPhone

Here is an incredible piece by Josh Brown on why you should start investing NOW as a millennial:

A Message for My Young Friends


Ben Carlson nailed this one Street smart vs Books smart:

The Two Types of Knowledge in the World





Why are you saving?


I have to say, I have got a number of drafts of unfinished blogs on saving techniques for different circumstances including risk taking appetite and ability.
However, I have to admit that I have been unable to finish any of them. The reason for this, I have discovered, is that I felt like there was no firm foundation.

Ever since coming up with the brilliant and very original idea of blogging about investments and the economy, I have been looking for the perfect first post.
After a few months of deliberation, I believe I have struck gold!
As with any undertaking in life, saving and investing yields better results with a goal in mind. And, when it comes to savings, perhaps on a spreadsheet as well. Having a savings goal is particularly helpful when you’re tempted to skip a certain month/week, since you know skipping will result in a shortfall. It…

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Bad Times Make for Good Buys.

Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying that “The time to buy is when there’s blood in the streets, even if it is your own.”

He should know. Rothschild made a fortune buying in the panic that followed the battle of Waterloo against Napoleon.-Investopedia

Coming back home and to the present, the social and economic climate do not look positive, an unstable geo-political scene (with Donald J. Trump as the President of the United States), the looming increase in interest rates by the FED, the list goes on and on. One can say that 2016 has been filled with a lot of noise for the investor. Now its 2017 and we press on!

However, I believe that bad times give rise to good buying opportunities in the market. We should get excited when an otherwise good company has a sharp, but undeserved drop in share price. Instead of selling in times like these, you buy some more! Remember the firing of Nhlanhla Nene in December 2015 where they Rand got obliterated and the banking stocks got absolutely hammered? Guess what was one of the best performing sectors in 2016…yes Banking up a cracking 26.2% in a market that was basically flat after dividends.

One of the many important things when it comes to investing is the price you pay for the investment. In fact, this is probably the most important part- The relationship between price and value. It should be the starting point of any investment consideration. Here’s one way to look at at; is it not always a warm, fuzzy feeling to buy that home appliance or your favourite sneakers at a discount when shopping? No need to answer that fam we all know the answer!

The same should apply when you are buying assets that generate a return. The cheaper you buy the product, the more value it shall create for you.

Investing has to be based on reliable estimates of the underlying value of the investment. The level of conviction in the estimate of the underlying value should be great. If there is no conviction, the investor may react irrationally to noise from the market, as a consequence he might lose faith in his investment positions causing him to sell, just when a drop in price should have lead him to increase his position. Thus exposing the investor to destructive exercise of buying high and selling low! Do not be that guy fam!

Of course it is not easy to vary from public opinion, especially during the so-called bearish cycles. It can be quite lonely.

Warren Buffet says this; we simply attempt to be fearful when others are greedy and to be greedy when others are fearful.

It is this sort of unconventional thinking that will bring you investment success. The ability to not panic when everyone is panicking and vice versa. This would mean maintaining unconventional positions against the general consensus.

Howard Marks says it best :

World affairs, economic and corporate performance will rise and fall in cycles. It is a never-ending pendulum that keeps swinging. Market participants also react to these events in a cyclical fashion. Therefore, price swings will usually overstate the swings in the underlying investment. When world events are positive and corporate profits are great, market participants feel good (greedy) and often bid investments at prices that overstate their underlying value. When world events are negative and panicky (fearful) market participants are prone to sell them at overly cheap prices, understating the underlying value of the investment. 

These fluctuations due to world’s events, thus affecting investor behaviour, give rise to assets being sometimes offered at cheap prices and sometimes the prices are too high.

Sir John Templeton puts it quite nicely, Buying when others are despondently selling and selling when others are euphorically buying takes great courage but provides the greatest profit.

Market roundups

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett

Since the beginning of 2016, there has been an influx of articles detailing the post mortem for the year. A lot of it was bad news by the way.

However I thought to myself, a lot can happen within the few days remaining in the year, good or bad. When looking at the recent past highlighted in these articles, very few people, if any could have anticipated what occurred in the coming 11 months, I’m shocked there are still people who think they can predict the future (I must admit that I am a long term Investor, the point of this article is to highlight the unpredictability the future).

As I was reading these articles, I received a picture from a close friend of mine – he tattooed his girlfriends name on his arm and visa versa. He encouraged that I do the same one day, the thought made me uncomfortable. I replied that the future has an infinite range of possible outcomes, and something as permanent as a tattoo seemed like taking on too much risk. Nonetheless, I wish them all the best.

Back to investing, all that is happening now makes me think of something Charlie Munger once said about investing: “it’s not supposed to be easy. Anyone who finds it easy is stupid”. The reason it is so difficult is that investing is future orientated, and the future is unknowable.

When I started investing I thought it was easy, this is evidenced by the single point estimates I used when valuing companies – I must admit I was wrong 99.9% when looking at how differently things played out in comparison to my valuations.

Now as investors, we still have to make decisions even though we are cognisant of the above, we need to manage and control risk and move forward as cautiously as possible. We need to check our emotions at all times. Nothing is stagnant, we have to take shots at moving targets.

So what we need to focus on, is controlling the knowable. Understanding your position. It is true that we don’t really know what will happen tomorrow, but we can at least try to manage what we know.

Being the first month of the year and of course the dreaded cash crunching January, do not let the many emotions that come with these times affect your objectivity when it comes to your investments. Take it easy, chill! And of course the noise churning out from the news won’t help either.

Frequent trading is one of the sure ways to waste and lose money. You get nothing from that, except for balling on those transaction fees, and subsequently making your broker richer.

The basics should always prevail, what I am trying to say is that we should always remember that we are in the business of making profits from the many public and private corporations that are at our disposal. Therefore what we should focus on what is the real returns (dividends and earnings growth) we receive from these corporations. These are the economics of investing.

From centuries of economic history it is clear for all to see that you can rely on adequate returns from the stock market for your investments. And the longer you stay invested, while reinvesting, thus allowing the Gods of compounding to do miraculous things with your hard-earned money, the better.

Therefore, I close by saying keep calm, be cautious and invest on.