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Money and your emotions
Mon, 08/01/2016
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? Read more >>
Mr Uncertainty
Mon, 05/02/2016
By definition our future implies copious amounts of uncertainty. The uncertainty principle (and probability) is one of the foundations in quantum physics. It basically says that not all properties of a quantum particle can be measured with unlimited accuracy.  Our macro world and South Africa in particular is uncertain. Consider the influx of immigrants into Europe and a turbulent election process in the United States. Nothing can really make our future more certain – there is no remedy for uncertainty.  Generations have always had to deal with degrees of uncertainty, right?  And at times when things seem to be certain, it isn’t… Read more >>
Abundant choices
Mon, 02/01/2016
Our world offers us too many choices and often individuals struggle to exercise an option. It becomes a problem when you need to make an informed decision quickly and you don’t have the time. I recently kicked off a small DIY project and finally decided to buy that cordless drill I always wanted. To my surprise, the decision wasn’t that easy. Apart from poorly trained staff (no one in the hardware stores could guide me and I was forced to do my own research on the Internet), the information on drills and models were overwhelming – to say the least. Choices varied between brands, drill sizes, cordless types, voltage, gear ratios, hammer action etc. From all these thousands of models, it wasn’t straightforward. How do I select a drill that suited all my needs? And I don’t know what I need! Read more >>
Are you clever enough?
Sun, 11/01/2015
During the cold war in the 1960’s, NASA constructed a special “space pen” in order to overcome the problem of a normal pen that would not write in space as the ink rolled backwards. It cost them hundreds of thousands of dollars in R&D.  The Russians used a pencil… Read more >>
Valuable advice, or not?
Sat, 08/01/2015
This issue explores financial advice, its perceived or potential value and what a person [seeking financial advice] perhaps should look for. The service level for example of any type of consultation rendered (lawyers, doctors etc.) is often difficult to quantify. How good, or of what quality, was the service rendered? Isn’t it often based on an experience rather than a measured result? How do you measure a good outcome compared to the perceived value of a product (a tangible item), e.g. a smart phone, piece of art or antique furniture? Are we more prone to look at what it costs? As the saying goes: “Nowadays we know the price of everything, and the value of nothing”. Read more >>
Sometimes there ain't no reason
Fri, 05/01/2015
In this issue we share a letter from Jurie Gouwsventer.  Jurie has been working with us for some time.  His practice Mindfulmoney is also part of our independent association with Finsolnet. Amongst others it is a platform where we exchange knowledge and ideas. In this way we avoid a situation where decisions are made in isolation.  You are welcome to peruse his webpage at www.mindfulmoney.co.za. Read more >>
Review your building plan
Mon, 02/02/2015
A few thoughts by Cobus Rysbergen:  I recently found myself in the (un)fortunate position where I wanted and needed to do some renovation and maintenance work to my house. The project was not without frustration, but it was interesting to note how certain of the difficulties that were encountered, could relate to the field of financial planning. Here are some examples:   Read more >>
Random rules
Mon, 11/03/2014
“The Drunkard's Walk: How Randomness Rules Our Lives” is faintly reminiscent to the Black Swan, written by Nassim Taleb. The author illustrated how very low probability events [highly unlikely] could have a high, or material impact around you. Although in my view a fatalistic approach to a world-view, Leonard Mlodinow, the author of The Drunkard's Walk, offered insightful comments to relevant examples. There are examples from sport, medicine, psychology, as well as the stock market. Leonard Mlodinow (also being a contributing writer to the classic McGyver series) does an excellent job in driving home the fact that, the true probability of events cannot be established intuitively; i.e. you really cannot accurately calculate or foresee a particular outcome. We mistakenly think we notice patterns, which permits us to make predictions – pure illusions of patterns and patterns of illusions (also a chapter in the book). Humans tend to struggle in order to distinguish between luck (or being unlucky), versus some kind of skill, or the lack thereof.  By the way, thank you Gary Larson for the cartoon. Read more >>
Do you skip a heartbeat?
Fri, 08/01/2014
Part of a recent medical check-up was an EKG, or electrocardiogram. For those of us who don’t know what an EKG is, it is a way to measure the electrical activity of your heart over a defined period of time.  It picks up electrical impulses generated by the polarization and depolarization of cardiac tissue and translates into a visual waveform. The waveform is then used to measure the rate and regularity of heartbeats, or the presence of any damage to the heart. Not so much of an epiphany, but what struck me about our heart rate is the waveform; a regular up and down movement, that implies life. Change implies movement whether up, down left or right.  Ironically humans don’t deal very well with change. In the financial world central banks try to keep inflation intact, currencies stable and financial markets from collapse.  This does not mean life, because if your heart rate flat lines, you are dead. Read more >>
Who is your pilot?
Thu, 05/01/2014
The disappearance of Malaysian Airlines flight MH370 left the aviation industry baffled and authorities without answers. The incident prompted the analogy of a pilot and aeroplane to describe the various roles during the investment and advisory process.  Bear with the example for a moment. A particular version proposed that an aircraft is being flown and guided by the asset or investment manager, the client being the passenger, while the advisor performs the role of a steward. This could lead to an interesting discussion, because sometimes we might get the roles mixed up. Read more >>
A focused perspective
Mon, 02/03/2014
No one could have thought that global financial markets would deliver such returns over the previous 12 months. Time and again economists and pundits claimed severe uncertainty coupled with more speculation. This injected fear with the layman investor. What are our conclusions?  We don’t know what is going to happen; we can only manage uncertainty to some degree.  Plus, we don’t need to worry too much about the daily news flow.  It is for the most part utter noise.   Once again, being part of the market (through its various cycles), has proved to be a better strategy than trying to time it; i.e. waiting for the perfect exit or entry point.  Those individuals, who “read” too much into the financial markets, were eventually caught on the sideline while the JSE All Share Index slowly crept up, well above its historical highs since the 2008/2009 financial crisis with a roughly 20% return per annum.   Read more >>
Some thing or no thing
Mon, 12/02/2013
From time to time I follow commentary by Carl Richards of The Behavior Gap.  He regularly questions conventional wisdom and has some insightful and very practical comments to the layman investor.   I took some thoughts from a recent letter which discussed our human bias towards taking action; i.e. we need to continually do something in order for something else to work.  He discovered a study that explored the success, or hit rate of elite soccer goalkeepers during a penalty shoot out.  The results were astounding.  You can download the study which was also published in the Journal of Economic Psychology here.  The notion was simple; that if goalkeepers just stood there and do nothing, they would be much better off. Read more >>
FOMO
Tue, 10/01/2013
This month I thought to explore some notions around the relationship with money and what defines our contentment.  Remarks by someone reminded me of what the Internet connected society might experience; and perhaps we are oblivious to it all. Humans are good at relating to others and measuring up to their peers.  We tend to measure ourselves – often in financial terms, where we live, or by ranking each other with job titles and income. Nowadays, people also rank their experiences.  Somewhere, right this very moment someone is having more fun than you; and making more money than you. Doing something more important, with better friends and with a happier ending than you (and letting you know via Facebook or Twitter). The fact is, you are not part of it. Read more >>
Less is probably more
Thu, 08/01/2013
The amount of information we have access to via the Internet is truly astounding.  With numerous investment opinions, newspapers, magazine articles and lots of other analyst reports; does all this information equal knowledge?  Do you believe that in order to generate handsome returns, you need to know more than everybody else? Read more >>
Why instead of what
Mon, 06/03/2013
Simon Sinek studied exceptional businesses and leadership which lead him to develop “The Golden Circle of Truth”. What struck me about his concept was the utter simplicity and that the deeper motivation of human actions are typically locked up in “why” questions.  Take note of how many times children ask why questions… why this and that, while adults have somehow managed to build up so many layers of assumptions about certain things.  For example we will ask someone what he or she does (implying his or her profession), but not why they do it?  Knowing that less than 10% of all working adults enjoy what they are doing, it is well possible that someone is not passionate about their job and just plugging away to pay the bills. Read more >>

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