View from the Chair - Proficio 2023 Issue 3

Embracing objectivity, diversification, and positive energy

Mike Estment CFP®

Mike Estment CFP®

Executive Chairman: JHB and Private Wealth Manager

Connect with this author

View from the Chair - Proficio 2023 Issue 3

I have just returned from a wonderful two-week spoil in Europe. Whilst not everybody's cup of tea, KTM Factory Racing and Alpine Stars invited us to VIP treatment, and with our oldest son, Bjorn, as KTM Factory Rider Brad Binder's personal assistant, we watched two events close up where twenty of the world's best motorcyclists vied for the top step of the podium.

A few things struck me. Firstly, TV doesn't tell the truth about noise, emotion, speed, or gradient. The lean angles these athletes get to, the raw power and deafening noise at the start, the braking from speeds of greater than 360km/h to negotiate a hairpin at 90km/h are but a few of the countless remarkable experiences we were treated to.

Further, our son retired from racing last year. The change is extraordinary as although we love racing, it was always nerve-racking watching your flesh and blood haring off into corner one alongside twenty or more other missiles! Their excellence, almost choreographed acceleration, braking, and leaning is something to behold.

But chaos lurks ever present. Brilliant and safe sports can be disrupted in a milli-second. Mistakes, miscalculations, technical failures, or simple foolhardy behaviour can result in mayhem at any time. At the end of it all, a winner and two runners-up are lauded publicly, the rest of the circus returning to their pits to fight another day.

I guess there are parallels to markets and investing. The closer to the racy top you get, the edgier it gets! Objectivity is a great ally. Going where you belong, not where others claim to be investing and making a fortune. Diversify as a strategy. Make sure it is not a one-horse race!

Getting back to the point around objectivity, having an advisor cast their objective eyes over your particular requirements and finding a solution which fits the need is very powerful.

Knee jerking into something you heard about at gym or dinner, hoping it continues to perform, often doesn’t yield the required outcome.

We find this risk escalates significantly after rates drop materially or markets run particularly strongly. Mistakes are made where suddenly a person typically comfortable in a big bank fixed deposit switches tack into a participation bond or riskier investment in an effort to match the interest earned in the prior period. This is because the part bond or syndicated property is nowhere near as safe as a bank deposit, but offers a better yield. There is always a reason that some offer a premium, and our financial authorities are always busy trying to pursue fly-by-night operators who have preyed on vulnerable or needy investors. The same is true of shares, crypto currencies, art, and a great number of other less transparent assets.

Treading wearily when alone is always wise. If you trust your advisor and their advice, this adds objectivity, and whilst clearly I have a bias, it is definitely advised. By the way, I am a client of NFB, experiencing excellent, candid and evolving advice and discussion of matters directly involved with investments and more. Importantly, this includes how our Family Trust and its Trust Deed stay relevant and complementary to our Wills here and abroad, including complex tax matters, where special skills and experience, as well as contacts for super-specialised issues, are required (for example, Situs and Probate abroad) where NFB doesn't feel adequately qualified to offer guidance.

NFB is learning from specific client needs all the time. As a client, I have the benefit of hundreds of interactions and learnings, which can then be adapted to my unique needs.

In conclusion, they say every cloud has a silver lining. Recently, we seem to be experiencing a lower scale of Eskom outages and load-shedding. There are no doubt “glass half full” and other assumptions about this highly charged issue. The facts include the following:

  • Home and industrial installation in the first quarter equalled the entire 2022 installation. This continues to accelerate every month.
  • Government's relaxation of capacity restrictions is materially accelerating the development of alternative industrial generation.
  • Mining groups and others are developing their own capacity.
  • The controversially handicapped Kusile was granted an exemption which will bring back 2100MW as early as November 23.
  • The Koeberg nuclear generator on the Western Cape coast is also scheduled for a life extension of 20 years, and will add material capacity to the currently hamstrung power grid.

My glass is half full. Notably, we’ve just invested in a solar installation. This has resulted in a substantial reduction in electricity costs. More importantly, it gives one peace of mind, which is worth a lot. On the lighter side, this almost certainly will lead to Eskom's complete return to reliable delivery! It is like taking a brolly to a cricket test. If you do, it will definitely not rain.

Read more from Mike


Don't forget to share this post!

Back to top
NFB Loading