Truth, lies and bitcoin
INVESTMENT INTEL: CRYPTOCURRENCIES, REGULATION, POLITICS, PASSIVE INVESTING
Three veteran asset managers share their views.
Louis Stassen, Sandy McGregor and Dave Foord have each spent decades at their respective firms – Coronation, Allan Gray, and Foord Asset Management – and have seen the sector develop from its early years into the significant player in the economy it is today.
The three individuals recently delivered some fascinating insights into issues facing the asset management world, and their lives in the industry: What impact does local politics have on your investment views?
Sandy McGregor: “We’ve managed money through very difficult times in the past. What we’re going through now is not new. I personally have seen six or seven crises, one way or another, in my investment career. Think back to the time of the Rubicon speech in 1985. We survived apartheid. So, it’s not unique. And the interesting thing is that we do survive.” What’s your view of cryptocurrencies?
Dave Foord: “I think they are not what they are made out to be. A currency needs to be stable, and they are definitely not stable. They don’t have any of the other characteristics of a currency. There will be a
lot of pain in due course.” What is the impact of regulation on the industry?
Dave Foord: “Regulation is the biggest disruptor. There is a lot of movement and not all of it is to the benefit of the investor. There are things that we could do if we had an open mandate that we can’t, so returns are lower because of regulation.” What do you think about passive investing?
Louis Stassen: “In South Africa, you’ve had good fund managers that have consistently outperformed the indices, so that makes the value proposition of passive a lot less appealing.”
Sandy McGregor: “My view on passive is that it’s an investment style that is flawed. The key thing about investing is very often not what you buy, but what you don’t buy. With passive you are not avoiding the things you should not buy.”
Dave Foord: “It’s a fad. It’s a trend. And it’s amazing how these fads and trends come in at exactly the wrong time. Why go passive now when on a global basis bonds are expensive and equities are expensive?” What’s the hardest lesson you have learnt?
Louis Stassen: “That people lie. It’s a rude reminder of how fickle humanity is.”
What advice would you give your younger self?
Sandy McGregor: “Learn to be patient. I once had a client who complained I hadn’t done anything on his portfolio for four years, so why should he be paying me a fee. I said: ‘Actually, you’re the best performing client in Allan Gray’.”