Historical news: Transcripts

MONEYWEB: Siphiwe, from Port Elizabeth, how are you?

SIPHIWE: I’m well thank you. I’d like to find out what’s the cost to belong to these clubs. And, since I am in PE, not in the major centres in South Africa, would I be able to connect through, say, Internet to my club, whatever club I’m assigned to?

MONEYWEB: That’s a good question, Siphiwe. Owen?

OWEN O’MALLEY: Yes, we do have platforms now that not only delivers the education online but our clubs also made online. Some of our clubs in Ireland actually meet round the table once a quarter, but meet once a fortnight online. So yes, we are bringing to the table an online platform that the clubs can meet. And to answer your question, the cost of entry into a club – I might hand over to Chris on that, because the club itself pools all its resources and makes sure its costs are to an absolute minimum. And again the advantage of being in a club of 20 members is that you dilute the cost of everything by one-twentieth – the commissions, wire transfers, whatever it takes to get involved in the market is diluted by one-twentieth.

CHRIS ELPHICK: The first question again – a potential member from Port Elizabeth is actually coming up for the seminar to Johannesburg this weekend with the intention of being a support base for the establishment of a club in Port Elizabeth. So that’s maybe at least one port of call and if you will send us an e-mail, we’ll maybe put you onto that distribution list for future reference. The cost – exactly as Owen has said, pooling those costs as a club will reduce the cost substantially. We are working at the moment on trying to reduce them further by still meeting the compliance requirements and being able to, for example, transfer funds and so forth. Once you start trading on the US market, there is a cost that the club pays on a monthly basis for the information that it receives from the international exchanges, which equates to approximately $7 a member per month. But it’s paid by the club, an amount of $150 a month for all of that information and the online access to the Web shops that take place twice a week.

MONEYWEB: So by dividing the costs by 20, it really gives you a huge advantage?

CHRIS ELPHICK: It gives you a huge advantage, and that advantage is further enhanced by the fact that the costs have already been pooled by TICN.

MONEYWEB: Would you suggest to Siphiwe that he waits until the club is established in Port Elizabeth, or goes online?

CHRIS ELPHICK: I suggest he makes contact with the Port Elizabeth connection that we have – and as soon as we’re in a position to get a club formed in Port Elizabeth. That is an important part of the context.

MONEYWEB: But there have been a few people, Owen, who have gone through the course already online, in fact, here from South Africa – ahead of the weekend seminars.

OWEN O’MALLEY: Absolutely. We launched effectively on your radio show on the 28th of June, and already I think it’s either eight or ten people have been trained online in South Africa via our platform. In fact, today I was demonstrating with Chris how we were able to explain our business model to some people in China – again from South Africa.

MONEYWEB: Amazing. Siphiwe, I think you got all the answers to the questions that you require. TICN.com is the website to go to, to get more information on it, or you could just drop us an e-mail here at Moneyweb, chrisb@moneyweb.co.za. Arthur in Cape Town, hello.

ARTHUR: Hi, good evening, folks. Is this TICN in any way similar or perhaps connected with something that was marketed at here a while back, called Investor Advantage? www.investortoolbox.com is their website, and this was also an online investment arrangement, with all the company data and all the graphing systems and everything else in place to make easy selection of shares. The only difference was that you opened your own account overseas. It was possibly for a higher level investor than what you’re targeting.

OWEN O’MALLEY: That company, I haven’t heard of it. Also, let me make it quite clear, the purpose of joining a club is to do it for yourself, so we do support – we have 12 000 members in 20 countries worldwide; 10 000 of those are club members who choose to work as a team, 2 000 of those are individuals who are supported by our organisation as well. So let not the name put you off. We can support you as an individual as well.

ARTHUR: Super, thank you very much.

MONEYWEB: Thanks, Arthur, for your call. Down to the beautiful, magnificent, cold and wet George. I hope it’s not too cold and wet down there, Nico?

NICO: No, luckily the rain is over.

MONEYWEB: Oh, good.

NICO: Listen, you know, I might sound mad but South Africans have got about R700 000 R750 000 that you can take overseas.

MONEYWEB: R2m now. Each.

NICO: Now why not register your clubs in Ireland and trade from there? I’ll go and listen at the radio.

MONEYWEB: OK, Nico, good question. Chris?

CHRIS ELPHICK: You have to still move the funds offshore through your individual capacity. There isn’t a mechanism through which you can move those funds for this type of investment in a corporate entity or a club entity, so you would still be moving it against your own individual personal allowance. Once it’s offshore you could have that club as an offshore partnership or whatever, but it’s still gone out through your own personal R2m allocation.

MONEYWEB: Steven?

STEVEN JONES: Yes, I suppose the other to consider as well is that, I mean, I’m understanding the club environment is the guy who has got R500 or R1 000 a month to contribute into the thing and, you know, we’re also getting hung up on offshore. A lot of people are going to join these clubs to invest in the local market and to learn how to invest in the local market.

OWEN O’MALLEY: Yes.

MONEYWEB: David, let’s just go to the concept, the concept of joining in an investment club rather than trying to do it yourself.

DAVID SHAPIRO: Look, I support that 100% and I think that’s what Owen is alluding to. You know, it’s not about the fancy instruments that you’re going to get into. I presume you start to write calls, that’s how you make your money and that’s how you protect yourself. You know, we don’t have a mechanism here where you can actually write calls. So I think initially the club must focus on really getting the basics, the fundamentals, intact before you start going on to sophisticated instruments. Once that happens, once you’re at that level, sure you can start to shift your money offshore and do it. But I think learn the fundamentals, learn which companies to buy, learn the charting techniques and I think that will be sufficient for the meantime, and certainly get you through the first couple of years.

MONEYWEB: You said the fundamentals, that’s the basics. How did you get to putting the basics together yourself, Owen?

OWEN O’MALLEY: Ten years ago I was fortunate enough to attend a seminar called Wealth Mastery, run by Tony Robbins in Hawaii, where 24 different millionaires and billionaires literally came together for six long days and compressed their decades of knowledge and experience into days. Some of the people that taught us over those six days were Sir John Templeton, who is now the 11^th richest man in the world, Peter Lynch a famous investor. We studied Warren Buffett, and basically we compressed that system and took a little bit of everybody and we took it home and we started to experiment with it. Very quickly we began to perform and, phenomenally, we actually got started just when the dotcom bubble was bursting. And in that very year when the dotcom bubble fell and the Nasdaq went from 5 400 to 1 200, our organisation grew from 1 000 members to 2 000 members, because we were teaching stuff that was working when everything else was collapsing all round them. So we learnt from those people that have decades of information.

MONEYWEB: How big do you think it could get in South Africa?

OWEN O’MALLEY: I think it could get very big. I mean, in some of our population centres in Ireland we have got a 1% penetration, so it means that for every 100 people in Ireland, one person is a member of TICN – and we believe we haven’t even started in Ireland. We are very passionate about showing people the knowledge to become self-empowered. We actually teach children under 18 for free, so anybody out there who is planning to come to our seminars, bring the children along 18 for free. And we want to basically teach people financial literacy. We want to teach people to take control of their own finances. There’s a bigger picture to what we do in TICN, in that if we believe we can teach people to control their finances, they become more peaceful human beings and they will be able to treat each other better and society will be richer as a result of people being self-empowered.

DAVID SHAPIRO: Owen, I assume that you don’t have to have 20 to form a club. If you had five people who wanted to get around a table, five friends …

OWEN O’MALLEY: To answer your question, my neighbourhood club started with just three people and then grew.

DAVID SHAPIRO: Yes, isn’t that more flexible, isn’t that going to be the easier one to form – just four or five of you around the table?

OWEN O’MALLEY: Yes, it’s a balance between the cost of everything – do you want to divide your cost by one-fifth or by one-twentieth? So it’s a balance. The way we manage our clubs of 20 is we actually form four committees, four sub-groups and one group will focus on fundamental research, the other will focus on technical research, the other on strategy research. So it is manageable if you come to the table of 20 and only four people speak on behalf of the 20. So yes, there’s a balance. But I agree with you, all clubs start with a small handful of four or five people and grow by word of mouth because, when people start making money in the market, they can’t help telling other people and it grows and there is a cap. As the gentleman beside you said, the partnership must be 20 or less so that’s why we’ve kept a lid on 20 or less.

MONEYWEB: Just to go back to your experiences in South Africa, Chris, the guys who were in the investment club with you from starters, who have now built – as you were telling us on one of these programmes before – a very substantial investment portfolio, was it the interaction that made it work?

CHRIS ELPHICK: It was partly the interaction, it was partly just other people focusing on things that you weren’t able to do yourself. So it was sharing the load of picking up on ideas and building on those ideas. I think it’s worked because people have had a stake in something that they have had to pay some attention to, and that’s where we have had people feeding in, the members feeding in ideas, feeding in bits of information that they pick up from the market, being used by people that might be more in tune with the market, members of the club, and then the investments being made on that basis. So in our case we haven’t had the benefit of the education that’s part of this process, but we did have the benefit of a broad range of participants in different sectors of the market, feeding the kind of inputs into a group that was enabling people with a bit of knowledge and expertise to make the right investments.

MONEYWEB: I guess if you can put them together, you’ve got a powerful cocktail?

OWEN O’MALLEY: Absolutely. When you’ve got 20 people in a room, some people are highly visual and can grasp onto charts very quickly and can read those charts on behalf of the group. Some other people are very good at paying attention to detail, and notice some fundamental pieces that other people didn’t pick up. So the power of a team – 20 heads are definitely better than one.

MONEYWEB: But where do they meet, Owen?

OWEN O’MALLEY: When you put 20 people together, one always knows somewhere they can get for free, like a boardroom, you know, upstairs in a pub – as long as you buy a pint on the night when you go out. Or, you know, that’s the resources of a club – they keep your costs down because 20 people can find efficient places to meet.

MONEYWEB: And do they become friends?

OWEN O’MALLEY: Absolutely. They go on Christmas dinners and they go, you know, out on some hill-walking outing, so it does become a good social outlet as well and it’s about having fun as well.

MONEYWEB: And the dividends that you get at the end of the year, how does that work?

OWEN O’MALLEY: For our clubs?

MONEYWEB: Yes.

OWEN O’MALLEY: Typically the club, around Christmas time they vote to take a dividend. Our vision for the clubs is that they will initially pay dividends annually, then quarterly and then the biggest challenge is how much do we pay ourselves per month? But that won’t happen overnight It needs time, as Chris has learnt, to build up a substantial portfolio over eight, nine, ten years. But yes, it will be eventually a dividend-paying instrument.

MONEYWEB: I ask that because I think you guys have, in your investment club that you started, Chris, a novel way of spending your annual dividend.

CHRIS ELPHICK: We’ve spent it on some interesting trips which have been quite useful, and have certainly kept the other halves of our relationships involved in the club to some extent. But typically we have re-invested most of the capital that’s been made, so there has not been much dividend taken home.

MONEYWEB: Well you’ve got a one-off opportunity and it’s in Durban, Cape Town and Johannesburg, this weekend. R5 000 is what the education costs. It’s a long weekend. We’ve got Owen, the founder of TICN, here in Johannesburg. So if you want it from the horse’s mouth, that’s the opportunity you have if you live in Gauteng. If you live in Durban or in Cape Town, there will be two other experts coming from TICN in Ireland to help you through understanding how the whole process works. It’s an investment that you probably will use for the rest of your life, but you’ve only got a day to really get busy because it starts tomorrow night. So if you are interested in the TICN course, or in fact if you have expressed interest and have been wavering, I hope tonight has helped you to make up your mind finally and you can do so by getting hold of us here at Moneyweb tomorrow morning or better still, e-mailing chrisb@moneyweb.co.za, and we’ll get back with all the details that you need.