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Is it too late to panic?

In the case of business, we are back to 1985.

In one of my first columns for Moneyweb, some five years ago now, I liberally quoted passages from the wonderful book on his tennis career by Gordon Forbes, A Handful of Summers.

In one particularly delightful scene, he describes the repertoire between him and his doubles partner Abe Segal during the Wimbledon championship.

Throughout the entire match, in which they were being hammered by a better pairing, he kept on calling to Abe: “Is it time to panic?” Abe, full of bravado, kept calling back: “Not on your life. These guys are just a bunch of palookas.”

And so it went, until facing match point, Abe woke from his slumber and shouted back to Gordon :“NOW it’s time to panic…”.

As far as South Africa is concerned, we have reached that point.

There is no other way to describe it. It is time to panic, but for many people it’s too late to panic. For them, it’s game over.

For years I have been warning about a confluence of financial and political undercurrents which, to me, had some very sinister potential outcomes. 

I tried on many occasions to warn about the death of the rainbow nation. For my sins I was attacked and lambasted by people ranging from Democratic Alliance leader Mmusi Maimane to Dave Steward, head of the FW de Klerk Foundation.

From the Moneyweb community, hiding behind glorious internet anonymity, I got the full treatment. 

From the world of professional economists (Dr Roelof Botha, adjunct professor at the GIBS Business School) I got the polite but equally dismissive put-down that my comments were “ill- informed, cynical and lacking of intellectual understanding of the economic theory that underlies commentary”, or something along these lines.

According to Dr Botha, in his article published on Moneyweb on November 9 2016, the SA economy would now be steaming ahead with wealth-expanding growth rates in excess of 2%, the recession would be long-forgotten and that the talks of the downgrades would be in the historical trash can.

A year is a long time in the world of finance

Here we are – as promised — a year later and it has not exactly turned out that way. We have been downgraded to junk by S&P Global Ratings and Fitch, Pravin Gordhan has been fired as finance minister, the economy has endured two quarters of negative growth, unemployment is at record levels and Bloomberg has described us as the third-most miserable country in the world.

Business and consumer confidence are at record low levels – in the case of business we are back to 1985! While the industrialised world is having a coordinated global expansion, our industrial capacity is shrinking.

More than R247 billion has left our equity market over an 18-month period and our stock market has been the worst-performing major stock market against all the major investment regions in the world, both developing and emerging.

The Medium-Term Budget Speech last month revealed the true extent of the fiscal hole we are in. The budget shortfall is expected to be more than R50 billion this year and will rise to a total of R200 billion over three years. Where is that money going to come from?

One of the most over-used expressions in the media nowadays is that we are at ‘tipping point’. Just Google that expression and you will see how often it has been used in the last couple of days and weeks.  

We are long past that tipping point. We have long ago ceased to operate as a normal country. 

Almost every day there are more revelations about the extent of the abuse we have been taking as law-abiding citizens. State capture, state looting, thieving by the Zuptas and their cronies who seem to be found everywhere. Nothing shocks us anymore.

I am reading former colleague Jacques Pauw’s book The President’s Keepers at the moment (like everyone else in this country, it seems) and I was not surprised by his revelations. It just confirmed what many people have known and suspected for many years.

In government, at our state-owned enterprises, at our municipalities – you name it: where there is money to be stolen or abused you will find them there. It all started with the ANC cadre deployment many years ago. The circle is now complete. A country collapses when the looting and corruption goes unpunished. Read the history of any formerly glorious empire, be it the Romans, the Greeks, the Dutch, Spanish and even the French and British. Your society collapses when the money runs out; either through ill-timed wars or plain simple looting of the fiscus. We are not fighting any wars at the moment, as far as I can tell.

And then there is surprise in government circles that tax morality is slowly imploding. The tax revolt will take many forms, some covert (by cheating and avoiding taxes) while others will use overt means, such a reducing their drawdowns from their living annuities in order to reduce the amount of taxes they need to pay. Or even reconsider buying an expensive house in order to avoid those astronomical transfer fees?

Could thousands of retirees reduce the drawings from their RAs as a protest against the looting of their taxes? What would this do to government’s revenue collection targets? Just asking.

I have written several articles here and elsewhere about where the collapse of our society will start: our very small tax base. You cannot have a situation in a country of 55 million people where approximately 60% of all personal taxes are paid by just over one million taxpayers. Or just over 100 000 taxpayers paying 36% of all personal income tax. The centre cannot hold.

The financial rot is permeating almost every corner of society and is affecting our traditional asset classes, such as property, listed shares, farms and even businesses.

Our residential property market, with the exception of the Western Cape and certain small pockets around Umhlanga and Ballito in KwaZulu-Natal, is moribund. And even the Western Cape is starting to slow down.

Strip out the strong growth in property prices in the Western Cape and the rest of the market has almost come to a standstill. Residential property prices in real terms are down by about 23% over a ten-year period, the strong surge in prices in the Western Cape notwithstanding.

Many small towns and even larger towns in great swathes of our country have no property market to talk about any more. The values of these properties are zero. 

The buy-to-let market, equally, has become a war-zone. The latest Tenant Profile Network report on the state of the rental reveals that, countrywide, only 65 % of all tenants pay their rent on time. This is down from 72% in the third quarter of 2014.

Of the balance 17.05% paid late, 10.8% paid partially, while 6.37% percent of tenants simply did not pay.

Furthermore, about 8% of all rental stock is standing empty. Whoosh! There goes another surefire retirement plan up in smoke.

It is not uncommon today to hear landlords complaining about non-paying tenants refusing to pay their rent for months on end while the eviction process winds its way through the courts. 

I attended an investment seminar two weeks ago where some of our top fund managers presented to about 200 financial advisors. It was telling how different speakers answered the question about how much money they would take offshore if they had complete freedom to do so.

Some openly said 100% while the others, perhaps more polite and diplomatic ranged from 30% to 60%, all depending on what kind of fund they were managing.

The crux of the seminar was that the ability to have offshore exposure saved the bacon for millions of South African savers, investors and pensioners. No other asset class available to local investors has managed to keep pace with inflation over the last couple of years. Be thankful for the freedom that fund managers have enjoyed to invest varying degrees of their portfolios into offshore markets.

That freedom, as I’ve warned many times over the past years, is a freedom that hinges on a political decision.

SA is currently heading into a financial storm. In the short term we will be confronted with the possibility of Moody’s downgrading SA to junk, thereby joining the other two large agencies. This could happen as soon as November 24.

The big question is what a downgrade of our local debt to junk status will do. SA’s local debt is currently included in the World Government Bond Index (WGBI). A downgrade means that up to R140 billion will have to leave the country. Such withdrawals are never orderly. The rand is starting to reflect these pressures building up.

With SA’s Treasury now firmly captured and under control of President Jacob Zuma, that becomes a freedom that is now under a very real threat. Ignore this threat at your peril.

*Magnus Heystek is investment strategist at Brenthurst Wealth. He can be reached at magnus@heystek.co.za for ideas and suggestions.

COMMENTS   61

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…I’m so glad we’re back again to Apartheid economics (…the ANC connected elite can then learn from the old NP-guard how it was done). It also means, like in the mid-80’s, we’ll start to see older cars or relics returning to our roads…thanks to increasing poverty….hail the Ford Granada, Datsun 140Y, Golf 1, Merc 230E, Datsun Laurel, Toyota Corona, Audi 100, Ford Cortina…and crime could even resemble the “Stander-gang”!!

Hats off to people like Magnus H, Max du Preez, and Jacques Pauw….they tell it “like it is” without fear!

MH, please answer this simple question, that others are also asking:

WHY ARE YOU STILL LIVING IN SOUTH AFRICA?

I will give you my answer, but I would want it from ‘your lips’…..
…..because its good business for you and your company using your scare-tactics marketing message on these forums.

If it is so bad in SA, PLEASE LEAVE, BUT DON’T do a Bob-in-Aus on us that are left behind!!??

So, wise Gerry, please point out where MH has his facts wrong…

Expat Saffa, please explain your question to wise Gerry!??
What has it got to do with with wise Gerry’s question to MH??

Whether you fully agree with MH or not, it’s irrelevant to wise Gerry’s question???

Now go join Bob-in-Oz for dinner before he joins MH for his Dec. lunch in CT.

Oh Gerry give the man a break. He got it right and in his business yes that is good for business.

Do Life Insurance tell you that you will never need them/ Do insurance companies paint rosey pictures of low crime rates? Face facts. Facts are not scare tactics.

Very good question – I see many are asking the same question but Mr Heystek who normally has so much to say is silent – will probably complain again in the next article about his bad treatment.

@ March Hare – I asked “wise Gerry” to point out where MH has his facts wrong. Sober up, you sound like a whiny loser…

Amazing how everytime Magnus accurately summarizes what is going on and how things are clearly getting worse, a whole lot of people say he is promoting his own business. I would love to know what these fools, who cannot see what is patently obvious, invest their money in?
Tell us about your investments – or tell us you have no skin in the game, have no option what to do with money you don’t have and are just bitter?

@ Nowandthen

I am one of those “fools” that you refer to.

I have professional people managing my affairs quite successfully, but can assure you Heystek (who went to Univ with me) has never influenced any investment decision we made.

He tells the truth and his warnings are well supported – but if you believe he is oozing milk of human kindness doing this solely to benefit you and many others then think again – this is his business plan – and it is working – and there is nothing wrong with it – so why hide it?

“From the Moneyweb community,hiding behind glorious internet anonymity,I got the full treatment” tell me about it MH!I also was the brunt of a full range of epithets – a lot suggesting I was gloating over my decision to move the smith family to aus in 1986. if only – I constantly warned of the dangers of under estimating the problems of being an ex-japie in aus or most other countries where 24/7 domestic help is not the norm! its given me no pleasure to see the downward path of my erstwhile country which has quickened over the last 6 months.
as regards the MH’s question – my philosophy has always been – “DON’T PANIC – BUT IF YOU DO – BE THE FIRST”!
my simple message has been to get your money out of sa BUT in a vehicle in your name – not thru some institution based in sa. for the large part I have been ignored. on the observe side I have warned that just by investing off shore will NOT guarantee returns. a share that I got in and out in a hurry was TEVA – the biggest owner of genetics pharmaceuticals. their share price is down by 75% in a year!
I will be lunching with MH in January just before returning to Sydney and no doubt our little comments will for a large part of our discussions – (Ryk will also be there!!!)

Aah Robert, still writing to us, I see,from that far away and beautiful country Australia, where men are men and sheep are nervous.

now that’s what I call a deep and thoughtful comment – NOT!

@ Danie van Parow. It is embarrassing to read a brainless comment like Danie van Parow’s. One gets the impression that South Africans like him have an inferiority complex versus Australians.

Robert you and Magnus will have a lovely lunch – Just be sure to tell the waiter how stuffed his country is and how much you have done to help save it – By the way Robert I have not heard one word from the wonderful Aussie government about Zuma and what he is doing to the country – Yet they were very vocal about “apartheid” – By the way people don’t stay in SA because of the the domestic help – They stay because of family, friends, because the employ other people etc… Some cant leave because of ill health or they just have the means to leave – Yet most countries will accept you if you have enough money (it does not matter where the money comes from) So much for the morals of other countries – Lets be clear Robert, YOU did not build Australia – You fled with your tail between your legs. As for Magnus, he rehashes the same old story time and time again – Magnus your business is built on creating fear (we all know SA has significant problems) – The “wealthy” families have taken out their money ages ago – For some reason the SARB was happy to sign of on multi billion rand deals – The rest of the money left via transfer pricing and creative accounting – Then we have all the reps fro all the tax heavens coming to SA telling everybody to get their money out so they can earn fat trustee fees, while pretending they care – Magnus why dont YOU write an open letter to Zuma explaining your economic solution for SA? Ill tell you why because there is no money in that for you – As I said before some of those wonderful 1st world companies has been part and parcel of the corruption in SA – So too some of the biggest banks and tax heavens (including Mauritius) where every 2nd SA resident is now buying property to get residency – I don’t think anybody on this forum has ever said don’t take money offshore (there are actually people out there that can think for themselves) – Just do it in the most cost effective way.

I say that Magnus has hit the nail on its head. We’re in big poo. It would be wise to pull our heads out of the sand, and see the situation as it is.

SA is doomed, are the objecters to this article current with the state of affairs here? It doesn’t seem so.

Miracles do happen and we’re going to need one to get out of this. There are another two years still to go with this president, and A LOT can still happen. Zuma’s in control, don’t forget. We’re not.

“A lot suggesting I was gloating over my decision”

Haha, oh Robert, you, gloat, can’t be, never, must be a mistake somewhere !
I love reading your comments, taken with a pinch of salt of course, but come on, you cannot deny the fact that they’re mostly intended to rub in our faces how you saw this coming, made it out in time, haven’t been happier, that those of us still here are doomed, EFF will take over etc.
Cheers mate.

Why this preoccupation with Robert and what appears to be silly, immature defensiveness.

South Africa’s in deep, deep trouble. That’s the crux of the matter.

Good luck to Robert for his foresight. I criticised, albeit silently, my daughter and her husband for leaving for Australia, too. And now, I’m very glad they did.

My grandchildren would have no chance here. The universities are about to collapse. My two eldest grandchildren are about to embark on university educations. Where would they go?

Good for you, Robert. Peace and happiness to your family.

Bobby Boy

Congratulations to you and Heystek – – – you have been proven to be (half) right.
Not that this took real intelligent thinking – everybody has known this for some time.

In your case – people (including I) react badly to your stupid posts every time something bad happens to SAfrica or a SAfrican company. You simply ignore good things happening here – but then, it does not suit your decision to go live in a Australia – a country with strong criminal history.

As for Heystek – his warnings were ONLY to assist him making more money from scaring SAfricans. If he was so worried, why did he not leave many years ago? Answer to that is he would – like you – find it extremely difficult to try earn a living abroad.

Any event, let me not rain on your (early) parade – congratulations guys – hope you can squeeze out a few Aussie $ to go buy yourself a (reasonably) good lunch today.

“You simply ignore good things happening here…”

What good things are happening here? I’d really like to know?

Danie-it is hard going to live offshore-harder still to make a living with little capital or network, education etc. To attack Mr Heysteck who has called many things correctly is a disgrace to your judgement. There is very little if anything positive in our dying country and positive spin( ie denial) serves no purpose.

Mr Heysteck has been correct on the Rand, property our government and the sustainability on robbing a few taxpayers to feed a crowd of lazy incompetent losers.

We are becoming a Zimbabwe-and its like Mr Rupert said about bankruptcy-it first happens slowly then quickly.( And Danie the Auzzies could not care less about us…nor does anyone else-get your money out and buy residency in Slovenia)

Robert you were usually right, the rest of locals are typical keeping they head under pillow and not even listening to any local news so not to get upset. I have been warning all my friends since 2005 !!!but NOBODY listened and thought I was crazy, negative , super pessimist, some people stop inviting me saying I was nothing but bad stupid news bearer- well everything that I predicted came true

Robert Smith in Sydney I note that you remain anonymous whist complaining that you got the “full treatment”.

You are extremely presumptuous to even equate yourself with Magnus.

As for the gloating and “I told you so,,,” well it is true and not a particularly pleasant characteristic.There are many, many people who have successfully relocated both financially and physically who do not lecture ad nauseam.

I am sure Magnus and Ryk are besides themselves with excitement with regard to the upcoming luncheon prior to your glorious return to Sydney. Poor buggers.

Wow – all that negativity and “I told you so” – would best suit a get together in a shebeen as it will lead to fist(or knife)fight as to who was first one who predicted the clear signals known by all taking a cursory interest in SA economy. No bright spark thought here….

Robert – good to see you intend to visit your country of birth – hope you are investing major part of your considerable wealth to help SA. Take your children but be careful they may want to remain there.

He has taken one of the most beautiful countries in the world to JUNK !!!!

Magnus, the reason Moneyweb readers are critisizing you, is because you have become Mr Negative. Anybody with an IQ higher than 10 can see the problems facing South Africa. The challenge is not to tell us that which we know already. We are not in denial as you seem to suggest, as ordinar people we are trying to do our best on a daily basis despite the plethora of doom and gloom. My challenge to you is to find something positive amongst the gloom. Perhaps you can tell us about your meteoric business success with Brenthurst which can serve to inspire us. We need positive people now, not more negative people.

disagree 100%. what you need is realistic commentary – not blind optimism when there is NO room for optimism. again I repeat the experience of the jews in nazi Germany – some of them were very very optimistic (hitler needs us). what they should have been is realistic and got the hell out while they could.

He has been saying “positive” things for years, get your money out. Those of us who did feel more positive than those who did not.

Agreed, but it runs deeper. As I’ve also commented before – MH, you are absolutely correct, here and in your multitude of previous articles. No argument, no debate needed. You dont have to try and scare us, we are already very scared. For the most part we are not complacent either – we don’t need shock treatment to mobilise us into action. What we need is constructive action around plausible solutions. As I see it, we have only two choices – beetle off to Sydney and chirp from the sidelines like you know who, or stay and be a part of a solution. There is no middle-ground.

We need to embrace a collective effort to propose and implement radical solutions. We need to wax smart plans beyond protest action and relying on the ballot. This may work in western democracies but it’s too passive in corrupt crony kleptocracies.

MH, you have a formidable far-reaching voice. Use it to propose solutions that we can relate to and engage in. We need things like a Rudi Guliani ‘broken window’ type action plan which ultimately saw the successful gentrification of New York City. Perhaps we can get attorneys in the community to work pro bono and start instituting legal action in obvious cases of corruption. Pehaps support for more active community policing to protect farmers. Smaller initiatives like engaging school kids to pick up litter on Saturday mornings and get retailers to reward them with a pie and a coke. Get auditing firms to propose and implement standards of best practice for governance in both local municipalities and national government (also pro bono)… Critically analyse and report on the successes and/or failures of BEE and affirmative action and propose alternatives if necessary. Form a work-group to actively monitor and report on all such initiatives … etc, etc.

It serves no purpose to continue repeating negative rhetoric that we are all too familiar with and aware of. If we are not all somehow part of a solution, then we are a part of the problem.

Brenthurst is built on spreading fear in SAfrica.

Great business plan – – worked well for Heystek – – pity his loyalty to the country of birth and training(?) and marriage and family and divorce and living the good life is so poorly displayed.

When the facts are on the table acknowledge them – as unpleasant as they may be. Stop smacking the messenger.

Do we detect a little green-eyed monster here?

Are you one of those who cannot emigrate or won’t because you will lose your ‘domestic workers’ etc?

I re-read the Botha article you mentioned. It is scary how much has changed in a year, I wonder how Mr Botha feels about his article now.

Yet another ‘I told you so’ article by Magnus…
I’m not disputing what he says, nor am I in denial, but, oi, *rolls eyes*

Happy Tuesday everyone.

I do not think that there is much to worry about people reducing their drawings from RAs. The real danger is the top few percent who pay most of the income tax. If they or their accountants can find some loophole to reduce their income tax by a few percent (shifting it into dummy companies, splitting it with spouses and children or whatever) it would have far bigger effect than anything else.

Probably not too late. The market may have entirely priced in a downgrade but it also seems to almost entirely bank on a Ramaphosa victory and subsequent recovery in the medium term. Sure, the $ has weakened but keep in mind it wasn’t that long ago the R/$ was R16 and the outlook then seemed more positive. So if you take Magnus’s view you could take a geared short on the rand or even take the first R660k of your provident fund savings out and pay the 18% tax (you will have made it back if the rand goes to R17 and avoid Reg 28 restrictions going forward) etc.

Instead of all the books you read, you should watch a 2015 movie called “Bridge of spies” starring Tom Hanks. In one scene he has a conversation with a Soviet spy arrested for espionage:

James Donovan (attorney): “Quite frankly, everybody else wants to send you the electric chair.”
Rudolf Abel: “All right…
James Donovan: “You don’t seem worried”.
Rudolf Abel: “Would it help?”

Nice comment jnrb. A pleasant change from the usual comments. Continuing the movie theme – when I read the Moneyweb comments I’m reminded of the movie “Groundhog Day” with Bill Murray in which his character is caught up in a timeloop when everyday is exactly the same as the day before. In the Moneyweb version of the movie robertinsydney would be the Groundhog! I have long since stopped reading his predictable comments and would suggest everyone does the same.

Yes … all the best lines are in the movies. “The Bridge …” was a good one. Sadly, we are in reality; one which is imploding around us.

Thank God Magnus didn’t mention the 10% of the population who are HIV/AIDS positive. Nor the 40% unemployed or the close to a third of the population on social grants.Or the school leavers who are for the most part unemployable without on the job training.

Now if he had gone down that road I would have REALLY worried! But here I am in Cape Town, the only First World City in Africa (according to our Dear Leader Madam Mayor) where the water will soon run out.

Well at least I can still afford the wine …

Dear Magnus:

A: No one likes to hear the truth because it means you have to make difficult decisions and then actually carry them out.

B: You are absolutely correct in your summation of where we are now and how we will get out of it without losing what we have worked decades for is the greatest challenge facing anyone over 40 in South Africa.

C: I think I read recently that only 8% of South Africans will ever be able to retire in reasonable comfort and the haters of your columns are probably amongst them, having sleepless nights about their futures.

D: “A Handful of Summers” was a wonderful book and when I was in the book business I heard him speak at one of his launches and a more delightful character you could not hope to find.

E: So my advice Magnus is: look after your family, clients and yourself as best you can, have a nice cup of tea and re-read “A Handful of Summers” again under a shady tree on a warm afternoon with a scone with proper cream and an excellent jam and make sure your passport is up to date.

Once the US declares war on Iran, it will be tickets for the western countries (war on Russia and N Korea are smokescreens).

US and UK are pretty much stuffed, Aus is stuffed but its citizens don’t know it yet.

Europe is turning into a refugee cesspool.

South American countries are easily susceptible to coup d’etat.

I will take my chances in SA.

Have you been to Europe recently? SA has far more refugees than the entire EU. In Europe the unemployment is a fraction what you find here. What kind of jobs could the millions of unemployed do in SA? What is the solution for SA? Reverse apartheid for 100 years?

Hahaha spoken like a true South African who has never set one foot in any of those places you speak of… Keep your blind fold on and sink on your Titanic.

@ “I’ll take my chances in SA”

Hope you’re right. I mean, if there’s really (God forbid) a WW3 scenario playing off between mayor world powers, SA will be mostly “off the radar”…we’re so insignificant globally, the world may forget we existed…saving us from a nuclear strike. We’re still out of reach of mad Kim Jong Un’s missiles….so far 😉

But a very real threat is Pres Wrecking Ball in SA’ own backyard. Another scenario, is the acceptance that SA is yet another African country (steadily) losing its economic relevance on the world stage, after being freed from colonialism. History repeats itself. Best to hedge against the Rand long term. (Am not saying a failed state…just becoming insignificant on the global stage).

I have no choice but to “take my chances in SA”, as the cost of relocation elsewhere is huge / life-changing…then realised its much cheaper to stock up on ammunition.

@ RogueTrader

The worst possible scenario for any of those countries is better than SA’s best scenario at this point!

Magnus

I hope that your quote ” It is time to panic, but for many people it’s too late to panic. For them, it’s game over. ” is not really your firm opinion.

if it is – I really question your thinking and your ability to advise anyone on complex financial affairs.

If not – then I understand it is solely to increase your earnings from scared SAfricans who must be calling you in droves today asking “Is it game over for me too???”

Questions: If this was so evident, and if you really believed it,and if you did not do it for the money, why are you still in SAfrica?

Be honest with the nation now.

To be fair, many people are working in SA nowadays as Expats in their own country.
It’s not a bad business model to work here, but keep your earnings offshore – you’re still offering a useful service, so keep doing that. We haven’t reached levels of killing each other yet, so until that happens we can carry on. We might reach worse levels if the ANC loses power like Zanu did in Zim – or we might muddle through, in which case, nothing has changed..

I would rather just have earnings offshore, and a contingency plan, ie can you go somewhere if required. No country is immune from failure so plan for that even if it were being run wonderfully.

Very well said. I also say, go where you’re treated best and when shopping for a second country, always look not what it’s like now, but what it will look like in 10 years from now. Is it better to have a Plan B and not need it or to need a Plan B and not have it??

Magnus so often advocates getting funds out of this country but never addresses the one vital component in this propagation – the exchange rate. Currently the exchange rate is against most persons to move funds overseas and the question is to which country as that has a material effect on funds moved out. Presently Europe is starting to look like a refugee camp, there is Brexit in the UK and Trump in America flexing his tongue to all and sundry.
Sometimes it may just be better to sit on the fence and agitate on a political level to get rid of Zuma and his thugs – we don’t need a repeat of the last time the exchange rate went crazy and people are still trying to recover from that disaster and the effect it had on the funds they moved out of the country

Move the money in stages and Rand cost average then… you know that if things were normal the currency should depreciate at 4-6% pa over the long run, we’ve got a reasonable level at the moment, the markets generally seem reasonably right – and the currency will always over and undershoot. Although, risk wise it seems more likely we’ll reach R20/$ than R7/$ so perhaps the current level will seem cheap in retrospect?…

After all the same old stuff, I have decided to no longer read articles from the Magnus-Robert mutual support pair. there’s never anything original or meaningful or interesting here any more.

Sure, go ahead and panic, not sure what good it will do… panic can paralyse you. There is much else that you CAN do: support your newspapers, they are fighting the good fight to expose all this rot. VOTE in anything and everything you can, local elections, national elections. Volunteer with your party to help get the vote out. Donate to the party you believe will save SA, even if its just by taking out a membership. Talk to the people in your lives and convince them that the fight is not lost. Apathy is the real evil here… don’t let it drag you under! The fight is not lost. The only thing that evil needs to succeed is for good men (and women) to do nothing.

The population has been in panic mode since “President” Zuma took office.

Most South Africans suffer from high anxiety levels due to his tendencies to destroy the country and everything we work for every day.

Do we really need one of these every couple of weeks? Things have been bad for a while, no one is debating that and if you have somehow concentrated all your wealth in SA then yeah you are heavily exposed (if you didn’t diversify then I’m not sure what you are trying to achieve).

This does not however reflect the long term view which is what retirement investing is about, if you believe SA has no long term future then yeah take your funds elsewhere but even If I am not physically here it makes sense to keep my investments I’ve built up here over the long run.

Lastly, you never sell at the bottom, trying to time the market is a silly game but selling when things are spiraling is a rookie error for me.

On property, I have often heard that property retains value even in countries like Zimbabwe. Liquidity is an issue but in terms of a defensive asset then surely you don’t get much better than property in a decent area.

“…property retains value even in countries like Zimbabwe”
Wow. You should maybe try to raise that argument in a discussion with a few ex-commercial farmers from Zim.

I don’t think MH’s advice is to “sell when things are spiralling” but to “cut your losses and move on” when “your course of action is clearly going to be unprofitable or unsuccessful, before you suffer too much loss or harm“.

Since being a teenager, and especially after reading MH book “making money made simple” in the 90’s, I have followed MH’s teachings eagerly.
Following his advice has always stood me in good stead, helping build myself up financialy to where i am now:-independent.
With a two-thirds offshore component and the other 1/3 in shares, cash and property, I have advanced in leaps and bounds.

Thank for opening my eyes MH.
I have never used your firm, just the advice you give in your books and articles. Ignore and mock MH at your own peril….

Yes and had you invested in Biotech stocks the last time he punted them you would be down 11% in Dollar terms (even the local balanced funds outperformed the biotech index) – Rather than listening to other people, educate yourself. Investing is not that hard. But you have to have a basic understanding of tax, forex and asset classes. Then buy the cheapest index tracking fund and just leave it (reinvest dividends) and you will outperform 90% of fund managers.

To all those who would like a positive message to feel better. Roelof Botha was positive, Magnus Heystek was negative. One of them was right. Your money/ the market does not care about your positive feelings.

Its never too late to panic. I started in 2008 and have not look back since.

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

Ernest Hemingway’s 1926 novel, The Sun Also Rises.

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