RYK VAN NIEKERK: Welcome to this week’s edition of the Be a Better Investor podcast. It’s the podcast where I speak to finance and investment professionals about their investment journeys, and why they chose a career in managing other people’s money. We also discuss how they manage their own money, and the idea is to find a few nuggets of wisdom to assist amateur retail investors to become better investors.
MADALET SESSIONS: Where did I grow up? [It is] a longish story. My older sister was born in Pretoria. I was born in Durban. My youngest sister was born in King William’s Town. There’s two years between [each] of us. Both of my sisters went to eight different schools and I went to seven different schools. So I grew up all over South Africa with the distinction of having never lived in the Free State.MADALET SESSIONS: My father is not a dominee, nor was he ever one. My dad was a bureaucrat.
To escape the wrath of my parents, I fled to the UK and there I got interested in economics, rather than in investments per se, but in economics. But the difference between the UK and South Africa when I was sort of in my early 20s really inspired me to sort of figure out why it was that some countries were poor and some countries were rich.
So I said to the professor, I wrote him an email, and said: ‘I really enjoyed your course. I did particularly well in your course. The university will allow me to do other financial economics courses from another university. It’ll be quite expensive for me. So, before I sort of walk down this path, I would really like to know if I actually want to spend some time in financial markets, in the economy and in investments.
RYK VAN NIEKERK: When did you make your very first investment, a personal investment where you paid for or invested your own money? The next evolution of my journey was to say, it really is – even as a professional investor – I think preferable to invest in unit trusts. MADALET SESSIONS: I do. A large chunk of even my active discretionary portfolio will be in unit trust investments, rather than stock-specifics. Estate duties and tax regimes and all these things and the administration involved are a lot more than I desire to be involved in. So admin is an absolute negative passion of mine. I can’t bear it. I hate admin. And so the less admin I have to do the better.
MADALET SESSIONS: Actually it’s the opposite. It’s on the long rates, and I entered the market at about 2%. So when long rates were about 2%, I went in on my short, and interest rates are now 4%. MADALET SESSIONS: It’s not insignificant, I would say. Well, it depends on what people call ‘significant’ but yes, my gambling portfolio, I’d say would run to about 10 to 15% of my portfolio, depending on how lucky or unlucky you get on the day.I have a firm view that if you’re going to put money even into a speculation, you should have a very clear idea of what it is that you think the value drivers will be.
Those things you can understand and you can know and you can own. It’s much harder to do that for other things, for things like crypto. RYK VAN NIEKERK: I’m going to stop you there and let’s frame it a bit more narrowly. What’s the best financial investment you ever made? And I looked and I thought about that very hard, and I thought, really, just inflation? That’s actually not a hard task for a company. All you need is [for] prices to go up.MADALET SESSIONS: That would’ve been 2006 or 2007.MADALET SESSIONS: So I bought. I’ll give you my purchase price. I bought at R13/share.RYK VAN NIEKERK: I’ve got a graph here in front of me, which is only a 10-year graph …
But this is why I say you give your money to the people who have a track record for delivering value. This can be either other portfolio managers who have a philosophy and a process that you trust, or it can be management teams with a sort of a history of capital allocation and value added over the long run.
I don’t think you will get that return in any other investment, so you need to keep that in mind that the dividend yield should be worked out on the price you paid for an equity, and not the current one.MADALET SESSIONS: I can fortunately say it was very, very small in my life, and it was also something I bought while I worked at Investec Securities. That was the time of the junior miner.
I’ll tell you this story as well. When I worked at Investec, I earned a R7 500 a month paycheque. My then boss agreed to send me to London for a week with international investors. My husband and I had been on holiday in Denmark, Norway and England for the three weeks prior to the week that we were going to be working in England.