BNC#7: Magnus Heystek – Building Brenthurst Wealth; offshore investing; and financial media bias

[Music] it was quite interesting listening to fwn and and and how they started we bu cars no business plan working on ratios spending money on advertising and you know I I was I was quite struck by the similarity of how we started our business uh Brest 21 years ago 25 just to give you some background about our company um for those don't of you who don't know I was a financial journalist for about 20 years while I was at the star or I started um a an investment club for the readers of the of the

newspaper I went to hary Tyson I said hary I think this was 1985 886 lot of political uncertainty and I said to hary I think we must start doing personal finance more than heavy business on a Saturday today and he said I don't think it'll work but try it anyway so I wrote a little article saying we starting an investors club and we invite people to write letters and we will answer their questions um in the paper the following week that went out on a Saturday and by Tuesday security calls me says sir there's three

boxes here for you to collect and I said what you talking about so the guy comes up with three boxes of letters from from readers and we discovered and we realized instantaneously that this is a goal mine that people wanted information on investments and with the result fast forward very quickly hello Neil welcome fast forward we started the service to clients and there was this huge huge knowledge Gap and people were desperate to get information about Investments economy the and we the same political uncertainty as we're having now and we started starting westers club we

started having seminars in fact it was a gentleman today come to me says I used to come to your seminar 30 years ago and certainly enough i' actually remember it it got so big ladies and gentlemen that I went to the editor of the star I said listen there's a business here so we actually decided to set up a business and we call it Nine pritet Street Securities was supposed to get an office down downstairs and then the investors or the editors changed and the new editor came in and he said no that's a idea

we're going to do something else and I was in limbo I already quit as editor of the personal finance section and I said no I'm going to give it a go so started my first business as F was saying virally no business plan no money in the bank just simple idea to give people good advice on their Investments fast forward I sold that business to C all many years ago it was a bit of clash of cultures and for a year or two I was playing golf and and uh I met my lovely wife Su

we were sitting there one night and said what are we going to do I said let's start a business and there was one guy from my previous company we found him we said listen come AC cross um you want to come and join us and I still remember we sat in the office there and we started a company I now we were thinking about a name and we try to be very smart and we Google all these fancy names of constellation Investments or Gladiator Investments and then the idea came up Harry op what's the name

of his house it's called Little brain toast Bing and the light went on I said we're going to call it brain test brain test Jurg Harry opim been driving past his house for years so we started the company and we actually Googled it I wasn't registered we registered name brain TST as a financial services company so we went out to town we started doing business within a week I got a lawyer's letter Mrs opon said Dear Mr Hast then you know what follows please change am it's part of the brenes foundation and Brent's family and

ceas and assistant and I wrote her a very back very short letter copying the registration saying ma'am I'm not breaking any law either buy me out or go away she obviously went away there we are three people starting a business and we said how are we going to do something different and F referred to it first of all the two similar arities between our two companies one was starting small richly no business plan but with an idea to give advice how do we get clients there was a book in my library called how to get

business in 90 days and keep it forever that book is still on my desk ladies and gentlemen believe it or not I met the lady Wendy Evans was a professor from Australian University and she did scientific research search about product and human being why does a human being choose that product over that product and it's a scientific treaty in sh she met her I took out to dinner one night and she explained that the human brain is programmed to remember name date place for about 90 days before it starts forgetting name of a person name

of a product name of a meeting what happened so your brain is programmed to forget things after 90 days and she wrote this bestselling book how to keep how to get business and keep it forever in 90 days on that basis we thought our marketing must focus on this and on the point of marketing when we started and I said and as soon as our marketing director every you see that prst stuff I said day one what we make 10% will go to marketing and we've never changed that rule till today what the income is

we spend 10% of our turnover on marketing for that simple fact if you don't keep your name up there keep it alive people will forget you because there's company B company C company in fact in the financial services World there are so many companies so the second part of the equation was and especially when we started and and later on how would we get people to call us instead of they we calling them we try to change around their old age thing in the investment business getting on a phone Mr Brown coming come and talk

to you go to people do a pitch and try and get some business very very unscientific waste of time in our opinion so we decided let's use our journalism experience to get out to look to the public and we write columns get under radio programs and create a demand for what you do and you do it as best you can based on just simply telling the truth in fact someone asked me the other day explain your growth as a business as opposed to so many other companies and we said it was actually quite easy we

had no business plann we just thought let's just tell the truth about the situation in South Africa and see what happens and our clients really like that they like the fact that when we're not M polishing the marble sorry I do apologize what happened 10 years ago interestingly enough I was going to give you a long lecture about politics and economics and 10 years ago something else happened in the budget of 2015 there was a smaller announcement in the budget that the Forex allowance has been pushed up for single discretionary allowance from 400,000 to a

million and for the other application you can take 10 million out it wasn't discussed in the media it kind of slipped in and almost two days later people realized my golly we can take a lot of money offshore and I don't think the investment industry was prepared for what was to come I'm not going to waste a lot of your time I started writing articles moneyway news week or new 24 WR I started writing about the situation in the country and it wasn't a pretty picture but the push back from the media was fairly dramatic

I mean I was slandered I was I mean I was an idiot Etc I'm just going to stick with one or two charts before we get to the conclusion the last 10 years ladies and gemen if and the and the thought occurred to me last night as 3:00 in the morning I was still not sure what I was going to say today and suddenly it struck me that we can thank the Inc for one thing apart from everything else that they've done how they've ruined the economy how they've ruined our budgets how they ruined our

expenditure programs there was one thing that they've done which has benefited all of us and that was quite simply whether it was part of a strategy because nobody was expecting this in the bu of 10 years ago it just happened they allowed South Africans to create Global wealth on their own withow no Administration issues fairly easy you could become a sovereign individual for most of your money unless you were very very wealthy people who you could physically actually take out most of your disposible cash if you so choose to do so and we actually have

to thank the fact that the ancy has allowed us to do that and still allows us to do that although they haven't changed the regulations over time they are still existence and the benefit to those people who have taken advantage is quite enormous but let me take a minute I just ask one question in fact I want to ask two questions how many in this audience have semr from the Northern parts of the country mostly joerg down to the southern parts of the Country Cape Town musle by hermonis put up your hand give us an

indication I ech of a lot of people who in you in this audience has or have offshore investments in one way or the other you just answered my survey I took a chance I was going out on the L you've all taken most of your money or some of your money but at least the point I'm trying to make you have the choice where to invest your money whether you want to have it in South Africa or you want to take it elsewhere in the world and I don't think that the local asset industry actually

realized how big an issue this is going to become after these articles started appearing and and I must add were other guys also saying the same thing you could actually see the local Asset Management industry coming with a very defensive Play No local is lacquer things are good JSC was the best performing stock market over many many years years ago that was true the JC up to 2010 ladies and gentlemen together with Australia and America with the three top performing stock markets in the world and there's a good historical reason if you understand history you

understand that we came with the the gold mining boom Platinum boom diamonds and then we had that construction boom in the early 20000s with the 10 world 10 there were many many driving forces in the economy that Propel our stock market to record highs and for years that was very true and if you take a snapshot thing 25 years ago from 2 2015 um 25 I be big part and the JSC is still the top performing Market in the world Believe It or Not mainly because the first 5 years the first six years two things

happened one is the offshore markets came off big time the Doom bubble so they went into a negative phase we were the beneficiaries of the Chinese Commodities boom and our stock market from 2001 to 2007 went up something like 400% we were darling of the world so as a as a as a long-term race we had a phenomenal race up ahead but that all came end roughly 2009 2010 and since then from from there on to now the JC has been a loser hands down against rest of the world and it doesn't matter what period

of time you take if it's 15 years 12 10 75 31 and there was a chart there we might find and there's a chart that shows you over a 16year period of Time how badly our stock markets have performed Let's see we can get the next one here again you have a 10year figure that just shows you um how badly the JSC has done over a 10year period starting point 10 years ago 1 million R invested and you can see the various numbers there JSC about what's it 2.1 2.2 million in your band today as

opposed to up to 9 million in the NASDAQ if you will but just a very good Global fund gave you more than double the JC so you can see what thanks to to the ANC the gates were opened and people said sir lady you can take your money and put it anywhere in the world no problem people have done it in a very very substantial way and late last year early early last year when Mike S was still alive he was still doing some runers for me you reckon the number is much bigger than we

think and he he spoke about 1.3 1.4 billion or sorry trillion Rand that has left the country investors were making the choice to their benefit and a lot of the people in the local asset man management industry didn't like it for simple reason the product that they were selling was not what the public wanted and today fast forward the numbers on the board is like a rubby game look looks at the scoreboard as they say that was the last 10 years I'm making no predictions about the for the next 10 years I'm just stating a

simple fact the other fact if you might go on one slide there you can see 10 year numbers I'm not going to bore for death with numbers there's one chart I like it to see next one please uh next one next one sorry darling I'm using none of your slides this is an example of what I'm talking about the local Asset Management industry in South Africa is under a lot of pressure and it's very difficult to actually get the numbers but this was an light coronation this is the dollar value of Coronation remember it's not

their money it's their client's money their business is actually shrunk by 30% in dollar terms over the last 10 years the flows are negative and this applies to more most of the other companies sunlam I'll get the sunam in a second oh Mutual everybody is battling with the same problem the clients don't want the product that they're selling more they want offshore for various reasons and for very good reasons better returns deemed safety out of South Africa and in fact by taking your money offshore it's your best revenge on the anc's policies cuz that will

protect you and has protected you against the chaos in South Africa and you have returns to prove it and I have many many clients in our practice we when we could take our 10 million said yes my 10 million offer goes now depending on the kind of risk factor that decision has been life-changing for most of those people uh I'll give you one classtic example and there were many cases where guy walked in with 10 the current value has run about 100 million being very aggressive those people are still in South Africa and the thought

that OCC last night is were it not for the fact that South Africans concerned about the country can externalize some of the assets has actually benefited the country enormously and you think in what way in the simple way that those people might have immigrated in order to externalize their Assets Now you can remain in South Africa you can migrate down from the north to the South you can come 11 in a wonderful place like a Manas if you could afford it if you had a better adviser um you live in Cape Town so those are

the two trends that we've been seeing in the last 10 to 15 years in South Africa the other trend is of course A lot of people are leaving but I would guess and I've got no factual stats to show it to you A lot of people are staying in South Africa and have stayed in South Africa as a result of being able to move your money off sh and I look at why practice I'm quite sure a lot of in this audience and there are some financial advisers as well in this audience I'm quite sure

they tell the same story by externalizing the assets getting the graphic you could get off shore I don't need to immigrate and leave the country I can still enjoy this wonderful country live in the cape winands G Town St BOS Paul plon B but your assets off show fantastic thank you very much ANC remember we come from for those oldtimers in the audience when exchange control was was introduced many many years ago and very strictly applied trust me you would break the law if you went have a season came back and didn't cashing your Travelers

checks there'll be a knock on the door say folks CES this phone said you still got some uncast trous chicks that's how bad it was in those days so to a certain extent this is one issue but the only of our people is to externalize the assets as they wish and where they wish fairly easy still easy today and the N effect is in my opinion being beneficial in two ways people become richer and they're staying in South Africa and that applies in my instance you know during the years that I was still running stuff

for money web and then all the attacks you get on the bottom why don't you B off and F off or go off whatever I love here my all my children are here all my grandkids are here I do have Investments of Shore and I am very comfortable with that so consider the the ability to take money offshore as a huge plus we and wearing you invest in the timing is a different matter it doesn't mean that offshore investing is is risk free of course not you've seen it again in the last couple of weeks

and every now and then you'll find some local fund manager saying oh now is the time to take money offshore and there was one slide I wanted to show you a classic case of old Mutual in 2018 going around the country saying the Johannesburg stock of change will be the best stock market going forward for the in the next 5 years I mean it was absolute rubbish and they were pushing this measures out to the agents and the planners and if you look at the the end result is actually quite shocking and there's a reason

for that this is the bra batter this is the High um fee products that they can sell in South Africa minute you take your money off sh you can get much better returns at lower costs and greater choice you mean today you're a global investor you're a sovereign individual I always get self annoyed when I see the stock market reports on netra 24 on news 24 and at focuses solely on the local stock market and I've often read into the editors and I say guys most of your clients have got most of their money offshore

give them offshore news and I just don't get it you've just proven most of your money is offshore you're interested more in the behavior of the S&P 500 or the NASDAQ or the the stocks 50 or the Euro next than the local JSC your money has been externalized so so that was was the thought that came up last night we actually thank the ANC for this that you still have the ability to take money offshore as in wind and fortunes enough to take it the negative thing is of course they haven't adjusted these allowances since

10 years 10 years a milon IR ran would buy you $84,000 today due to currency weakening you can buy approximately $52,000 so the same million Rand and hasn't be moved up and this is becoming a problem for certain people like myself who has a daughter University in London a million Rand doesn't go far anymore it buys you less and less so they've left it where it was so the best investment strategy of the last 10 years is to take your single discretion allowance offshore every time you qu5 for and b n de that has been

a fantastic strategy you don't need a million Rand it could be 100 could be 500 but my use of it while it still exists and if you fortunate enough R your amounts of money the same proces you apply go through the tax tance remember it's legal money it's legal to have optional money it's not being un patriarchy having offal money everybody has done it in fact there's one more I want there's one one to finish if you okay I'm not going to show how you stuffed up the government and just anyway now I'm really going

to spoil your day all right there was an article two weeks ago moneyway written by I think it's a ker an APS journalist colleague of mine and he basically said the big money has left the J 10 years ago and that was quite a statement to make for a media publication that has been very cool if I could put it on writing about oal Investments uh actually admitted the big money is gone and there's a reason I'm going again why and and and this pertains to my vice when you taking money offshore my advice to

consider offshore as the main building block of your wealth is not simply based on shortterm political movements up or down the around this you've got so much more choice in terms of investing from the moment you wake up you can the Japanese stock market which by the way has been a phenomen place to be but whenever have you read any article about the Japanese stock market in the South African media I mean the or This Global Japan Global Equity Fund has been growing like top of my head 12 133% in dollar terms for 10 years

quietly chugging your away it's been a phenomenal investment you can invest in India you can you can invest in Europe now if you want to benefit from the the real alment taking place in in Europe uh after Trump's tantrums and stuff that he's doing to by some European companies European Defense uh companies have been doing fantastic stuff yet our media so focused on the local companies they're all suffering from the same restraints the economies in the slump it's like fishing their fish pond versus someone who's fishing in the open sea in the open sea you

catch these big blue fin tuners that makes you the blots of money it's so African Mar unfortunately ladies and gentlemen and this is a fact is not not I'm making this up has been shrinking as an investment pool as a result of of the destructive policies by the r for many many years but it's becoming very very acute you read from Wei Cars one of the very few listings in the last couple of years that got the public excited but our universe of companies were shrinking all the time um and there when you analyze the

returns of the South African Equity type of funds or even multi-asset they all give you the same kind of returns there's very very few companies who can shoot out the lights why because they're all fishing in the same Pond Pond is very very small the big pond is out there and I don't think that so the gates have been opened and unless government and there is pressure there was comment two weeks ago by the politician in one of the newspapers saying maybe we should pull back on these very generous offal allowances uh as a way

to keep more money in South Africa and that has been repeated quite quite often unless that has changed that should be your priority of building a broad-based Global portfolio if you understand South Africa if you want to leave in live in South Africa it doesn't matter you're building Global wealth for and that's simply is the story that we've been telling to our clients and to end off on one last point someone this morning tweeted about oh don't you invest anything in South Africa I said if you investing billions in South Africa our bond market has

been a phenomenal place for risk averse investors looking for a predictable return on their money but that's not the money spending funds ladies and gentlemen there's are lowcost funds but bond funds global enance very b b enance income funds by merging the two and having a 703 mixture 70% offshore Equity 30% bonds enhanc income funds have actually been a phenomenal formula to follow the last 10 years giving you returns of about 14% per anom over 10 years at very low volatility and that's the kind of strategies you can create for clients if the you if

the universe is your is your is your canvas so that's what we've been doing for our gr so thank you for your time and thanks for the slides BR send me the bat let's go straight to to audience hi Mr hastac Brandon here um I was just wondering what your thought process and decision making process is with regards to integrating digital assets into clients portfolios and if you have thought about including this for your client products sorry I found he a word very simple question very simple answer and you know I've been ask this a

question a lot of times why don't you recommend Bitcoin or digital assets quite simply whatever My Views are on this is simple until about 18 months ago it was not legal in terms of our license requirements to offer that kind of advice and secondly I haven't written the exam in order to qualify to give their advice some of my other members have in the staff remember we we were a team of 23 24 financial advisors some of them much in fact all of them much younger than me um they can recommend it if they wish

to do so we have a very open culture in our company very flat structure there's no boss telling them you have to invest there and it's one of the reasons why it's such a nice company very flat structure so to answer your question I just told young maxia actually enrolled at the University of Cape towns doing their Bitcoin and blockchain course so call me eight weeks from now okay so I cannot legally advise a client in a professional relationship to invest in Bitcoin I'll be breaking our regulations in general I can make a comment and

say it seems to be that there is a place for Bitcoin in your array of funds and maybe 5% Monopoly money or gambling money or call it what you like smoke and Binx money is it part of structure yes it seems to be gaining in acceptance but it comes with a high degree of volatility like we've seen the last two weeks again if you prepare to live that it's fine but can I professionally advise no generally yes it's it's becoming mainstream question there um how do you as a financial advisor decide to allocate um a

client's money you have options from polish real estate to pesan Wheels to cryptocurrencies what systems do you use to guide yourself in making an asset allocation uh um decision and how do you decide when to sell and when to buy an asset and just to follow on why do you think the ANC let um people take money out of the country in 2014 that actually is a very good question the second one the first one is easy we got our clue from the Wolves of B did you see that movie we sell anything now itay

no we don't you know as as let's explain to how we we how we make a choice in the business obviously we are inundated with people wanting to us to sell their fun to our plant so we have a a team of people who listen to submissions and we have have a guy like Tony Bell runs the very successfully the raisable winner for 10 years now we use him as a consultant and we have created let's call the menu of funds in various risk categories that we have spoken to the fund manager we've looked at

their systems we've looked at their in sub structure and a whole lot of stuff and then we answer the question can we safely invest money in this particular fund and it's a whole process and 70% of approaches to us are rejected and that started many years ago when we had guys like shanet Shan Max and the leader guard and bit B coming knocking on the door that you want to sell this to your Appliance it's that's a lot of commission of course that out the door I mean they all flocked I mean I can't tell

you how many guys have knocked on our door and when they use the word commission they're out the door so we have a screening process with Consultants to tell us these are the good funds and we can use them and out of that that's the best we can do we scale it down to about 60 or 70 funds in and from there on it's the decision of the individual advisor because that person has a relationship with a client and and then and then we use econometrics measures to guide tolerance to risk and then we Max

the fund with a personality say how process before you get to a portfolio the second question is I don't know I don't think they realized what they were doing maybe they wanted to take some money out themselves has always been why did the NC do this but they had created the total new industry for ourselves and I'll explain what I mean by that 10 years ago when we sit in front of a client it was 90% local assets local funds local trusts in 10 years based on that all the money has gone and we've seen

it in our practice and our business across the country I would say about 60 to 70% of our money is offshore um if the parents have not gone with the money most of them are stay believe it or not it's the children who have gone yannies and in birth and sunnies and Portland suddenly we have to give Global advice global trusts Global Tax SST tax we had to revent or reinvent ourselves as a company to give that kind of advice people walk into to D they want advice on they trust endowment structures inheritance and and

a lot of people don't understand it most financial advisors need to understand they are now global advisors and they had to help skill themselves very very dramatically and we've seen it also with the asset management industry I just wanted to mention Sal there's a very interesting point look when the movement out of the country St out of money a lot of the asset management companies initially resisted It But as time went on they started forming relationships with the big players overseas Standard Bank with JP Morgan Discovery with Goldman Sachs etc etc because that's what the

clients wanted very interesting announcement for months ago sunap of all companies said the following we don't want to do active management anymore we want to do a deal with in 91 they must take us quietly under the radar they basically said we don't know how to manage Global money give it to 91 who who left South Africa a long time ago or enter the global markets in 1998 when they bought brick but it fright and started the global funds and exchange these a Sher show I thought this this the most f fascinating transaction that Sunan

probably the biggest or second biggest said someone else must do it we don't know how to do it so it's quite a nice topic for you to to to share so Henry to always had this vision of building 91 or before that invested asset management into a global player and then took 30 years but it's working for them now they're now the biggest so local managers are saying we actually don't have to run Global funds let someone help do it so that's an interesting development and it's just part of the bigger development of s Africans

externalizing their Assets in a legal way and nowadays it's a very friendly environment so the onshore offshore debate is over it's gone it's dead it's buried there'll be times when some South African funds do well they'll outperform for a short period of time but the there's no driving force of the JC really that can compete with the best of the best out there thanks Magnus um curious some your views on China as a investment destination um and if I could ask for one more question if if you had the the Liberty to give your clients

your house view what would that asset allocation look like by geography that's that's a very smart right now because of the downturn of the Chinese markets for the last four years China offers very very objective valuations if and always the provisor when it comes to Chinese Investments what is the government going to do there seems to be a reapo m of governments and business sector in in Japan I started buying things like Alibaba two three months ago that's gone from $80 to $120 so there's already some early buying in China for people understand the risk

and they also nice China funds either here or sure and that considering there might be remember the last 15 years it's been USA USA USA it's just sucked up all the money in the world it's not only how Market complaining about money flowing out the the Brits are saying the same thing the Australians are saying the same thing all the money is just been sucker by this period of American exceptionalism they call it magnificent sevens just sucking up a growing growing growing growing bigger there is feare that you might be near the top we never

know about the signs are there so some of the smart money has been moving out of the US into Europe and also into Japan and also into Japan and to China so yes I would be allocating some money to China for the ri T that was a second question as allocation 70% still in the USA maybe dropping that a little bit I was looking and we fortunately we run funds of showing Shan Pasar stalk in clar and I actually sat next to sha the breakfast this morning and I was looking at the returns of his

fun in the last two to three weeks where Marcus the tumbling Sean fun has actually gone up to rep eyes and I looked at his ass as vation he has been quietly moving away from America and he was buying British and some European stocks exactly what I was talking about Sean picked it up so actually had to congratulate him so p and there actually made money in because these are the trends and that's why we like using different kind of managers with different kind of investment St but we have to know what they do I

have a very very strict um instruction to any fund manager that we use if I call him or her they must take the call I'm saying Sean what are you doing now and then you must take the call so we need to know what they do just to follow on to that question there's a high concentration of wealth in the developed world with a very small number of shares at ridiculously high valuations what's your view on the fact that we might be in for a crash and some of the value investors have already moved lots

of their money into cash and gold let me be very careful yes of course markets are going to crash not just don't know when let's be very sharance markets are expensive overseas markets years Market is very expensive waren buff has been singling for quite a while I'm happy in cash I'm happy in cash the Central Bank buying of gold has been increasing import of the word gold itself is starting to improve as a as a countermeasure to these high valuations the problem is these high valuations can go even higher you just you just cannot call

the highs however it does make prudent sense to start cutting or reducing your exposure um to away from the US market and and and selectively if you look at our the top Fund in our company is run by Tony B the IP Global opportunity fund and I I was talking to Tony last week I said Tony you 20% now about a month ago 20% in cash there's an example of what managers can do behind the scenes as opposed to an index now he can and he said to me I don't like markets where the red

lights are starting to go on I'm 20% in cash and I say Tony I'm with you now if you look at the performances then he's on a relative basis done very well for anybody to try and predict major crashes in front of 200 people is is ludicrous yes markets do crash if you not if you don't have the stomach for big big draw Downs you should not be in the stop you should be in the bond market or the income Market it comes without saying it's you don't go and run a marathon and after 5K

you say you're Tire you must know it's part of the game maybe not a good example but we educate our clients on road dos we say it's going to happen these are the worst ones these are the bad ones if you're not happy with that we look for something else and that's just part of the advisory game so do I think there's a crash coming I really don't know do I think it's time to be more aggressive on gold yes I like gold like Japan and the other day someone asked me if the whole world

collapses where would you put your money I said I probably put it in in in the Swiss frank or the Danish croner as a safe haven and it's based purely on the stability of the country the stability of The Reserve Bank on the level of Reserve but that's really really kind of Doomsday stuff uh Marcus find a way of adjusting themselves and that's normally what happens uh M thanks uh my question would be more coming back home sorry there you are yeah yeah um yeah coming back home in terms of our service providers so we

sitting with uh the likes of alen gray 91 Old mus International sunlam International they are all there which of these platforms obviously we use them to to funnel the funds offshore would you uh think or suggest maybe is the better ones in terms of um admin and in terms of offering funds as well as a sort of a private wealth capacity you know buying into share portfolios yeah that's when when and I need to know back about 12 years ago in our hisory I came back from an investment tour in in in the United States

with investing a management at the time and we they we went to Tesla we went to Google Facebook Amazon and then with that coffee company I don't know what's the name uh Starbucks so we went and visited all these companies and met with these guys and I came back to South Africa and I said gosh we need to get in this technology uh boom and in South Africa I couldn't find anything there was one tiny little technology company standing about it and they actually just closed it they said there was no demand for technology stuff

I then started funing around the platforms that you're talking about this is the platforms are the vehicles that would put our allore funds and some guys didn't even take the call uh we spoke to glac here uh and and we went you got momentum someone have to listen to our court and I said my question was the following I said I want technology funds I want demographic funds I want Healthcare funds and I want bi technology funds can you help us they were very very helpful and they went and organized with vard and Templeton and

those guys to put put them on the fund for us so we have a very good relationship with momentum and we still have it today they said whatever you want we give it to you so that was a demand driven solution that they gave to us Le year was very good but from personal experience of all the ones that I deal with momentum is by far the best and if you want a new fund that listen so right we'll put it on for you and and on the GL on on the momentum platform for instance

I can buy physical go I can buy those shares or I can buy Bitcoin so there are other platforms which you can only deal with three or four otherwise becomes too complex so ask a question we prefer momentum on the global side just want see if there any questions in that side or on that side of the room thank you very much and then I'm going to take the last five minutes with you Magnus if you don't mind Paul um madus you talk about the foreign direct investment allowance um if people are using an Arbitrage

investment you can use that allowance up very quickly so you might only send 500,000 offshore but you might do it 20 times in a year and you've already used your your allowance up your 10 million surely that allowance should work in a way that if you send money offshore and then you bring it back it should be canceled out and you should be able to send more is that not a fault in how that allowance is calc calculated you you know the way they they calculate their allowances be changing all the time the for instance

I'm going to get to your question the other day I found out that even my Netflix subscription nowadays or anything that I pay for in ran to Dollars Adobe Netflix PornHub all those servic uh sorry uh it comes off your allowance and somewh there's this big machine sucking up all this information the V are talking to each other and I got a l the other day and say yes sir your your Lance has been exceeded stop using your credit card so the all guys watching us what we do so don't see Be Clever having three

different credit cards or bank accounts and it can come back to BU you and I've heard the issue is that if you bring money back it's not recorded to offset what you've taken out so yes it's probably but that's the thing that treasury Reserve Bank needs to look at but uh it's they becoming a little more uh um what's the word I'm looking for very cracking down on people phrases I referred to my daughter in London with with her great card paying for stuff and they also stopped there and no more she's over a limit

so the million Rand today doesn't buy as much as it could 10 years ago and my daily my fear is someone might just convince treasure just cut the no more short but just by not adjusting it for inflation adjust terms and dollar terms it's getting less and less and less so that's why when I when I see a your plant I say how much are we Tak an offshore let's use your million R and start trading an offshore portfolio and that has been a very good strategy clients's comfortable the are being good and you're in

control of your money so Magnus I'm going to reverse engineer our introduction because not many of you heard me when I was introducing Magnus Haack the co-founder founder of brain toast wealth people were transitioning from the room brain toast wealth is 21 years old today I think on this stage we celebrated your 20th birthday last year and brst wealth has been voted the top performing Boutique wealth manager for seven years in a row that was started by intellex I know intellex has now merged but it's still a fundamental BAS case um test in South Africa

and then further DA investa has just voted BR wealth the most trusted Boutique wealth manager I just wanted to sweeten you up before I asked you a really tough question we're sitting with a a situation right now I I mean Magnus we've sat on many stages together um you've always been proved right in terms of your view of offshore over South Africa and I think not uh fundamentally you can see what's happening right now um although we did hear F talk about uh the the positivity in in the broader economy as well but the foreign

policy issue is looming large across the board and I want to understand how it changes the standpoint because you congratulated thec on making possible for us to invest offshore right but with sanctions looming and and I don't want to be a dramatist here but potentially if worst case scenario unfolds and we did see the sanctioning of South African government debt what would that mean for us in South Africa it's something we don't hope doesn't happen but it looks like it's going to happen I think that the an is not getting they're not reading the room

they're not listening to clever guys uh Joe po telling them guys you better change your position on Iran and then Israel or else I think uh one of the previous speakers uh mentioned the very very strong Jewish Lobby in in in in Capitol Hill you cannot ignore that they control substantial amounts of money know one way to punish South Africa for that anti-israel stance is to about cutting off the financial Lifeline I mean our bonds are B all over the world and if they in play place inaro on the sale of our bonds to Americans

or American institutions IMF World Bank who knows it could be very catastrophic for our our financial situation and know coming to right I've been thinking about it a lot first of all your currency will take the big knock the currency takes a knock your interest rates on your bond blow out so there's a massive loss and it just that it it's quite catastrophic in the extreme if it is uh if it happens so one pray and hope it doesn't happen rapo comes to his senses and talks to Donald Trump and and at least make some

concessions start dealing with a man don't send him the middle finger we don't need you we're not going to supply with uh the rare earth metros you know that kind of rubbish statements don't don't talk to the biggest guy in town he's they will come after you and and looks like we are on radar he surrounded himself with um Elon Musk and he's very very well informed about South Africa he playing God with Gary Player for 30 40 years Gary is really outspoken about South Africa when I used to play golf I played golf with

Gary a couple of times his friends with Earnie El so he's been very well informed as to what's going on they try and mock him he's idiot and doesn't read books I don't believe that um we must be very very careful so to honestly your question it will have a severe impact on South African financial markets whether your bonds or equity or and then then you are looking for more protection in you Bitcoin go or sure assets so that is something that everybody in this room must pay very strict attention to and you'll see the

market start reacting as we get closer last year on the same stage we were chatting about the elections and the government of national Unity prevailed and and there was positivity post the election we obviously s seeing a situation now where the budget wasn't tabled hopefully it has been now um but many are saying that that's great that's a celebration of democracy it is a coalition government working I didn't think I would ever ask you this because generally you are pessimistic on South Africa but are you more pessimistic now than you were when we chatted about

the elections which obviously there was that as I said some positivity post the election but it looks as though your negativity could be proving right I'm going make it very very clear people say are you anti South Africa I'm saying no I'm anti-c very different I have been buying properties in South Africa in the last since we spoke believe it or not in the Western Cape how did you know oh it's my research what can I say I was nearly tempted to buy something in Johannesburg the other day Ladi in gentlemen just to give you

an example what's happening in this country office Block in t Valley 32,000 R square meter same office Block in a nice area the same building same type construction 177,000 R square meter there is such a there's there's a misallocation at this point in time and there is a slight recovery in the management of of Johannesburg and another rapos evolved got full confidence is going to happen Johannesburg must be so cheap right now ran for ran and the cap mon is getting very very dangerous I mean the prices people are asking for land I'm just saying

this smells like a bubble it looks like a little bit of a bubble so I'm saying opas might be time to look at jber again and some states because they are so cheap this an example so our negativity is driven byc policy and the ANC have introduced expropriation the medical Insurance TOA act and other acts are coming we so I think my temperature's gone up a little bit worried about the economic structure and the damage thaty is doing and we won't pay the price so children will pay the price all children we see it already

in the levels of unemployment of young black people not getting jobs at is scary statistic and that's what worries keeps me up to par I want to close out you said earlier if you were to choose two currencies we talk about them as hard currencies to put your money in it would be the Swiss frank well understood the Danish koner just some thinking around there and excuse my ignorance well if you look at Denmark with with you know their foreign exchange reserves is like 2 300% of gvp is an astonishing number because of the oil

the S oil funds they be building up and their sound fiscal policies over many many years Denmark was got mountains of money if you want a currency that or at least buy retain his value you need to look at some Danish CR and Switzerland of course historically has just been a a very safe place to be but that I mean look at Denmark with no Nordisk and those kind of companies that are that they putting out into the world it's a country that really esses me thank you so much Magnus hak bring to wealth okay

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