BNC#6: Heystek Q&A – Cautious investing, market uncertainties, looking offshore and more

In an enlightening Q&A session at BNC#6 in Hermanus, Magnus Heystek delved into the world of investment strategy. From navigating market uncertainties post-elections to assessing the tech sector’s valuation and exploring offshore investment opportunities, Heystek shared valuable insights backed by years of experience. Discover his views on gold investments, India’s market potential, and the ongoing challenges of timing markets in a dynamic financial landscape. Gain actionable investment advice and a deeper understanding of risk management from one of South Africa’s seasoned wealth managers in this engaging and informative session.

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Summary of the Q&A session with Magnus Heystek at BNC#6 in Hermanus

At the BNC#6 conference in Hermanus, Magnus Heystek engaged in a dynamic Q&A session, offering insights into various investment topics. When asked about advising clients after a favourable election result, Heystek advised caution, suggesting not to rush into offshore investments due to uncertain market factors beyond elections. He emphasized the need for balanced risk and reward strategies.

Regarding the tech sector’s valuation and investing in dollars, Heystek highlighted conflicting opinions on the Nasdaq’s tech sector but stressed the difficulty of timing markets perfectly. He encouraged investors to consider their risk tolerance and diversify accordingly.

On investing in India, Heystek recommended more direct and cost-effective methods than Sun International, considering regulatory constraints in South Africa. He also discussed his preferences for offshore investments, particularly bullish sentiments towards Japan and Europe.

Regarding specific companies like Aspen and Lilly, Heystek acknowledged their potential but noted limited accessibility in South Africa currently. He also addressed questions about Bitcoin, expressing a lack of understanding and preference for regulated investments aligned with client risk profiles.

The discussion extended to Heystek’s ongoing five-year investment competition, where he shared insights into market timing challenges and asset class performance.

In terms of gold investments, Heystek recommended Krugerrands and offshore gold funds, citing gold’s historical performance and investor preferences.

Overall, Heystek’s investment approach revolves around thorough research, utilizing tools like Morningstar returns and direct engagement with fund managers. He emphasized the importance of personalized strategies based on client risk profiles and market conditions. The session provided valuable perspectives on navigating complex investment landscapes.

Edited transcript of the Q&A session with Magnus Heystek at BNC#6 in Hermanus ___STEADY_PAYWALL___

Bronwyn Nielsen [00:00:07]: Mr. Doom, the little anarchist curator. And congratulations to him on a well-deserved acknowledgment for his work with Busy News Conference 6. I think he’ll appreciate your compliments. He curated several speeches over the last two days focusing on potential scenarios in South Africa. I’ve noticed you sitting in the front row. Has anything from those conversations shifted your perception?

Magnus Heystek [00:00:41]: Well, if we can remove the ANC from power, that’s a game changer without a doubt. But will it happen? I hope and pray for a DA-led coalition to take control, which could save the country. However, I don’t see it materializing, and I can’t risk my clients’ money on such uncertainty. If that doesn’t happen, we’ll have to change our strategy.

Bronwyn Nielsen [00:01:07]: What about global uncertainty? We’ve seen shifts like Trump’s election in the US, geopolitical tensions, and potential conflicts. Doesn’t this uncertainty undermine offshore investments?

Magnus Heystek [00:01:43]: Uncertainty has always been a part of markets, whether it’s political events, geopolitical trends, or natural disasters. They’re unpredictable and can impact markets positively or negatively. This unpredictability is why stock markets offer high returns but also come with risks.

Bronwyn Nielsen [00:02:59]: Do you think today’s uncertainty is more significant than in the past?

Magnus Heystek [00:03:05]: Not really. Market history shows ups and downs over decades. Smart money follows trends, whether in equities, bonds, or commodities. People often panic after crashes, missing out on market recoveries due to emotional reactions.

Bronwyn Nielsen [00:04:15]: How about South Africa’s institutions, like banks, as stabilizing factors?

Magnus Heystek [00:04:34]: The damage to the middle and upper class in the last decade reflects in banks’ bad debt provisions. Even affluent individuals struggle with debts due to economic challenges. This situation doesn’t inspire confidence in local investments.

Bronwyn Nielsen [00:05:27]: It seems quite despairing for many South Africans. How can they start with offshore investments given current challenges?

Magnus Heystek [00:06:14]: Start small but smart. I’ve taught my children to invest wisely from a young age, focusing on assets that offer growth. Size doesn’t matter; the right asset class does.

Bronwyn Nielsen [00:08:54]: Can’t the private sector solve some of these challenges, offering investment opportunities?

Magnus Heystek [00:09:52]: Private sector opportunities exist, but they’re often responses to forced situations, like investing in solar panels due to power cuts. The systemic issues in South Africa’s economy overshadow these opportunities.

Bronwyn Nielsen [00:10:19]: Why rely on offshore managers’ decisions?

Magnus Heystek [00:10:19]: Global asset managers have broader perspectives and can choose the best investments worldwide, not limited to South Africa. Their choices reflect market realities.

Bronwyn Nielsen [00:13:40]: What about hyperinflation risks in South Africa?

Magnus Heystek [00:13:58]: The government’s decisions, like tapping into reserves recklessly, can lead to hyperinflation. This, coupled with high debt, creates a precarious situation.

Bronwyn Nielsen [00:17:28]: Are you considering the geopolitical shifts, like the BRICs?

Magnus Heystek [00:17:38]: The BRICs’ impact is relatively small globally. China and India are significant players, but South Africa’s role is minor in the big picture. The dollar remains the dominant currency.

Bronwyn Nielsen [00:18:13]: So, it seems global factors still heavily influence investment decisions.

Magnus Heystek [00:18:25]: Absolutely, global dynamics and market trends play a crucial role in investment strategies.

BizNews Community Member [00:18:22]: Magnus, if there’s a favourable election result and the rand strengthens, what advice would you give your clients?

Magnus Heystek [00:18:37]: Can you repeat that question?

BizNews Community Member [00:18:38]: Sure, if South Africa has a favourable election result.

Magnus Heystek [00:18:44]: Then I will tell them the following: if you have more money to invest and already have some offshore investments, don’t rush into investing more offshore. My advice would not be to bring money back because the election results might not be the sole factor affecting the markets. While I hope for positive outcomes for our investments in South Africa, I won’t risk your money on uncertain events.

Bronwyn Nielsen [00:20:01]: Go ahead.

BizNews Community Member [00:20:02]: Thank you for your honesty. Do you think the tech sector is overvalued in the Nasdaq? And is it too late to invest in dollars given the current circumstances?

Magnus Heystek [00:20:23]: It depends on your perspective. There are conflicting views on the tech sector’s valuation. Some believe it’s not overvalued, while others like Jeremy Grantham have concerns. As for investing in dollars, timing markets perfectly is challenging. It’s about balancing risk and reward based on your risk tolerance.

Bronwyn Nielsen [00:22:27]: Interesting. Go ahead.

BizNews Community Member [00:22:28]: What are your thoughts on investing in India?

Magnus Heystek [00:22:42]: I wouldn’t recommend Sun International as the best way to invest in India. There are more efficient and cheaper options available directly into India. However, as an advisor in South Africa, we are limited to recommending registered funds. So, it’s important to consider the available options within regulatory constraints.

Bronwyn Nielsen [00:24:09]: Lots of questions coming in.

BizNews Community Member [00:24:12]: Where would you advise investing offshore?

Magnus Heystek [00:24:17]: I’ve been bullish on Japan for a while, but Europe has also shown promise. It’s crucial to diversify and choose funds based on thorough research and assessment.

Bronwyn Nielsen [00:26:01]: What about Aspen and Lilly?

Magnus Heystek [00:26:05]: They’re interesting, but not accessible in South Africa currently.

Bronwyn Nielsen [00:26:19]: Fascinating. Any more questions?

BizNews Community Member [00:26:55]: Can Bitcoin be a safe investment given the upcoming elections and market uncertainties?

Magnus Heystek [00:27:24]: I don’t understand Bitcoin well enough to recommend it. I prefer regulated investments that align with my clients’ risk profiles.

Bronwyn Nielsen [00:28:13]: We’ll delve deeper into Bitcoin in future discussions.

BizNews Community Member [00:28:33]: Can you update us on your five-year investment competition?

Magnus Heystek [00:28:44]: It’s neck and neck currently, showcasing the complexities of market timing and asset class performance.

Bronwyn Nielsen [00:29:52]: Thank you.

BizNews Community Member [00:29:52]: Can you elaborate on your offshore gold investments and your view on Krugerrands?

Magnus Heystek [00:30:06]: We recommend Krugerrands to clients and also invest in gold funds offshore, considering gold’s historical performance.

Bronwyn Nielsen [00:31:42]: Insightful discussion.

Magnus Heystek [00:32:07]: Our investment decisions are based on thorough research, utilizing tools like Morningstar returns and direct engagement with fund managers.

Bronwyn Nielsen [00:33:38]: Thank you for sharing your expertise. It’s always a privilege to learn from you.