Investor Newsletters

Dear Fellow Investor


I think we can learn from this theory as it has made many a short-term trader rich and long-term poor.  It assumes that there will always be a greater fool than yourself in buying or selling something so that you can make a profit.  I think we are in the good company of Warren Buffett in rejecting this theory as we are no fools.  Buffett’s company currently holds a record cash balance of $128.2 billion up from $116 billion last year.  So he did not get carried away by the popular, daily media getting very excited that the  US stock markets and the S+P 500 is up by over 20% year to date.  He knows that the New York Stock Exchange Composite Index is still below where it was in Jan 2018 and the S+P 500 is only up 7.4% from 22/1/2018 with a drop of 17.53% along the way.  Bottom line – Buffett prefers cash and bonds at this stage.   So do we.

From 25 Jan 2018 (record High) to 3 Dec 2019 the performance results are:

SA Listed Property
Olympiad Managed
Olympiad Worldwide

(Source:  Morningstar.  Olympiad funds net of management fees.)



Over the last year 2/12/2018 to 2/12/2019 the Olympiad funds yielded +7.44% (Managed) and +7.51% (Worldwide) whilst the inflation rate (urban areas) was 3.47%.  (Source:  Morningstar.)

Please note that from 28 April 2019 the holdings of the two Olympiad funds are identical i.e.    

 mainly in local cash and bonds.

May you and your family have a wonderful Christmas and a Blessed New Year.


Whilst the JSE was all over the place in September (+5.34% to -0.94%) it ended with a return of +0.19% for the month.  The Olympiad unit trusts yielded +0.49% in a smooth uptrend.  From 28 April 2019, day we invested in local bonds/cash, till end of September 2019 the returns, net of management fees, have been:

Olympiad BCI Managed
Olympiad BCI WW Flex
SA Listed Property TR
(Source: Morningstar.  TR – Total Return)


As Buffett told his fellow shareholders, you pay me for results not activity, I need to tell you the same.

January 2018 to date has not been the time to be aggressive for the following reasons:

  1. US stockmarkets have only once been more expensive.
  1. Inverted yield curve in USA i.e. when rates on short term bonds are higher than on long term bonds (normally 10yrs).  Every US recession over the last 60 years was preceded by an inverted yield curve.
  1. Higher interest rates in US coupled with record amount of US Corporate Debt. Poorly managed companies could survive at 0% interest rates maybe not so at 2%+.
  1. US/China/Japan/UK/ Europe etc trade disagreements. Like in the late 1920’s the threat of a US trade war resulted in businesses delaying investment/expansion decisions with a negative impact on the global economy.
  1. Manufacturing is contracting around the World. Consumers are still holding up but for how long?

Before getting too despondent we should note the following:

  1. Relatively high interest rates in RSA. For example Government Bond (10yr) yielding 8.35% pa is welll above the 5.7% pa average return from other emerging countries. The rate on US and UK 10 yr Government bonds are 1.64% and 0.47% respectively.  Countries like Germany, Japan, Netherlands, Switzerland and Ireland offer negative rates i.e. you pay them to keep your money varying from -0.78% to -0.03%.
  2. The need for basic materials/minerals by countries like China and India should over med/long term support the economies of RSA, Canada, Australia etc. With economic growth rates 2,5x  to 2x higher than that of the USA, China and India need basic materials.  For example the current annual goal set by China is to urbanise about 900,000 people per month.

    So globally and locally (even under poor mangement) history willl probably repeat itself with the two growth asset classes, property and businesses/stockmarkets, outperforming bonds and cash over the medium/long term.

    Please feel free to contact me should you have any questions or comments.


Over the last two months the JSE dropped 0.29% following a loss of 4.84% in May and a gain of 4.78% in June. The total return from the two growth asset classes/ local equity and listed property from 27/04/2015 to 30/06/2019 (just over 4 years)/ has been a poor +19.23% and -2.17% respectively. Not much better from US equities. The New York Stock Exchange Composite Index, considered most representative US index, is 5.86% below its record high of 22/01/2018 and so is the JSE at 5.51% below its record high of 26/01/2018. (Sources: Morningstar/ Yahoo Finance/ Moneyweb).

The two Olympiad unit trusts yielded -^1.12% (Managed) and +1.08% (Worldwide) over the last two months. This is due to our ±60% exposure to local bonds and ±34% to local cash. I feel comfortable with this situation.

Bonds are lending instruments on which you earn interest and capital gains or losses depending on whether short term interest rates increase or decrease. If short term rates decrease/ as we currently expect/ then we will earn interest plus a capital gain. Should short term interest rates increase then a capital loss will be suffered. For example should short term interest rates fall from 6.7% pa to 5.7% pa then the current interest rate of 8.11% pa on a 10 yr bond becomes more attractive and the demand for
the 10 yr bond increases resulting in a capital gain or vice versa. The extent of capital gains/losses will depend on the duration/term of the underlying bonds. Short term bonds of 3 months will suffer virtually no loss or gain however a long term bond of 30 years could experience significant gains or losses. To counter the risk of capital losses income unit trusts/ like we are invested in/ sometimes hold more than 100 holdings with different maturity dates. As a result they are considered conservative unlike equities
which are rated as aggressive.

Bond markets are significantly larger than stock markets. For example over the first five months of 2019 the turnover of the local bond market was R15 trillion and the JSE slightly more than R2 trillion. (Source: JSE). This is a very large/ diversified asset class best left to people like Henk Viljoen/ Stanlib Income Fund/ [VI.Corn (Economics) (Cum laude) with almost 30 years’ experience in this field.

Why Olympiad Managed unit trusts rather than a 5 year fixed deposit?

The short answer is that Bonds/ Equity and Property have outperformed Fixed Deposits over the long term. For example the AJ High Curve Wrap Fund/ now the Olympiad BCI Managed FOF, yielded a gross return of 160.73% from 1/6/2009 to 2S/2/2015 with one negative year of-3.16% in 2016. Inflation (urban areas) over the same period amounted to 62.9%. (Sources: AIMS/lnetBridge + Morningstar).

In conclusion we must be careful to follow the central bank of America (Fed) when US property and stock markets are at record highs supported by high levels of debt and deteriorating business fundamentals.

Please feel free to contact me should you have any questions/comments.

  Dear Fellow Investor

  “You pay a very High Price for a Cheery Consensus in the Stockmarket” – Warren Buffett

  At Olympiad our two main priorities are:

  • Not to lose money over 12-18 months.
  • Not to invest in the two growth asset classes i.e. equities and property when

  The graph hereunder (S&P 500) tells us to be cautious in considering equity investments.  Normally a US
  correction/crash has a global impact on equity markets.  Note: Crashes of 44% (2000-03) and 48% (2007-09). 

  Recovery times, to break even following a crash, were 7 ½ and 5 ½ years respectively.


Good News – Local interest rates and bond yields are relatively high compared to the UK, Europe and USA.

  The pause in US interest rate hikes should support local and emerging market bonds.

  As a result a decision has been taken to switch the money market funds, in the Olympiad unit trusts, to the
  following three income funds:

  Fairtree Flexible and BCI Income Plus are low/med risk multi – asset managed income funds.  Stanlib
  Income Fund is a short term interest bearing fund.  Split equally, three ways, the underlying asset classes

  within the Olympiad unit trusts will be mainly SA Cash (34%) and SA Bonds (60%).  Comparative low cost

  bond ETF’s (exchange traded funds) are not competitive based on performance nor volatility in comparison

  to the smooth graphs above.

  The aforementioned switches should give all of us the prospect of higher returns and a high level of security

  even though euphoria is currently pushing US and other equity markets higher.  

  Please feel free to contact me should you have any questions or comments.

In a landmark paper, published in 1986, Determinants of Portfolio Performance, Brinson, Hood and Beebower concluded that asset allocation is the primary determinant of a portfolio's performance and accounts for some 90% of the return experienced. Ibboston and Kaplan later confirmed this in 2000 with a finding of 75%.

Source: Financial Analyst Journal, 1986 and 2000



Saturday, January 12 2019 | AFFLUENCE

It wasn’t a good year for investors in equities

OH DEAR. Last year was not kind to investors. It was the worst year for the JSE since the Big Crash in 2008. And it started off so well, with all the optimism around our new president.

I won’t go into the reasons for the malaise, which differ according to the analyst you speak to. But let’s look more closely at the figures, which make for enlightening, although somewhat depressing, reading.

The FTSE/JSE All Share Index ended 2017 at 59 504 points

(after breaking the 60 000 mark in November 2017). It ended 2018 at 52 736 points, a drop of 11.4%. That’s low compared with the 27.5% drop in 2008, but here’s the rub: there hasn’t been a crash. Just lots of volatility, with most of it occurring in the last quarter.

Looking at the total return index (which measures share prices with

dividends reinvested), the drop was a slightly more palatable 8.5%. This is the better indicator when considering the performance of your equity unit trust or exchange traded fund investments, because, unless you’re drawing an income, you’re likely to be reinvesting your dividends.

So how did our equity fund managers do in the tough times that were 2018?

Not too well, sadly. The average South African general equity unit trust fund was down 8.9%, according to Profiledata. Of the 163 funds in this sub-category, only two did not end in the red after costs: the Kagiso Islamic Equity Fund (up 1.7%) and the RECM Equity Fund (up 0.47%). The worst-performing funds were down as much as 20%.

It’s likely that the better performing funds had a substantial

exposure to our resources sector, the only sector to have done well in 2018. The worse-performing funds were most likely heavily invested in industrials, which had a miserable year. The darling of these stocks, Naspers, which featured large in many an equity portfolio, lost 16.5% of its value in 2018.

High-equity multi-asset funds also did poorly. These funds can have a maximum of 75% in equities, but the managers can reduce their equity exposure if the markets are looking dicey, switching to safer options such as bonds and cash. Of the 174 registered high-equity multi-asset funds, only a handful emerged in the black at the end of the year.

The average fund in this subcategory was down 3.7%, according to Profiledata. Star performers were the Gryphon Prudential Fund of Funds

(up 5.4%) and the Olympiad BCI Managed Fund of Funds (up 5.24%).

Cash and short-term bonds were the best-performing local asset classes, delivering northwards of 7%.


The JSE was in good company on its downward slide. The Visual Capitalist website, which contains informative financial infographics, recently published a infographic titled “How every asset class, currency and sector performed in 2018”. It shows that most asset classes ended 2018 in the red, with the S&P 500 (which measures the 500 top American stocks) down 6.2%, emerging markets down 16.9%, and non-us developed market stocks down 14.5% (all in dollar terms which, it must be said, strengthened against world currencies by 4.6% in 2018).


Contact us

99 Jan Smuts Ave, Winston Park,
Gillitts, KZN, 3610

The value of the investment may increase / decrease and past performance is no indicator of future growth.