Entries by David Nathanson

Keep Doing the Basics Well

What a quarter it has been. COVID-19 has abruptly reminded us of the many frailties in our global society. The world seems almost paralyzed by the shock. As bad as the reaction in financial markets has been, it pales in comparison to the magnitude of the real economic pain this virus is causing across the […]

When patience doesn’t pay

Last quarter we wrote about active share and how our portfolios are very different from the index. The strength (both relative and absolute) that we saw in September continued through the end of the year, as our portfolios rose 13.1% in aggregate during the last quarter, bringing our total net USD return for 2019 to […]

Investment Case: Apple

We sold out of our position in Apple in the 4th quarter of 2019. We bought most of our shares in 2016 between $90 and $120 for a total return of roughly 140% in just over 3 years. While Apple has been a phenomenal investment for us, and it remains an excellent business by our […]

Dare to be Different

Investment managers are generally split into two categories: Active and passive. Active managers aim to outperform a certain benchmark index by being different from it. Passive investors seek to replicate an index. Both have their proponents and their detractors. Recently there has been a strong trend towards passive investment following a number of studies which […]

Too Much Information

The conventional wisdom in investing is that more information is better than less. In the past Peter and I have sometimes questioned whether we have an informational deficit, but over time we’ve realized that it is not quantity of information that counts, but knowing which information is important and analyzing it correctly. In fact, to […]

SA Foie Gras

AfrAsia’s latest South Africa Wealth Report found that wealthy South Africans have 83% of their assets invested locally. According to the report, their asset class breakdown between South Africa and the rest of the world is: Let’s exclude properties, businesses and alternatives, which tend to be illiquid and might correlate with where you live or […]

Consistent Profitability

Return = Yield + Growth + Revaluation = Sustainable Return + Revaluation This understanding of return is central to our investment philosophy and process. We’ve written about this on numerous occasions. Those who have followed our writing will recall that revaluation, though dominant in the short-term, tends to cancel itself out over long periods of […]

Don’t let the Rand dictate your portfolio

For many South African investors, the Rand exchange rate is the single most important variable they consider when deciding whether to invest money offshore. It crowds out every other consideration. We think this is a mistake. If you’re thinking about investing globally, but you’re worried about timing the Rand, ask yourself the following questions: 1) […]

Investors should Ignore Annual Predictions

After reaching new all-time highs in September, the S&P 500 lost nearly 13.5% in the fourth quarter of 2018, while MSCI World ex-USA declined by 11.4%. Equity markets have recovered somewhat from their December lows – the S&P 500 came within a hair’s breadth of official bear market territory (-20%) on 24 December, before rallying […]

Global Diversification: Are you doing it right?

Most investors would agree that diversification is a good thing, but how many of us really understand what it means? All too often, South African investors think about global diversification as fleeing risk. Diversification is about managing risk. It is not about avoiding or eliminating risk, which cannot be done without sacrificing investment goals. It […]