Director’s Cut: David Shapiro – Buffett’s farewell, the AI giants and where smart money goes next

Veteran stockbroker David Shapiro reflects on Warren Buffett’s exit, the dominance of Nvidia and ASML, why SA bonds and property suddenly look attractive, and where real investment opportunities lie in today’s volatile markets..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.When Alec Hogg and David Shapiro sit down together, the conversation inevitably drifts into reflection. Three decades of working side by side in business broadcasting gives them license to talk less like interviewer and guest and more like two veterans comparing notes on how the world has changed.Fresh back from the US, Shapiro describes an uneasy atmosphere that he believes now defines America.“People don’t know what it means to be American anymore,” he says. “They’re frustrated with both the left and the right, and nobody feels like they’re speaking for the middle.”Despite that political unease, business in the US continues to thrive. Technology giants keep breaking records, capital keeps flowing, and markets show little sign of collapse. Shapiro cautions against dramatic panic about bubbles or imminent crashes.“This isn’t mania,” he says. “The dot-com period was mania. 2008 was mania. Today? We’re not there.”In fact, Shapiro points out something extraordinary about the current era: Nvidia alone is now bigger than the entire UK stock market. When he recently compared gold reserves held by the world’s top central banks against Nvidia’s market capitalisation, the conclusion startled even him.“The gold holdings of major central banks at today’s prices barely add up to what Nvidia is worth,” he explains. “It shows you how small the gold market really is and how massive these technology companies have become.”That scale explains why he remains comfortable holding mega-cap tech shares. Their cash generation, research muscle, and market dominance keep them far ahead of challengers. Markets today offer extreme liquidity as well. Shapiro sees this as a powerful safety valve.“If I buy something this morning and don’t like it this afternoon, I can sell,” he says. “That’s the beauty of the modern market. You don’t have to commit forever.”Warren Buffett’s recent retirement has hit Shapiro hard. He describes genuine sadness reading the legendary investor’s last Thanksgiving letter.“You don’t realise how rare a personality like that is until they’re gone,” he reflects.Buffett’s philosophy still guides much of Shapiro’s thinking today. He recalls how Buffett taught investors to avoid spreadsheets filled with complex projections and instead focus on understanding simple business quality.“He always said: If you like the business, research it,” says Shapiro. “Ask what it looks like in five years, ten years. Ignore the rest.”He illustrates this ethos through the story of Rose Blumkin, Nebraska Furniture Mart’s founder and one of Buffett’s favourite entrepreneurs. Illiterate and starting from a basement furniture store, she built one of America’s biggest retail chains. At 96, after being pushed aside by family members, she launched a rival business that became so disruptive Buffett had to buy her out again just to stop her competing. She worked until 103 and died at 104.“That toughness and integrity is what Buffett admired,” Shapiro says. “Those kinds of stories don’t feel common anymore.”Closer to home, Shapiro believes South Africa’s greatest investment opportunities are shifting away from glamorous boardrooms and into far humbler territory: the informal economy.“The real growth in South Africa isn’t at the top,” he argues. “It’s at the bottom.”He highlights companies like Pepkor and Boxer as prime examples. These retailers operate deep within township and rural markets that most executives once ignored.“Pepkor is opening 25 new stores a month,” he says. “I didn’t even know we had that many towns or villages.”Through products like Flash and micro banking initiatives, Pepkor is creating financial infrastructure for spaza owners and informal traders, enabling payments, savings, credits, and remittances in communities previously shut out of formal banking.“The fight between Pepkor, Capitec, Shoprite, Boxer and others for that market is the most exciting story in our economy right now,” Shapiro says.While foreign earnings now dominate the JSE and many mining giants earn little locally, Shapiro believes the informal retail ecosystem is where organic growth still happens.“This is where economic life is,” he insists. “Factories, retailers, ecosystems that employ people and circulate money in communities. That’s what creates growth.”His current tactical preference reflects that pragmatic shift. Alongside selected equities, Shapiro now favours South African long bonds and property stocks.At yields around 9.5 percent with inflation near 3 percent, he estimates real returns of roughly 6 percent even after tax.“For someone who spent a lifetime focused on equities, yes it feels strange recommending bonds,” he admits. “But value is value.”Property trusts, battered by high interest rates, are also starting to recover.“Growthpoint was up 30 percent last year,” Shapiro notes. “With rates stabilising, that sector is quietly getting interesting again.”Despite decades of navigating market crises, Shapiro sleeps well.“We’ve lived through far worse,” he says. “Crises are part of markets. You adapt.”What does worry him is not valuations but misunderstanding. He draws a sharp line between hype-driven assets like crypto and businesses he can analyse from balance sheets and income statements.“I need numbers,” he says simply. “If I can’t understand where profits are coming from, I’m not comfortable.”This principle drives his more cautious view on Prosus and similar holding-company structures. While he respects management leadership, particularly the indirect exposure to Tencent, he remains unconvinced by the mounting losses across many subsidiaries.“You pay every day to keep loss-making businesses alive,” he says. “Eventually you must earn that money back. Accounting doesn’t change.”Looking ahead to the Crystal Challenge stock-picking competition that has become something of an investment cult favourite, Shapiro says his selections would emphasise South African consumer plays and value recovery stories rather than pure tech bets.“Tech remains exciting,” he adds. “But at home, opportunity is in the informal sector and recovery assets.”After nearly 50 years in markets, his philosophy remains remarkably unchanged: keep investing simple, understand what you own, and stay liquid enough to change your mind.“Markets punish emotion and reward homework,” Shapiro says.And perhaps that quiet discipline, learned under Buffett’s example in Omaha and refined on trading desks in Johannesburg, is exactly what investors still need most in a noisy, hyperactive financial world.

Director’s Cut: David Shapiro – Buffett’s farewell, the AI giants and where smart money goes next

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