WEBINAR: Strong Rand offsets ‘Trump & Brexit’ dividend – maintaining 30% pa return

It was just over two years ago that Biznews decided Zumanomics was going to severely damage the South African economy. And on the back of this, founder Alec Hogg launched the global portfolio, a hedge against the country's share price (the value of the Rand), anticipating that it would weaken over time. And it has, the portfolio has delivered a 30 percent per annum return. In the January update Alec unpacks the latest news and events around the portfolio holdings – a spread of nine companies and a tracker fund, in the United States and United Kingdom. This month saw share prices boosted by a 'Trump' and 'Brexit' dividend, but returns were offset by a Rand that strengthened by close to a Rand against both the Pound and Dollar, still maintaining that 30 percent per annum return. The webinar is transcribed below. – Stuart Lowman.Welcome to January the 26th broadcast of the global share Portfolio. This is our monthly webinar. We do bring you up to date every month for about half an hour on exactly how the portfolio has performed. This month there's some quite interesting changes to the share price performance, but the biggest change has been an increase in the value of the Rand, which has offset gains. So we went out very strongly in the US, as you'll see in a moment on the shares that we've bought, but the Rand has then taken away a lot of that shine, but first of all, I'm here in London, it's Alec Hogg and in Johannesburg, of course, as always our managing editor..___STEADY_PAYWALL___.Thanks, Alec, it's Stuart this side, looking forward to taking all your questions. Please just put them on the right-hand dash bar and I'll get Alec to answer as soon as possible, but yes, good to be back..Yes, I hope everybody had a wonderful festive season and a good break. Just looking at the one purchase that we did today and I need to explain this a little, what we do in this portfolio is to try and eliminate the impact of the exchange rate and share price movement. We stagger our purchases over three months, so you will see that in this period we've bought the last of the metro bank shares. Metro Bank is a UK listed company, that's why it says at £32.35 and if you multiply 157 by £32.35, you won't get to £6,298 because that's in US Dollars, so we've converted it back into US Dollars, a little complicated, but this is a global portfolio, we do have most of our money invested in the United States, but we also have two stocks that are on the London Stock Market..Well, there's the overall portfolio in Dollars. As you'll see, it's now a 30 percent gain since we started this portfolio in December 2014. What is interesting is there were some pretty hefty moves in the past month by companies that were enjoying a little bit of a Trump dividend and also a rerating on the tech side. If you have a look at the first of the stocks there, that's the Vanguard S&P 500 Index, we began with 30 percent of the portfolio invested in Vanguard. As we've found better opportunities, we've sold the Index fund and taken that money and reinvested into companies like Tesla, Facebook, and Metro Bank. That's part of the strategy here, to have the money in an index fund and to benefit from the weakness of the Rand. Remember, we did start this portfolio two years ago when the Rand was R11.27 to the US Dollar..It's now R13.27 to the US Dollar, so there's been a lot of bumping in between. As you well know, it got much weaker than the current level, but it does support our overall thesis, which is, let's get money offshore and the good fortune is that the money that we have taken offshore has substantially outperformed the market as a whole. You'll see there Vanguard, which tracks the market was up 12 percent in the last two years, whereas the portfolio overall in Dollars or in hard currency terms, look at that number down at the bottom, is up 30 percent. In this period, just to take you very briefly through the changes in the past month, the big winners were Tesla Motors, which is one of our more speculative stocks, a bit of a wild card. As you see, it's our smallest holding at four percent. We bought that up over three months. Well, that has just come well; it's up 28 percent in the last month..I hope that you're enjoying seeing the Pretoria-born Elon Musk getting his just rewards now on a fabulous company, 28 percent gain in the last month. Maybe that's another Amazon for us. Talking about that, you can see it's been our best performer by quite some distance, a 155 percent gain in the Amazon share price since we bought it on the 5th of December 2014, it had another very good month, the shares there going from $768 to $836 and Amazon now, once again, our second-biggest holding and it started as an eight percent stock, an eight percent slug at the portfolio is now worth double that amount. Also good in this month, was Alphabet, one of our core stocks. That was up from just under $800 to $835 a share. Apple, at last, is getting back to the break-even level..We've really had to nurse this holding over a period of time, but I still think it's one of the cheapest stocks on the US market. It has a PE of under 12 of price to earnings ratio and plenty of money, billions of Dollars in the bank. Another good thing for Apple, I think that the market is finally starting to understand the decision by the new president to allow American companies to bring back offshore earnings without penalising them with a taxation levy, is going to be very, very beneficial for Apple because most of the $200bn in cash that it has offshore, or rather that it does hold on its balance sheet is outside of the country, so it would be a big beneficiary bringing that money back. IBM had another particularly good month, in fact, it helped the Dow to get above 20 000 for the very first time..The Dow, which is an index of 30 stocks that's been going for over 100 years, is a barometer for the health of the older companies on Wall Street. Both Apple and IBM are in that index. Of the last 1,000 points that the Dow has put on, in other words, to get it to 20,000, so the last 1,000 points, IBM has contributed 106 points, and ten percent of that final move through the benchmark area. Also in this past month, we had a lovely move in Facebook; it looks like we might have timed our purchase really well there. That went from $120 to $131..You will recall, those of you who have been following these webcasts over the last two years, I've been eyeing Facebook for quite some time, wanting to make the plunge, and finally did so on the 25th of October and over the three-month period (October, November, December), we made our purchases and in this month it's obliged by moving up to over $130 a share. And then of course, the star performer this month was Tesla, which went from $198 last month to $254 at its current share price. That's the overall portfolio showing a 30 percent gain. It is witnessed to a little bit of good luck that we've had there in making some pretty nice share selections and the market overall has assisted..Of course, aimed primarily at South African investors, you have to look at the portfolio in Rands, that's the most important determinant if you're sitting in South Africa and investing through the Webtrader platform. Incidentally, you can put R1m into the Webtrader platform, no questions asked from Exchange Control, so you can replicate this portfolio immediately, and with the Rand having risen so sharply, if you have a look down towards the bottom, we're at R13.27 against the US Dollar. A month ago it was at R14.23, so a very big move in the Rand. It's picked up a Rand in the last month. I think this is largely due to the belief, in the global markets anyway, that Jacob Zuma is not going to go and blow his foot off by making changes to the cabinet..This was highly rumoured in early December. The view was that he would bring his ex-wife, Nkosazana Dlamini-Zuma into the cabinet and fire the highly respected Pravin Gordhan. With that news coming into the open, also a very strong showing by the Zuma-free delegation in Davos, there has been more confidence that has come into the South African political arena. One more thing, of course, is that Jacob Zuma literally has ten more months left, that's because in December the ANC has its presidential elective conference and if Ramaphosa or Zweli Mkhize, who are two of the three nominees, and Zuma's ex-wife being the third one, if one of those two were to come into power, then Zuma may well serve out his term, but he would be unable to do anything disruptive because the new president of the ANC would simply recall him at that stage, as Zuma did (you will recall) to his predecessor, Thabo Mbeki..Generally, in the international markets, there's a feeling that there won't be any shocks coming from South Africa, we don't know though with the enigmatic president and as a consequence of that, of the international reading, the Rand has been firm. Of course, South African interest rates are also appealing at the moment relative to those in other emerging markets and/or as much as you might criticise the South African geopolitical situation, it compares extremely well with other emerging markets right now like Russia, Turkey, Brazil, and others of that ilk..The Rand has firmed, R13.27 to the US Dollar, R16.73 against the Pound, that's also up by one Rand against the Pound in the last month and that has offset, that wonderful improvement we saw in the value of our stocks, but that is the determinant that one has when you're playing in international currencies. What you need to do is, first of all, make a long-term bet and our long-term bet is the Rand will be weak, secondly try and find good stocks to invest in, in hard currencies and we've been successful in that regard so far. Remember you can ask questions. Stuart will pick them up and Stu, you just interrupt me when you need to..Yes thanks, Alec. I have a question/statement from Francois Gouws, who says, "Value investing does not seem to consider major structural changes in the market. However, in the short to medium-term, these do seem to have a significant impact on share price. Does Buffett have anything to say about this other than to stagger one's investment over time, buy when others are afraid, avoid when others are greedy?".Yes, Buffett would do that, purchasing when others are afraid and selling, or rather being a little more cautious when others are greedy, as a general term, but what he does, is extreme bottom-up investing. He would have a look at a company, work out its intrinsic value and that you do by taking a period in time. With international stocks, at BizNews, we would take a ten-year view and then we would look at the cash that'll be generated over ten years, we then add that to the current value of that company and have a look at what the company would be worth. That would give you an idea of what the company would be worth in ten years' time and that would be our intrinsic value. We would then only buy the stock if it were trading at a discount of between 20 and 30 percent to the intrinsic value, that's as a general principle, that is value investing..In the South African context, we look at the shares over five years, so we calculate the cash flow over five years because South Africa's a far riskier geography than the United States, but you have the exponentiality of some companies and while we would be looking very much at that basis when considering stocks like IBM and Apple, when we look at Tesla or Amazon, or even Google, which is now called Alphabet, we bring in other determinants and we would then accelerate the growth rate because we do believe that those companies would grow much faster and by the same token we also extend the life term, if you like beyond ten years and that is what gives us a more comfortable feeling when going into exponential shares..It's something very difficult that human beings battle with to get their heads around, what is exponentiality? If you can imagine, if you take in a value invested decision on Naspers, any time in the last five years you would have lost out on the greatest run in any stock listed on the Johannesburg Stock Exchange to the degree that Naspers has come from just about nothing in the index to 20 percent now of the JSE All Share Index, so it's quite an extraordinary success story..Therefore, you need to embrace what exponentiality is, you need to understand the company and then if you think the company is a wonderful bet into the future, that it's going to grow in excess of others or that it has a business model that is going to shoot the lights out like Amazon.com, our view on that one, as well as Alphabet and Tesla indeed and also Metro Bank, which is the UK's version of Capitec and you may as well add Facebook to that one too. So we're looking at those as being exponential growth opportunities and you can't really work on the value investing thought that way round. Investing is something that you understand, it must be bottom up, and that's what Buffett teaches us..Buy the company, not the share and understand the company and have a very good feeling for what the company is worth and then buy it when you have an opportunity to buy or acquire the shares below the price that you value them at. That's really what it's about and then be patient. Most of these shares, if you've been with us in the last two years, you'll know that even Amazon and Alphabet and especially Berkshire and IBM and Barclays have actually reversed quite badly before they've come back and contributed to our portfolio's value or gains over this period. Find the right stock, buy it cheap, or what you think is cheap and then be patient, just hold on, don't trade, those are really the secrets that Warren Buffett teaches us..If you have a look here at the individual stock performances, it shows you in Rands, Amazon has been comfortably our best bet, Alphabet at 84 percent, is also a big winner. That was one of our core holdings right from the outset and Vanguard and Berkshire, Vanguard is the market overall, Berkshire, in line with the market, Tesla, we've only had it for three or four months and that's already done a fantastic return and IBM is now getting up there as well. Apple the disappointment, Facebook, we've only had it for a short period of time, so we don't need to worry too much about that, and Metro Bank is one of those long-term holdings, it's the future Capitec, we really believe that and there's a graphical representation. As you can see, the Rand Dollar exchange rate, we've outperformed that on more than half the portfolio now, Stuart?.Yes, Alec it's a question from Andrew. He says he's read that Buffett apparently uses derivatives to hedge Berkshire. I'm not sure how valid that is, but he wants to know if that's something you can talk about..He doesn't use derivatives to hedge Berkshire Hathaway itself, but he does use derivatives within his re-insurance portfolio and within. Remember Berkshire is almost three companies in one. It has a huge insurance operation, in fact, in the last few days, they've just done another transaction with AIG. You might remember AIG was one of the star performers in the global financial crisis and I mean that with a little bit of sarcasm, but AIG has recovered from the financial crisis. It's one of the biggest insurance companies in the world and it's done a deal with Berkshire, where Berkshire has gotten an extra $10bn into its float, in other words, $10bn that it can use to pay out exposures that AIG has got off about $34bn..Now not all of the $24bn is going to have to be paid out, there's no way Warren Buffett's going to buy $34bn in liabilities and only get $10bn for it. A proportion of that will be paid out, but until the liabilities are met, Berkshire has that $10bn that it can invest and that's really how Buffett started. He had an insurance company, he built the insurance company, used the money in the insurance company just to really simplify it, if you pay for your car insurance today, it's on the expectation that if you have an accident sometime in future, then the insurer will actually pay you out for that accident..Now, insurers tend to make a profit on that contract that they have with us, but before you have your accident, and please God it doesn't happen, but just for illustrative purposes, I think you get this, before you have that, the insurance company can use your money in any way it wants to and that is called the float and that is what Warren Buffett has done in Berkshire Hathaway, so he has a massive float that he can invest and earn returns on and until such time as that money will be repaid to the people whose premiums are being given to him for some kind of insurance cover, so that's one part of the business, a very big insurance business. A second part of the business is more than 80 wholly owned subsidiaries. In fact, nine and a half of those companies would be Fortune 500 companies on their own..We're talking here about BNSF, which is the biggest railroad business in the United States. Berkshire Hathaway's electrical company, which is bigger, for instance than Eskom and companies of that ilk, very large subsidiaries that they have as wholly owned subsidiaries in the portfolio and then thirdly, there's a portfolio of over $100bn in investments and those investments are allocated about two-thirds of them in five individual stocks and depending on how those three parts work, that is how Berkshire will perform in a year. Berkshire is really three companies in one and those three legs, if they're all firing as they all seem to be doing at the moment, then the share price will benefit from it. What you can see on the screen now, is the dividend receipts that we've received in the last two years..In this last month, we added $146, which came from the Vanguard S&P. They pay dividends every four months. We should be looking forward to quite a juicy dividend from both IBM and Apple in the near future, both of those paying out dividends in February, so a little more dividend flow coming through on that. I hope that answers the question with Warren Buffett. Vanguard S&P 500 Index, this was a core holding right from the beginning, it's an index investment, it's a good way to start if you are investing in a market that you're learning about..As you can see, it's done pretty well in the last year and what I do like here is on the day of Donald Trump's election and you can see where that would roughly be on the 8th of November, the US stock market has put on nine percent, so it's bumped around for most of the previous nine months, but since November, the election of Donald Trump, the S&P 500 Index gained nine percent. Of course, that helped our portfolio. The second company or the major company that's a bigger stake that we have now, almost a fifth of the portfolio, is in Alphabet, or the old Google, that's a picture of Sergey Brin and Larry Page. Sergey, who is on the left was in fact at Davos this year and quite a star attraction as you can imagine. This is a picture from a few years before. He now has a little bok-baardtjie and it's kind of greying, almost like Larry Page is, but lost none of his mental power..Well, the share price of Alphabet has had a really good run in the last couple of weeks and as you can see there, a lovely uptick for that stock. We're going to hear much more about Alphabet today after the market closes in the United States, so watch out for those results. We'll have something on site on biznews.com, of course, tomorrow. The analysts are anticipating that the earnings for the fourth quarter of the year will come out at about $9.60 as against $8.60 a year ago and Ruth Porat; the Financial Director of Alphabet is getting a lot of kudos around this. If the numbers come out better than anticipated, you can see that sharp spike over the last few days extended. However, if they disappoint for whatever reason there'll be a bit of a pull back, but you can pick up on what happened in the fourth quarter a little later this afternoon if you're really that keen..Alphabet continues to make bolt-on acquisitions, they're always the best, and it was interesting to see that it's had a good look at Twitter and it pulled out a part of Twitter that works with app developers, called Fabric and it bought that little business and put that into Alphabet in the past few weeks. The other story as far as Twitter's concerned, Twitter's not part of our portfolio, but they are starting to get their act together. They've closed Vine and they've also reduced their staff complement by nine percent, so we'll be starting to look at Twitter a little more closely as an investment proposition over the next month or so. Here's our star performer..Alec, just on Alphabet, Des van As wants to know, do you still consider it cheap?.Des, thanks for that question. I do believe that Alphabet has a good long-term business and when you consider, when you have a look at the exponential companies, or when you try and unpack a relative value for them, just to give you an example, they're looking at fourth quarter revenues up by 15-16 percent on a year before, earning a similar growth. If you put that into your spreadsheet and you go ten years ahead and in the case of Alphabet, 15 years, given that Google is the dominant search engine in the world and that brings all kinds of other opportunities, then these are the kind of businesses, the exponential businesses that you mustn't pay too much attention to your intrinsic value..As long as it's not way out from where the share price is, but then just buy the shares if you like the story and you like the company and you can see the opportunities in the long-term and get yourself a slice of the business. Would I be investing 20 percent of the portfolio in Alphabet right now, if we started from a zero level? I'm not sure. I think some of the other stocks offer better potential, or a better upside or a better value right now, but would I have Alphabet in the portfolio as a weighty holding? Absolutely, it has the perfect business model and it's one of those that, you might get a better performance out of something else, but in ten years' time, we'll be sitting here. I'm pretty confident that Alphabet will still be a good performer on the Stock Market generally, so it's difficult to start telling you whether it's cheap or expensive, but I guess fair value right now, I would be very happy to continue accumulating the stock..Amazon is one that I would be happy to accumulate over this period and it is now at over $800 a share. It was under $400 a share when we bought it and I certainly wouldn't be thinking of selling these shares anytime soon. Amazon's results are out on the 2nd of February. You might want to tune in. They have a webcast that will be available to anybody, so make a note of that, it's 14:30 US time, so South African time, it's into the evening, but it will be a worthwhile exercise, they always are, these results presentations. What I liked about Amazon in the last month was that they've moved now into the banking arena and this is the world we're in. You have to understand that the world is being disrupted dramatically in every single area you want to consider. In fact, Amazon's even gone into car parts, would you believe, by doing deals with four of the big car part distributors in the US, it's going to be moving into that field too, but what it did in the past month was very interesting. It has an offering called Amazon Prime. You're paying $99 a year for it, you get free delivery, you get free music, free movies (not the whole offering, but a certain selected part of it)..I'm a member of Amazon Prime, but living in the UK it's kind of an obvious thing to do. The benefits that you get from Amazon Prime easily outweigh the $99 that you pay for it, but from Amazon's perspective, they're building up these millions and millions of people now who are a captive market and what they've decided to do is to offer Amazon Prime members a Visa credit card, so that every time you buy something on Amazon Prime, you immediately get a five percent kickback, but not only that, if you go and use it in a restaurant or to buy fuel, you get a two percent kickback and anything else, you get one percent, so there is a big incentive now for Amazon Prime members, like me to become even more involved with Amazon and that's what's happening..Why would I need a card from a bank in future if I have an Amazon credit card and who knows where that might all go to, so when you look at Amazon, Google, and Facebook, these are companies that are disrupting the world in ways that we can't even imagine yet, but they are the growing companies, they are the businesses that are expanding and the traditional businesses whose markets that they are now creeping into are almost (well, I wouldn't say they're dead ducks), but they certainly are going to have to come up with an alternative to it. As we've seen in the media industry from big media companies, it's very difficult when you are trying to compete with a company like Amazon that's got the massive cash flows and the huge audiences in the same category you could put Google and Facebook..These are companies, or in a South African sense, Naspers, which owns over 30 percent of TenCent, which is the equivalent company in China. These are companies that are just going to get bigger and bigger and stronger and stronger and we can't see how their business model is going to falter. So, it's a kind of company you've just got to get into, buy your shares, be patient, you'll see reverses from time to time, but over the long-term, you would be happy..Berkshire Hathaway's at the other end of the spectrum. If you have a look at that, it's had the Trump dividend in an enormous way because Donald Trump is promising to help traditional America, or establishment America business, as you can see the share price has gone from $140 a share, Berkshire's now at $165. It's a big company; it's one of the top five companies in the world..It hasn't done anything spectacular outside of that transaction with AIG, but Berkshire is an appealing business as a cornerstone holding and we're very happy to have that one as well. Also, you can be quite assured that Warren Buffett isn't going to be making any stupid mistakes..Apple, this is still one of my favourite shares and I'm so glad to see that the share price has been improving even since the Donald Trump election, the share price is now back above $120. We bought at a bit higher than this, when you take costs etcetera into account, but we're nearly there now with Apple and as you can see it's another example of patience. Going back to May last year, the stock was at $90, we'd actually taken almost a 30 percent hiding on our Apple shareholding buying a little bit too early and not staggering our purchases..This was another one that reaffirmed that it's best to stagger your purchases over a period of three months. This one, I liked it so much, I'd been watching it for so long, we added all the stock to the portfolio, well, over two tranches, and it would have been much more sensible to do it staggering it over three months. You just never know what the shares are going to do, but it now looks like Apple is moving in the right direction. This is a company that's trading at a price to earnings multiple of under 12. If you have a look at the Dow average is 15 times and a company that's doing all kinds of interesting things including suing Qualcomm, it's chip maker in China of all places..So when you're a big company like that, interesting things do happen, but just to repeat very briefly, a huge beneficiary Apple will be, of the proposal by the new President of the United States to allow American companies to bring their cash from offshore back into the country without any penalty..Okay, let's' get into IBM. Here you can see the share price at the time that we took this picture, it was $152, well, it's $178 today and there's the share price movement, or the graph movement. It continues to run. Warren Buffett was showing a huge loss on his IBM purchases, it was in the billions of Dollars. He's now in front and I remember mentioning on this webcast over many months and then you can go back there to when it was under $120 a share and we owned the shares at that stage. Mentioning that if Warren Buffett's prepared to pay $170 for these shares, surely we should be too and now we can see the result of that. IBM is a company that has released its quarterly results; they brought out the fourth quarter results on the 18th of January. Once again, it reaffirmed the strategy that it's doing. Just to put this into a nutshell for you, IBM is a company that used to move boxes, it used to essentially have hardware. It was a hardware company with a few services to it, but it has relationships with all of the Fortune 100 companies and most of the Fortune 500 companies, so its salesmen are arriving at the doorsteps of the biggest companies in the world..What it decided a few years ago was that moving boxes was not a business that was sustainable, it needed to do something different, it needed to get into the new age, so it started something called its strategic initiatives and in the financial year that has just ended, 12 months to the end of December, these strategic initiatives produce $32bn in revenue, which is very substantial and that revenue is growing at 13 percent. The star performer there is its cloud computing revenue, which is up 61 percent. The other areas here, mobile up 40 percent, security 13 percent, and analytics up by nine percent. IBM sitting on $8.5bn in cash, so it can continue to pay its dividends..It's new initiatives are now approaching about one-third of the total revenue and they are growing rapidly while the old initiatives are coming under pressure. IBM is a stock we bought as a value proposition. In fact, the good news that it managed in the fourth quarter to reverse the earnings slide and it pushed the earnings up by 3.5 percent. Wall Street hasn't liked it because the revenues have been falling, but IBM telegraphed this a long time ago and the revenues in the past quarter were down very slightly..Moving on to the first of our British stocks and here was one that again emphasises the need to be patient. We bought this share in April. As you can see, it was doing okay until Brexit, that's where there's that sharp decline that was on the 23rd of June. After Brexit, the share price was underwater for us, for two reasons..One, the shares were down and secondly, the Pound was down, so we were looking pretty sick at one point on the investment into Barclays. Why did we buy it? Because the company has an excellent High Street franchise and also it is a turnaround situation and it appears as though more people are buying that argument or that story as well coming down from around about 120p, it's now over 220p, so it's had a very good run, particularly if you're a Pound investor and one of those stocks that have a South African interest as well through selling its stake in Barclays Africa..Facebook has been a marvel for us. We watched it for most of the last two years; it didn't do a whole lot, and then we bought the company over a there-months staggered purchase period. As you can see, it didn't do anything after Trump's election, again on the view that Trump wasn't going to be that good for the technology shares, but all of a sudden, that's turned around. People have reassessed their numbers and had a look again at the opportunities that a stock like Facebook offers and also there's been a rapprochement between the Donald Trump and the Silicon Valley heroes (including Mark Zuckerberg, who did visit with Donald Trump at a recent meeting) and it appears now as though things are getting a little bit more on track as far as that relationship's concerned..Remember, California and Silicon Valley was very strongly anti-Trump and very pro-Hillary Clinton, but it appears as though Trump doesn't hold those kinds of grudges anyway and the share price since we concluded our purchases has put on $10, so you can't hope that that will always happen, but the reality is that we're in front now with Facebook and that's a great place to be given that this is a wonderful company going into the future. We'll be talking about the Facebook results in due course, but it is one of those rapidly expanding exponential businesses that you've just got to have in your portfolio. We were fortunate that we bought it at the time we did and here's an even more fortunate purchase. You know, how lucky can you get..We finished our purchases of Tesla in the three-month period, as just before it started moving and that was in November and this share has now risen 28 percent in the past month. Elon Musk is a Pretoria-born boy, who immigrated to North America when he was 17 years old; he's in the process of transforming three industries. What we really liked about Tesla when we were buying it between September, October, November, was that it was going through a merger with a much smaller SolarCity, also within the Musk family (well Musk financed it, but it's run by the Rive brothers, his cousins) and at that stage there was all kinds of stuff coming out of Wall Street, saying that they thought the deal was wrong and the governance was wrong and it just looked like a great opportunity for us to acquire or to finally buy into the stock, which we then duly did. I hope you followed us over that period..What happened in the last month, in that a steep incline from around $170 or $180 a share to over $250 in the share price is twofold and first of all Morgan Stanley, the big Wall Street firm, has upgraded its target on the share to $305 and Elon Musk has met twice with Donald Trump and it appears as though they have quite a lot on the business front that they agree with, so that can't be bad for Tesla. Also, on top of this, Tesla hired one of Apple's top team, a guy called Chris Lattner, to run the autonomous driving software unit. What that means is the driverless cars that Tesla is going to be bringing out..Tesla launches its model three, in the fourth quarter of this year and that's going to bring this prestigious brand into the ambit of more normal people if you like. It's going to be more keenly priced than the brands that it has at the moment and they're looking to produce 183,000 of these vehicles, from around 50,000 a year at the moment, 183,000 of these vehicles by 2018, so ramping up the production, Tesla is going to participate in the swing towards electric vehicles. By 2030, it's anticipated that around the world, electric vehicles will make one-quarter of all cars sold because of the penalties on carbon taxes etcetera and you've got a South African, Elon Musk running the company, how could we stay away. I'm delighted that we didn't, for too long anyway and then finally, Metro Bank..Metro Bank is the UK's version of Capitec. I was recommended to have a look at it, in the first place, by Gerrie Fourie, the Chief Executive of Capitec and what I've seen there, I really, really like. The share price hasn't done a whole lot since we bought in, it's been bumping along there, but that's kind of standard practice for this portfolio. You buy the shares, you put them away, you hold onto them and you wait a little while until the opportunities or the realisation of the value starts coming out. This is a company that really is (if you look at the High Street banks in the UK), it is like a Capitec against the High Street Banks in South Africa. It has a wonderful franchise, it's growing rapidly, opening new branches and it was started by an American who did the same thing in the United States, starting from scratch with a difference, a Capitec type approach to banking and eventually he sold the bank that he built there for billions of Dollars. That is a repeat opportunity that is likely to happen here..Those of you who are considering replicating this portfolio and are worried that maybe 29 percent annualised growth in the last two years means that a lot of the heat's gone out of it, I wouldn't worry too much about that. The Rand at the moment is very firm by historical standards, it has improved considerably. I would suggest that it's a good time right now at R13.27 to the Dollar and R16.73 to the Pound to be doing your purchases of offshore companies..South Africa remains a very volatile geopolitical environment and a move one way or the other can really shake this currency. It's now offering pretty good value for South African residents who are looking to globalise their portfolio, so if it has been on your mind, we've had a six percent gain in the Rand in the past month. Those kind of gains usually are followed by retracements and of course, there could be, if we had a Nenegate II, which hopefully doesn't happen, but it's always possible, that could see a significant reversal in the Rand's good fortunes of the moment. Stuart, any more questions from your side?.Owen wants to know, with regards to the resources stocks, why there aren't any in the portfolio given the big turnaround in Glencore, Rio, and BHP last year because there is quite a high bias towards tech stocks..Yes, we're always going to miss resource stocks and I go with Buffett's view on this one. His feeling is that when you're going to invest in shares, you are investing in human potential; you are investing in the ability of the company, which is run by human beings to leverage the human initiative or the initiative of human beings to add value for you. When you invest in resource shares, you're investing in an inanimate object and with an inanimate object, there's no leverage. You can trade it, you can play with it, you can get clever, and you can buy Anglo American a year ago and put on 150 percent in a year because commodity prices have risen because Anglo has restructured its business, etcetera, but that could also go down by 50 percent in the next year. To me that's not investing, investing is when you acquire an interest in a company that you can hold indefinitely..If you buy into Anglo today, for instance, or had you bought into it a year ago you would have a very comfortable situation that you're looking in, but what happens if the trade war gets out of control and commodity prices fall again? These are things you can't read. To buy an inanimate object is not investing, it is trading. That's my view on this and it is one that I agree with Warren Buffett on..When you try and predict the future, the chances are you're going to get it wrong and if you don't believe me on that, go and read "Fooled by Randomness" by Nassim Taleb and once you read the book you'll realise that the guys who were crowing about the money they've made on Anglo in the last year are the same people who are going to be very quiet about the losses that they might have made somewhere else in that period as well. I don't believe that commodities and resources stocks are investments; I believe they're traders and we are investing..Thanks, Alec, this might be more of a statement. It says, "Why on earth would the US government penalise their own companies for bringing money back into the country?" I'm sure that statement is for pre-Trump days..It is and I would agree with you absolutely, it is a ridiculous situation, it seems. It might have something to do with the taxes; it might have something to do with a liberal strategy towards helping other countries around the world. If you make money there, leave the money there, I really don't know what the motivation would have been, but it seems a very, very strange motivation, particularly if the United States needs more capital, it has lots of debt, it needs its own companies to be investing within the country. It's probably something historic that exists there, but I don't agree with everything. In fact, there's a lot I don't agree with what Trump is doing, but on this one I would certainly think that he's just being pretty sensible. If you had South African companies, multi-nationals, like a Bidvest or an Old Mutual, or an Investec, why would you penalise them if they wanted to bring their cash back home to invest in the domestic economy? It doesn't seem to make sense. Anyway, Trump is fixing that..Thanks, Alec, a final question from Andrew. He just wants to know, "If I had R1.5m, do I move it offshore, or do I go through Webtrader?".If you have R1.5mn, my suggestion to you would be to take the first R1m and put that into Webtrader. There are no questions asked when it comes to that R1m, you're allowed to do that. The other R500,000 you're going to have to apply for exchange control approval, if you want to take it offshore, or in fact, even if you want to put it into Webtrader, so the first R1m there's no questions asked, there's no forms to fill in, it's all part of your annual allowance. What I would do in a case like that is probably put the first R1m into this portfolio and keep the other half a million and next year you can put another R1m if you have it, into the portfolio as well. That R1m is per annum, so there is a big advantage. Exchange Control is quieting down a little bit in South Africa, but that would be my recommendation for you in this case..You really have got through Webtrader, a fantastic opportunity. You live in South Africa, you make your money in South Africa, but it doesn't mean you have to have all your money tied up in the fortunes of the South African economy. By investing in Webtrader, as we have recommended in this portfolio in the last two years, you can, in fact, invest offshore and have your asset prices quoted in international hard currency terms and you can see when the Rand weakens, what a boon that can be. Well, thank you, everybody for joining us today; it's been a real privilege and a pleasure again to take you through the portfolio. It's an interesting ride that we see in the international stock markets and the purpose of this portfolio really is to give you something to work with, to work towards..Replicate the portfolio if you can, you will then at least have a monthly update from me on the performance of the shares, so it's not like you're making an investment and closing your eyes and forgetting about it. In term of the portfolio, we have sold one share, Novo Nordisk, a diabetes maker. It really got into quite big problems that nobody anticipated. Just to put it into context, the Chief Executive of Novo Nordisk was rated as the best CEO in the world by Harvard Business School and then out of the blue, he got fired. We didn't really know why..Fortunately, we got out of the share at that stage, then came a massive profit warning and there are all kinds of skeletons coming out of that particular cupboard. Well, unfortunately, you can't get them all right, but when you have a dramatic change in the fortunes of a company, that is the time that we will be selling, but we try to buy into companies that we believe we can hold forever, another reason why we steer clear of resources and commodity stocks. Thanks for being with us, we'll be back with you in round about the same time next month, we'll give you lots of advance warning and well, happy investing in 2017.

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