R1m Local v Offshore Challenge: Rivals agree SA stocks are now super-cheap

A collapse in the Rand and a sharp fall in local asset prices brought the contestants in the R1m Local v Offshore Challenge much closer together. But 18 months into the five-year competition, Piet Viljoen’s portfolio still has a handy lead (R550 000 v R450 000), and he says the JSE’s selloff has made high-quality SA shares very attractive. They are so cheap that even Magnus Heystek, his rival, reckons it’s worth buying them.

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Here’s the latest update on the Local v Offshore investment challenge between Piet Viljoen and Magnus Heystek. We’re 18 months into the five year competition and Piet’s SA portfolio still holds a comfortable lead – albeit one that has been contracting. They discuss their investment strategies, market fluctuations, the attractiveness of South African stocks, the importance of diversification, and the risks associated with relying on specific stocks or sectors.

Magnus, who invested his R500 000 offshore, explains how he was left behind at the starting point in November 2021, one of the very worst times to be fully invested offshore. He admits to having learnt after making some “amateur” mistakes and acknowledges that predicting market outcomes is challenging and shares his experience of facing initial setbacks in the competition.

Read more: Round One of The R1m Challenge: Piet Viljoen’s ‘Local’ is smashing Magnus Heystek’s ‘Offshore’ – but it’s very early days

He highlights the dynamic nature of markets, where different sectors and stocks can perform well or poorly at different times. Magnus mentions the recent upturn in the market and expresses his fascination with the unpredictability of markets. He emphasizes the importance of diversification and learning from market fluctuations.

Piet explains that his initial strategy was to invest in undervalued SA value stocks and stick with them for five years. Despite recent market changes, he believes that the current market conditions present an attractive opportunity to invest in high-quality South African companies at value prices and confirms he is increasing the quality of his mutual fund’s holdings, taking advantage of the recent sell-off in stocks to acquire attractive opportunities. Viljoen believes there are good businesses in South Africa that can thrive despite challenges brought by an incompetent government.

Read more: SA Treasury’s shock Exchange Control tightening – Magnus Heystek on why, and how citizens will react

Magnus mentions the need for global diversification and highlights Japan and technology stocks as potential areas of growth. Magnus agrees that market rallies driven by specific stocks or sectors can be risky, but he believes in maintaining a long-term perspective and not getting swept up in short-term trends.

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