Director's Cut: Piet Viljoen — War, Bitcoin and why SA stocks may be the world’s best bargain

As the world grows more uncertain, clarity matters more than ever. BNC#8 brings together some of the smartest and most experienced minds to help you cut through the noise and navigate the turbulence with greater confidence. Tickets are selling out fast, with only 40 left. Don’t waste time, book your place at BNC#8 by clicking here or on the image below.With war talk rattling markets, investor Piet Viljoen explains why forecasts are pointless and diversification is everything. From Bitcoin as a modern “hard asset” to why South African shares remain deeply undervalued, Viljoen shares how he prepares portfolios for chaos rather than predictions..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 every morning on 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.The world feels uneasy again. Aircraft carriers moving toward the Middle East, talk of conflict spreading across global markets and investors once more trying to read the tea leaves.But for value investor Piet Viljoen, the instinct to predict the future is exactly the wrong way to think about investing.In a wide ranging discussion with BizNews founder Alec Hogg, Viljoen argued that geopolitical events are almost impossible to forecast and that investors who try to build portfolios around predictions are setting themselves up for disappointment. Instead, the key is preparation.Viljoen prefers to step back and focus on what can be done to protect portfolios against the unexpected. Wars, energy crises and political shocks often arrive without warning. Investors call them black swans but the real problem is that people spend too much time trying to predict them.“People want forecasts because forecasts give them comfort,” he says. “But I prefer not to start with a forecast. I prefer to prepare for any eventuality.” The way to do that is through diversification. A portfolio should include different types of assets that respond differently to changing circumstances. Some will benefit when markets fall. Others will benefit when they rise.Viljoen says the reality investors must accept is simple. Nobody knows the future.“You don’t know what’s going to happen next,” he explains. “The only way to prepare for the future is to build a diversified portfolio.”War and marketsRecent geopolitical tensions have once again reminded investors how quickly sentiment can shift. Yet Viljoen says he has not changed anything in his own portfolio in response to the latest headlines.In the fund he manages, known informally as the “Cockroach” fund because of its resilience, no trades were made during the recent spike in geopolitical tension.The reason is simple. The portfolio was already prepared.Viljoen has maintained meaningful exposure to energy assets, not because he predicted conflict but because those assets are relatively cheap and tend to perform well when geopolitical risk rises.“They are there to protect against exactly this kind of thing,” he says. “Not because I forecast it, but because it might happen.” That philosophy mirrors the thinking of legendary investor Warren Buffett, who has long argued that it is better to focus on individual companies than to attempt forecasting the global macro picture.Viljoen agrees with that approach and goes even further.“I would say it is impossible to forecast geopolitical events,” he says.Bitcoin as a hard assetThe conversation also turned to a topic that still divides many traditional investors: Bitcoin.Viljoen has been more open than many South African asset managers to including cryptocurrencies in portfolios, though he stresses that they should only represent a small allocation.His reasoning begins with the technology itself.Blockchain systems have the potential to change how financial infrastructure works, which means the associated cryptocurrencies could capture significant value if that transformation takes place.There is also another characteristic that appeals to him.Bitcoin behaves in some ways like a “hard asset”, similar to gold. Unlike equities or bonds, it is not someone else’s liability. It also has a limited supply and can be transported easily across borders.“You can buy Bitcoin in one country and sell it somewhere else,” Viljoen says. “It has characteristics that make it attractive as a real asset.” In politically unstable regions this becomes especially important. Throughout the past decade, people in countries facing economic turmoil have often turned to Bitcoin as a way of protecting wealth.Iran is simply the latest example.Viljoen says this trend has already been seen in places such as Venezuela and even South Africa during periods when the rand was under severe pressure.South Africa’s hidden valueDespite the global turmoil, Viljoen believes there is one area where investors continue to overlook opportunity.South Africa.He argues that the country’s assets remain deeply undervalued, largely because global investors have avoided the market for years.That neglect has pushed valuations to unusually low levels.“There are good businesses in this country trading on price earnings ratios of five or six,” he says. “Those businesses deserve to be on multiples of ten or more.” Political dysfunction has undoubtedly played a role in suppressing investor confidence. Viljoen is blunt about the impact of government policy and ideological thinking within the ruling party.Yet he also believes the underlying economy continues to function thanks to entrepreneurs and the country’s extraordinary resource base.South Africa remains one of the world’s most resource rich economies and global demand for those minerals is likely to increase as supply chains shift and industrial production expands.Those structural advantages may ultimately outweigh political noise.“There is irrational thinking in government,” Viljoen says. “But the economy still moves forward because of the people and the resources we have.” Investing in uncertaintyViljoen will expand on these ideas at the upcoming BizNews Conference, where his talk will focus on how investors should deal with uncertainty.For him the key insight is that uncertainty is not new.Markets are always uncertain. The headlines simply change.“Every time you think about investing you feel like things are uncertain,” he says. “But that is always the case.”Instead of trying to eliminate uncertainty, investors should build portfolios designed to survive it.In other words, stop predicting and start preparing.

Director's Cut: Piet Viljoen — War, Bitcoin and why SA stocks may be the world’s best bargain

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