🔒 WEBINAR: Amazon, Alphabet outperform

Alec Hogg takes us through the performance and current position of the Biznews.com Global Share Portfolio Webinar, which is still proving to be highly successful. If you’ve just joined in on this journey, not to worry. Hogg provides a comprehensive breakdown of how the shares are doing and how the companies, split between the likes of Apple, Amazon, Berkshire Hathaway, Alphabet, IBM and Novo Nordisk, are performing. And despite February being another challenging month globally, the rand hedge is still paying dividends. – Stuart Lowman

I’m Alec Hogg and this is your second month of the year update on the Biznews Global Share Portfolio. Stuart Lowman is with me in the studio.
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Thanks, Alec. As always, it’s good to be here.

You’re going to be picking up the questions.

Yes, Alec. If the listeners can just…on the right-hand side on the little toolbar there’s a ‘questions’ option there. Just send it and we’ll take them as they come.

It is interactive so as soon as your questions come through, Stuart will wave me and then we’ll be able to pick it up. I’ve had quite a few enquiries about how you invest in the Biznews Global Share Portfolio. Well, do it in conjunction with Standard Bank Online. They have Webtrader, which is one of their products. Up to R1m you can put into Webtrader without worrying about any exchange control approval. If you want to put more than that, you do need a clearance certificate from the Receiver to say that your taxes are up to date. Its’s only fair that you can’t put money into international markets if your taxes not 100 percent right. Once you’ve done that… We started off with R2m in our portfolio and we’ll give you an update on how that’s been performing. You could start again right now, with R1m and give it to Webtrader. They will then ensure that the money gets put into a Dollar account and from that (like you would manage a normal share trading portfolio through an online service), you can buy and sell shares through the Webtrader account, which actually brings you to many share markets around the world.

Just on that Alec, Peter Eksteen asks, “What’s the trading costs per transaction?”

I think the trading costs are $20.00 per transaction but they are there within the Webtrader back end. I don’t know specifically but you will be able to get that from the Webtrader people. Just drop us an email, Peter. The nice thing though is that it gives you exactly what you’re paying inclusive of all costs when you do your transactions (the same way as when you do an online trading transaction). There are no hidden numbers. You see your portfolio immediately and away you go. It’s really good and if you’d started with us in January 2014, you’d be showing an annualised return of 33 percent, which is actually outrageous but it’s only outrageous because the Rand has taken an awful hiding. Our view (back in 2014) was that we felt the economy was being poorly managed and as consequence, our view was that there would be a deterioration in the exchange rate going into the future. It’s starting to become a little different now. We have Pravin Gordhan in the hot seat. We look forward to seeing what happens in the Budget Talk tomorrow. There are all kinds of internal conflicts going on within the ANC – the old Soviet style approach, which has been mirrored in Venezuela and Cuba and the kind of places you wouldn’t want to put your money. We were going along that road at quite a rapid tile. It does appear to have been pulled in and as a consequence of this, the Rand is no longer the one-way bet. We did mention this last month. It’s no longer the one-way bet that it was, heading up to the December disaster called Nene-gate but this isn’t really a place where we’ll be discussing that in much detail.

Alec, just quickly on the one-million within the account, Clive Edwards asks, “Is it per year or in total?”

It’s one-million per year. You have a discretionary allowance as a South African citizen, which means you can take R1m and put it anywhere in the world (of course, you must report it in your tax return), but you’re allowed to do that without getting any approval from anybody. If you would like to take more than that – indeed, up to R10m – then you need to have a Tax Clearance Certificate. That’s per annum. Let’s say you are one of the very fortunate people who are worth R100m for argument’s sake, you can put your R1m in before the end of February and as long as your taxes are up to date, you can put in R10m more this year (so you put in R11m), but that’s it. The rest of the money has to stay in South Africa. Next year in the following tax year, which starts on the 1^st of March, you can put another R1m discretionary and apply for another R10m through the Reserve Bank, etcetera. There is still exchange control in South Africa but it is a lot more lenient than it was in the past. Let’s get into the portfolio. I see the questions are coming through Stuart, so if we don’t get into our portfolio we might actually not be in a position to answer all the questions.

The prices at opening versus the prices today: this is an overall view of our portfolio. Just to explain how it works: we took R2m to begin with and R2m was then put into US Dollars and as you can see, at the time it was investment there of around $200,000.00. That was then allocated back on the 5^th of December 2014 to various shares. We did keep a little bit back, which subsequently went into Apple. The way we recommend the transaction is that you buy over three months. If you’re going to put your R1m into your Webtrader account today, it will come up to around $50,000.00. You would take that money and invest it over three months – 15/15/15 in broad terms. Our recommendation as you will see, is that you go with round about one-third into the market as a whole. That’s in the S&P500 – the Vanguard Index. That gives you stability. Remember, we’re making an investment for the long-term. The average period that you would hold these shares for is forever. Thirty-three percent return (annualised) is, as I said, outrageous but that is only because the Rand has been under an enormous amount of pressure. From where we’re sitting, we’ve had a four percent improvement in the performance of this portfolio since we started.

As you can see; Vanguard, which tracks the U.S. market is down by five percentage points so actually, we’ve outperformed the U.S. market by nine percent. Add in the Rand’s benefit there and you’ve got a 38 percent gain on the portfolio as a whole (or 33 percent in annualised terms). We’ll get into the portfolio in some detail a little bit later but that gives you the overall position.

Peter Eksteen wants to know. If he sells, does he have to repatriate the proceeds?

No. If you sell within the Webtrader account, it stays there. The money stays overseas and in fact, the process is that you would convert your Rands into Dollars, leave them over there, and keep adding to them (in our opinion) until we get signs that show us that the South African economy is going to be a good place to reinvest again. Well, with the way Pravin Gordhan’s going and with his engagement with business, that might be just around the corner but we need to see some very concrete evidence of that before we can switch our view ‘that the better place to invest right now is offshore’.

Moving on to the second (and this shows you the Rand value of the portfolio). As you can see, we started at just about R2.3m. My apologies. We said to begin with, that we started with R2m. In fact, we started with $200,000.00. That was where it came from. There you can see the investment of about R676, 000.00 into Vanguard. Initially, that was one-third of the portfolio. That has now grown to R863, 000.00 and that is because of the Rand’s depreciation. Even though Vanguard (or the U.S. market) is down, your R675, 000.000 is now worth more than R850, 000.00 and it shows a similar trend across the board.

Alphabet, which is the old Google, has almost doubled in Rand terms from around R330, 000.00 as you can see to R600, 000.00 today. Apple has been a disappointment in U.S. Dollar terms. It’s down quite significantly. It’s only down four percent in Rands. Berkshire Hathaway, despite being down in U.S. Dollar terms is up healthily in Rands. There’s our star performer – Amazon -, which has turned an investment of R184, 000.00 into R425, 000.00. Novo Nordisk has also done extremely well and IBM is one that is just a little bit better in Rand terms. It shows you that if you invest offshore in Rands, you’re giving yourself wonderful protection. The reason for that (as you see at the bottom there): on the 5^th of December, the Rand was R11.27. That’s when we started. Today, it’s at R15.20. Who’s to say where it will be going in the future? R15.20: it clearly is (on most fundamentals) undervalued but if the economy continues to progress in the direction that it has been going, that won’t be undervalued for very long.

There the prices again just give you an idea of what has happened with the Rand. The Rand has depreciated by 29 percent over that period. The star performer (Amazon) up by 130 percent. We’re very fortunate in that stock selection. Alphabet, which has about one-third of our portfolio in it, is up 78 percent and the laggard was Apple there – down four percent. Interesting to see that IBM (in the past month) picked up quite nicely and we’ll give you some more insights into that as we get a little bit further.

This is a graphic, which gives you a really good feel for how the portfolio has performed. Amazon, Alphabet, and Novo Nordisk doing better than the Rand/Dollar with Vanguard doing worse. That’s the overall market so if you put all your money into Vanguard, you’d be sitting at a return of about 20 percent rather than 33 percent annualised, which we’re at now.

Berkshire: a good, long-term bet and Apple’s down a little bit. There’ve been no disasters in the portfolio and that’s really where (in investing) you should be aiming just to avoid – in many cases – those that lose money for you and where you have significant disasters. As you’ll see, we’re far away from anything in the resource sector. We believe that that’s not a good place to be.

Dividend receipts. There were a couple that came through in the past month. IBM and Apple both paying a dividend. As you can see, IBM at $1.30 dividend (adding $130.00 to our portfolio) and Apple a 52 cents dividend (adding $133.00).

Onto the individual constituents on the portfolio. Any more questions, SJ?

There’s a question on Apple. Do you foresee the FBI demand on the company to have a negative impact on any future sales of iPhones?

They were telling the Treasury staff that nothing would change, except that they are there to approve financial payments that the Minister wants done.

It’s easy to make the connections to the Gupta family, etcetera. Can you tell us a bit more about these two advisors? How do we know that they were somehow connected to the Guptas?

That’s an interesting story. You’re referring to the big story of the moment where the FBI (Federal Bureau of Investigation) wants Apple to change the way that the iPhone is encrypted to make it easier for the FBI to write software so that it can get into an iPhone that was owned by the San Bernadino terrorists. Apple is fighting this tooth and nail in the court, saying that it will compromise all iPhone users. It is an interesting aspect but I would point you to the fact that Apple’s competitors are Samsung from Korea, Huawei, Xiaomi, and Lenovo. The last three are from China. Another development that we saw in the past month, was China announcing that all foreign companies and even foreign JV’s (or Chinese companies that have JV’s with foreign companies) will require approval in future before publishing online in China. They will have to get that approval from the State Administration of Press Publication Radio, Film & TV. What that’s telling you is if the FBI in America is wanting Apple to change things, be aware that the Chinese government, which won’t even let you publish online unless it approves what you put there, will be doing something at least similar to its competitors. You can be pretty sure that South Korea, which in many ways is a vassal of the United States (a very highly capitalist society)… If the U.S. goes one way, South Korea will probably impose similar rules onto Samsung so no, it’s unlikely in a zero sum game. If Apple is forced to do something it doesn’t want to, you can be aware that the Chinese competitors will at least have to compromise their security in the same way and almost certainly, the number one in the world – Samsung – will be there as well so I don’t see that as a competitive disadvantage.

Onto the market generally: here’s Vanguard, which is an Exchange Traded Fund that charges .05 percent as a commission when you go into it. The costs are all-important when you invest in EFT’s and as you can see, it tracks what’s happened on the overall index – that is the S&P500 Index – as a good EFT should do. That’s down in the last year by eight percent so the U.S. market has come down sharply in the beginning of this year. In fact, we had the worst ever January. You can see that at one point in time, the market was down by 12 percent in January, having lost ten percent in the month itself. Then it fell still further in February after a little rally, but its rallied back in the last few days. The S&P500 Index and Austria down by eight percent. Vanguard is reflecting that as well so in U.S. Dollar terms our portfolio, which has about 30 percent now in Vanguard is also being affected in the same way.

Not to worry if you’re a Rand investor because although you’ve lost a little bit on the index overall, you’re still sitting pretty comfortable when it comes to Rands. One-third of the portfolio is in the S&P500 Index. When we began this portfolio, we put one-third into two bellwether stocks or two anchors if you like – Berkshire Hathaway and Google, which has now become Alphabet. Subsequent to that, we’ve found great value in Apple so we’ve put another 15 percent into Apple’s. If you like, the portfolio now is around about 30 percent that’s in the S&P500 Index and then 45 percent roughly split between Berkshire Hathaway, Google, and Apple. – Berkshire Hathaway – the first of those – underperformed the All Share Index in the United States (the S&P500) in the past year. Berkshire’s down about 12 percent (in Dollar terms, that is) In Rands, it’s still doing pretty healthily and in the last month not a whole lot coming out of Berkshire. It disclosed that it had bought a stake of about 1.2 percent in a company called Kinder Morgan, which is a pipeline operator in the United States and that news alone was enough to shoot up the share price of Kinder Morgan by more than 10 percent. It shows that the drawing power of Berkshire Hathaway’s Chairman (Warren Buffett) remains as strong as ever.

Stuart and I are going to the Omaha AGM at the end of April to go and see Warren and Charlie. When you get there Stuart, you’ll see 40,000 people gathering just to listen to these old fellows tell us about investments. Its’ one of those stocks that I’m very comfortable holding even though the underperformance against the S&P500 is quite relative. It’s only three percentage points, actually if you consider what the market as a whole has done. Berkshire’s not the kind of stock that’s going to fall out of bed and lose you a lot of money. Warren will position himself in this time for the future. He thinks long-term. He thinks he’s going to live until he’s 120. There’s nothing wrong if you haven’t bought any Berkshire Hathaway shares yet, in going ahead and making a big step.

Peter Eksteen would like to know if we record the webinar and if so, where?

Yes, we do. We even transcribe the webinar and we put it onto Biznews, so it will all be there in the next couple of days. Obviously, it’s quite lengthy but it is transcribed so you can go back and have a look at what we said in previous months. I think we’ll certainly have it up by the end of this week. That’s Berkshire.

On to Alphabet, which has been one of our top performers. As you can see, within the past year (this is the old Google. It’s still reflected as that in the share code GOOG). It has pulled down more than 30 percent as against the NASDAQ, which is down about eight percent. It is an outperformer and that’s in U.S. Dollar terms. Of course, in Rands it’s quite special. In the past month, Alphabet very briefly went above Apple to become the biggest/most valuable company in the world. It got to 540-billion in market cap. That was early in February, as you can see it highlighted there. At the time, Apple had fallen from 750-billion last year, down to slightly below Alphabet by about 546. Apple however, has gone back up to 535-billion and Alphabet has come back to around 500-billion. After briefly becoming the most valuable company in the world, Alphabet has gone back to being number two, behind Apple.

The big story there is really a global story. Questions on whether the Chinese are going to be in a position to knock Apple of its perch in Smartphones and Alphabet/Google of its perch in search. Google has two-thirds of the world market in search – way ahead of number two, which is Bing and three, which is a Chinese company called Baidu. Baidu has got 70 percent of the Chinese market but very small outside of that. You must also remember that Alphabet has one-billion active users on Gmail and its search functions is in such massive investments that it isn’t going to give up its two-thirds of the world market in a hurry. We even talk about ‘Googling’ things now, and not searching for them. However you want to look at it, it is a company that is well positioned. It did disclose that in the last year, it spent nearly $3.75bn on what it calls ‘moon shots’. These are investments into long shots or things with fairly limited market appeal to everybody else, but Google thinks there are opportunities and consequently, it has a very significant lead now in the move towards driverless cars around the world. Also, it has connectivity through the LOON program that’s Internet balloons high up in the stratosphere, which can then give previously underserviced/un-serviced areas Internet access. While $3.7bn that was spent last year is a lot of money in anybody’s terms (certainly in Rands), it’s not out of kilter with Google that made $23.5bn in profit last year. They’re having these ‘moon shots’. They are hoping that at least one of them will come back and create a whole new business, and that’s part of the reason why Alphabet itself was created rather than just staying all in Google. Alphabet is the holding company, very much like Berkshire Hathaway is structured with Google, which is by far the biggest part of the business right now – the search engine having its own team of management and then the other activities including moon shots, driverless cars, and Internet balloons having their own areas as well.

Naspers is heavily invested in Tencent. Is it better to invest directly in Tencent rather than doing it via Naspers?

As a South African, there’s no question that Naspers is the preferred route for two reasons. You can do it in Rands so you can use the money that you haven’t taken offshore to invest in Naspers. Secondly, Naspers trades at a discount because of its Tencent shareholding being so substantial. You’re almost getting the rest of Naspers for nothing/free and that makes a lot of sense. Pretty much, the Naspers share price today is reflected in the Tencent shareholding that it has and then you’re picking up Multichoice, the newspaper industry, and the book sector etcetera, free. Anything free in investing is a good deal.

In that vein, do you have any other ‘moon shots’ picks for us?

The ‘moon shot’ picks that we have been looking at very carefully, are Tesla Motors (the South African born and raised Elon Musk business). We’re also having a very careful look at some opportunities in financial services – Tech Fin, as they call it. I haven’t been able to come out with a definitive recommendation yet but that’s going to be a very big opportunity into the future and if you can find the Google or the Apple of the Fintech market (the disruptor who’s going to change banking) then you certainly are in the right place. A lot of people made money in biotech by getting in early. We’re not quite sure yet which is going to be the digital currency play that is best for you, but we’re keeping an eye out and doing our research. Hopefully, we’ll have a moon shot on that for you in the not too distant future.

Let’s move on to Amazon. This is our star performer in the portfolio.

As you can see, at one point in time it was up by more than 80 percent in U.S. Dollars. This is just in the last year. In fact, last year as a whole Amazon gained 117 percent but it did end towards its all-time high in December. It’s come back quite a bit since then, which is only sensible. In fact, at one point in time the share price was (as you can see) down to only a 30 percent gain on the year. I say ‘only’ but when you add the Rand to it, 50 percent is still a very special performance. It’s picked up very nicely in the last few weeks. It’s been a dull start to February but then, when the analysts started reassessing all the numbers they came to the realization that Amazon Web Services, which is the big play for the future – it’s got the biggest margin and it’s the fastest-growing part of Amazon – is really starting to motor. It’s something that Amazon got into years ahead of everyone else in the same way that Google got into driverless cars ahead of the market and it is that ‘first mover’ advantage, which is playing into Amazon Web Services’ hands. It showed revenues up 69 percent in the fourth quarter – about USD2.5bn. Amazon is not a company that you need to look at if you’re anticipating dividends or indeed, if you want to have profit every quarter because Jeff Bizos is investing for the future. He’s still investing for the future and I would just suggest that you look back at the Google track record to see why this is a sensible way of going about things. Amazon’s story is not entirely understood yet but it is being more appreciated by investors and we’re very happy to have gotten in at the price that we did, and even happier to be staying with it.

Isn’t the portfolio rather imbalanced and too heavily skewed towards IT stocks?

Well, it is but that’s because we believe that the world is going through a revolution – the Fourth Industrial Revolution, to be precise. If you read through the work that came out of our coverage of Davos this year, the old economy stocks…. We do have Berkshire in there. That’s pretty much it. Berkshire plus the S&P500 Index. The world is at a transformation point. Seismic shifts are happening. This is not just occurring overnight. It’s been changing for some years now. Two years ago, Eric Brynjolfsson and Andy MacAfee wrote a seminal work called ‘The Second Machine Age’ and  at that point in time, I started doing quite a lot of research on how the world was transforming. Something else you need to understand as well is that with these new technology companies, they have the ability to replicate for free. That’s the big advantage of digital. Digital means that you can reproduce yourself without having to charge more for the next product, which is very different to what goes on in the real economy. Yes, we have a preponderance of New Age stocks. We have an investment… We got in at the time that we felt that they were offering value. I guess that if you were a trader, you’d look at Amazon and say, “My goodness. In Rands, you’ve doubled your money. Isn’t it time to take something off the table?” This is not a trading portfolio. This is an investment portfolio and Amazon remains a good, long-term investment. We still like the story.

Moving on to Big Blue, which is a story that I absolutely love.

If you haven’t invested in this one yet, I suggest you try and pick up a research report from Morgan Stanley, which came out in the last week hence that big bump in the share price of Big Blue. The Morgan Stanley analysts have come to the conclusion that IBM is being unappreciated by the market and that its transformation efforts are a whole lot more significant than its being given credit for. This is a company that’s bought back more than half its shares in the last 20 years, spending USD150bn. Those with long memories will know that IBM was the most valuable company on earth between 1980 and 1991. It’s nowhere near the most valuable company in the world today. In fact, its market cap is worth a relatively modest (given that it does business with all of the Fortune 500 companies) market cap of $130bn. It’s trading at a price-to-earnings ratio of under ten. It’s generating dividends of four percent and it’s still buying back its stock. The story with IBM is a shifting of the old economy company into Cloud services, Data analytics, mobile user engagement, and cyber security – the four big pillars that it’s building the new business on. Already, those four areas, which are growing at almost 20 percent in revenues every year are 35 percent of IBM’s total and the one that is very attractive (for those who’ve done work into this) is artificial intelligence, which is machinified through the brand Watson. Tom Watson Sr. and Tom Watson Jr. were Chief Executives of IBM so they have taken that legacy and called this Super Computer of theirs ‘Watson’. Watson has been developed over decades now. It was the first computer to beat Gary Kasparov, the chess champion and it also won a big game they have in the United States called Jeopardy, which showed that artificial intelligence trumped human intelligence at that point in time. That was some years ago and it’s just getting stronger and stronger, and they’re now starting to apply Watson and the Big Data capabilities to healthcare and retail in particular. The demand for Watson-type services are growing dramatically and in my opinion and I think certainly, in the opinion of Morgan Stanley and many other analysts of their type around the world, it’s moving in the right direction. It’s a value play at under ten PE. At a four percent dividend yield, you can get into this one in a big way.

Moving on to Novo Nordisk. Here’s one of our favourite stocks as well. One of the world’s great Insulin-makers.

Novo Nordisk: in the past month you can see that share price has really come down a lot before recovering. In fact, a turnaround of nearly 20 percent in the month. It was down from 15 percent up and then below zero, to gain again about seven percent. Remember, these are all in USD terms. The reason for that was that the Chief Executive (it’s a Danish company) said that the profits coming out of the United States were going to be more difficult in future. Pricing pressure is now in the hands of a consolidating healthcare sector, which doesn’t augur well for companies like Novo Nordisk who’s selling into that sector. The other problem that they’re facing is the growth in China. However, what makes Novo Nordisk relatively immune to this is the market that it plays in. if you are a diabetic and you’ve gone through the whole process of getting Insulin, you tend to stick with the product that you know and Novo Nordisk generates 80 percent of its revenues from its Diabetes products. That gives it a very solid underpin even though pricing pressures are not as much in its favour as it was in the past. The company has come out with a statement to say that it expects that long-term operating profit growth will now be ten percent per year rather than the previous estimate, which was 15 percent. The market had already discounted that 15 percent per year profit growth and the global economy is extremely high, especially in a deflating environment. Ten percent: well, the Danes say they’ll be making that in future. I guess you can bank it. If you can get ten percent per year from USD, you certainly aren’t going to be sneezing at that one.

Then Apple. Here is a stock which, if you have not invested in yet, is really appealing. It has underperformed since we got in – quite significantly. In fact, it has come down by about one-third overall in the last year/year-and-a-bit as concerns amongst analysts about Apple’s ability to continue to grow its share of the cellphone market. My thinking on this one is that the company continues to buy back its own shares aggressively. In fact, it’s just closed the second-largest bond issue of the year of $12bn. Incidentally, the largest one was through the company that’s just bought SABMiller. It raised $46bn. The second-biggest bond issue of the year – and Apple is using those $12bn to buy back its own shares – that has to be a very strong indication and reflection of confidence in the company. Of course, when companies buy back their own shares they also add value automatically to existing shareholders. It has a share of about one-seventh of all the Smartphones that are in issue, that are owned around the world. What makes Apple really appealing though, is the eco-system that was created around all of its products. I know. I’m a long-time Apple fan. Of its products, once you buy an Apple you in fact just add to your family. Apple products have gotten critical mass around the world. It’s not just the Smartphones but pretty much every other thing that they make. If you’re an Apple fan, you just add it in. It seems like integration.

This one’s about resources. What about Anglo buying back its own shares?

Resources are not a Buffet play and we try to structure this portfolio in many ways in the same way as Warren Buffet would. Of course, we’ve gone more for the exponential/tech shares than he would ever touch but I believe you need to defer to his judgment and his view. i.e., “When you’re buying into commodities, you are acquiring an inanimate object. The whole idea of investing in shares is that you can invest in human potential/human ingenuity, and in the managers of companies.” By investing in commodities, you’re trading because you’re expecting that somebody else will be prepared to pay more for that inanimate object in future. The other big point about this… I would refer you to a wonderful interview that George Soros did in Davis this year where he described himself as a hedgehog as against a fox. Isaiah Berlin brought out this idea that most human beings…when they’re thinking about things they’re foxes who as we know from our own Clem Sunter have a good understanding of many things, or hedgehogs who just focus on the one single goal and follow that way. Soros says the one single thing he knows right now is that the world’s going into deflation and deflation is bad for commodities. It’s bad for resource-based currencies and it’s bad for Anglo American. Although Anglo (Mark Cutifani) is doing the best he can, he inherited a terrible hand. He’s having to now make the best of it and he certainly is doing so, but the global scenario is awfully against him. Even if it were in his favour, my inclination would be to say, “Don’t invest in inanimate objects.”

Onto our overall slide. There it is. It shows you the prices at opening as against the prices today. The portfolio – thanks to Amazon.com’s 130 percent, 78 percent from Alphabet, and 51 percent from Novo Nordisk – all of whom have substantially outperformed the Rand since inception, is ticking along at 33 percent per year. My suggestion right now is that you do follow and replicate the portfolio as it is. All of those stocks: Amazon, Alphabet, and Novo have come back and you’re buying into Vanguard at an eight percent lower USD price today than when we started this portfolio in December 2014. The obvious one that sticks out like a sore thumb here is Apple whereas IBM is offering fabulous value. Why not buy yourself some Berkshire’s as well, just ahead of the AGM?

I think you might have answered this already, Alec. What about gold?

Gold is a trade. Even the best gold bugs will tell you that it’s not the kind of thing you should be buying indiscriminately on a regular basis. In South Africa, you’ve done very well out of Kruger Rands but only because the Rand has fallen so it has offset the decline in the gold price. Gold is a negative investment. It’s an insurance investment against catastrophe and tragedy. The human condition is such that we overcome the most incredible odds and I’m sure that when you look back in 20/30 years’ time at where we are today with the difficulties that we face, you’ll be amazed at how much ingenuity has been brought to bear. Gold is for people who have a negative view on the world. I don’t. Well, that’s it. We’ve overstayed our welcome by about ten minutes today but I hope you enjoyed this rather extended version of the Global Share Portfolio. Thank you for being with us. As mentioned in an answer to a question that I think Peter asked earlier, we will have today’s conversation transcribed. It will be on the website on Biznews.com along with all of the slides as well. If you’d like to revisit this or indeed, any of the other webinars that we have through the year, you’re welcome to do so. Thanks for being with us today. Look forward to being back in your company next time.

Cheers, Alec.