Financial Mail and Business Day

Half a century at the JSE

DAVID SHAPIRO

On February 1 2022, it will be 50 years since I first walked on to the trading floor of the JSE.

When my late father, Archie, reached that mark in 1983, the firm arranged a banquet in the market hall that was attended by guests from leading local and foreign institutions, an indication, at the time, of SA’s importance as an investment destination. Regrettably, the curse of Covid-19 has prevented me from arranging even a small gathering.

I have lived through several boom and busts, earth-shifting economic and political changes and transforming advances in technology. From running scribbled telex messages as a “green button”, I joined the cheering when the exchange went electronic in 1996. I witnessed broking firm Wilson Mansfield being hammered in 1972, and was on the floor when Ann Mackeurtan was admitted as the first woman member in 1976.

Being nestled in the heart of capitalism for five decades has allowed me to observe, firsthand, the path of the economy, the life cycles of industries and the comings and goings of individual businesses.

When I joined in 1972, the JSE was the Resource Capital of the world, with more than 40 operating gold mines listed. When the JSE moved to screen trading in 1996, there were 600 listed companies, the top 10 companies making up 28% of total market capitalisation, compared with 63% today.

Yet it was from the 1990s that the market started aligning itself with the direction of the economy, with the service sector challenging the supremacy of the mining sector.

My experiences over 50 years are far too wide to share in this small piece, but there are two important thoughts that have shaped my investment thinking over the years.

First, there’s an adage in investment circles that one must buy companies that can run themselves. I disagree. One cannot understate the value of management in determining the success and prosperity of a business. Nor can you establish management’s worth overnight, or whether they have their or your interests at heart.

It takes special skills to grow small and medium enterprises into large, heavyweight corporations, and the failure of so many management teams to recognise their limitations in trying to enlarge an operation has led to the ruin of many companies.

Second, there is a misperception that equities are riskier than any of the other asset classes. Each asset class has its risks, even cash where inflation and tax on interest eats away at nominal value.

One thing that has always stood out for me is the huge wealth that ordinary individuals have accumulated by steadily investing their savings in a portfolio of quality companies, undeterred by short-term swings in sentiment and persistent proposals from advisers to diversify and balance their funds.

Learning from the wealthy, I’m 100% equities. Rather than invest in cash, bonds or property for income, I peel off shares should I need to raise funds.

I have no intentions of retiring, yet. I still savour rising before dawn to catch up with the overnight news, discussing exciting new growth stocks with colleagues and taking deep breaths when I see red on the screen. But I must confess there is one facet of today’s markets that could push me into the Happy Valley Retirement Home. One more antimoney-laundering course, cybersecurity training session or lecture on POPI and I’m done forever.

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2021-12-03T08:00:00.0000000Z

2021-12-03T08:00:00.0000000Z

https://timesmedia2.pressreader.com/article/282183654334148

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