Weekly Thoughts 09 June 2017

Possibly the four most useful and simple terms in investing could be cash, capital, yield and return. This week I’ll talk cash and capital.

Cash is basically what funds our daily existence. Whether we use this tool via a credit card, an EFT or have a pile of blue, brown and green notes in our pocket, it is only cash that can be used to buy the stuff we want or need. It is the lack of cash that causes individuals and businesses (or governments) to get into financial difficulty. To me, we want a fair amount of our investments to have the ability to pay out cash. Otherwise how do we use them….?

Capital, is the term we can use to describe accumulated wealth. It could be cash, either in the bank or what you store in a box in your ceiling. It would include the value of your listed investments. We’d measure this total accumulated wealth in one or other currency, like US Dollars, Rands, Pounds etc. One point here is that the value given to listed investments is notional, because the actual value of an investment is only known with certainty when it is sold out and cash is received. Like the value of a property – pure speculation until cash is in the bank.

On Monday I am off to Cape Town. Initiated because of an invite to take up an opportunity to spend a day at Coronation Asset Manager’s Head Office, with all the honchos of the establishment. They only invited 60 advisers from around the country to come to this, an invite list that I seemed to made my way onto. It will be good. I like doing the corporate due diligence with an asset manager. Important to do. We have to pay our own way: we are not allowed to receive any gift or ‘sponsorship’ greater than R1000 per year from any corporate we might or might not work with. A good rule this.

I have also set up a morning at Foord Asset Managers, who also have their Head Office in Cape Town. This will be just myself with their MD, a chap who has got to know me personally. I will do much the same with him on Wednesday morning, just more personal.