Business Maverick: EDITOR’S NOTE
Taking stock of the future: Why we supported the JSE’s 2021 Virtual Investment Challenge
As usual, the prizes were shared between teams from a dusty school in a township no one has ever heard of and some of the highest-ranked schools in the country.
Business Maverick this year supported, in a small but important way, the Virtual Investment Challenge, the JSE’s annual investment event for learners and university students. The event is now well established on the JSE’s calendar and many schools and universities take part: between 300 and 400 teams enter every year.
The event, which has just ended, is one of many in SA that are pure, heartwarming delight. As usual, the prizes were shared between teams from a dusty school in a township no one has ever heard of and some of the highest-ranked schools in the country. As usual, the teams were all supported by outstanding teachers.
In this case, the lowest risk category, the Income Category, was won by Mpumelelo Secondary School which is in a township called Rethabiseng – good luck in finding it on a map. Hint: it’s somewhere north of Bronkhorstspruit.
The team made a return of 5.3% over the six-month period of the competition, and I would challenge any fund manager to beat that by not using anything that smells of a derivative, investing only in JSE Top 40 shares, and keeping 40% of your capital in cash. The team was fighting a declining market which lost around 7% over the period.
Not to pick on anyone in particular, but Ninety One’s SA Equity Fund made 0.75% over the past six months, while Sanlam’s Multi Managed Aggressive Fund of Funds made 4.5% (and that’s the aggressive fund). Old Mutual Investors Fund made 4.7%. Of course, investing real money for real clients over a longer period is different, but just scanning the results of the more than 1,700 funds available to SA investors, and seeing what these schoolkids did, you really can’t help wondering what exactly you are paying that 150 basis points for.
The two other categories, the medium-risk and high-risk competitions, were won by teams from two of SA’s best schools: Maritzburg College and Paul Roos; both had mixed-race teams. One hopes the “speculator” prize won by Stellenbosch’s premier boys’ school doesn’t lead them down the dangerous path trodden by some of the town’s more notorious residents.
Business Maverick’s support for the competition was simply to keep track of it and write occasionally about the people and strategies being adopted, and to report the results.
Neesa Moodley, whose assignment it was in cooperation with the JSE, wrote wonderfully about this year’s competition. She was so hopeful for some of the people whom she interviewed over the past six months, she said she was weeping when the results were announced.
She said it was interesting how much more aware participants were of the news, notably Aspen’s contract to start producing more vaccines. The trading platform EasyEquities was also much discussed by the teams.
Of course there is a bigger picture too. SA’s endless cohorts of publicity-seeking Marxist academics and trade unionists will probably be sceptical about this competition, which quite honestly makes me feel warm and fuzzy all over, because the competition is becoming more popular and the utility of stock markets is becoming more obvious to SA’s new generation.
The fact is that stock markets have proved themselves fabulously useful assets in the process of human development, providing entrepreneurs with capital to improve all of our lives, and savers with places to protect and develop their capital.
The problem with stock markets is not that they exist, but that their enormous benefits are unequally spread. However, that is changing fast and competitions like this aid that effort.
For all those who think capitalism is failing, please take note of the following: never in human history have so many people been invested in stock markets around the world, and never before have they made so much money from doing so. About $50-trillion is currently invested in stock markets around the world; about twice the global GDP. That is almost double the proportion it was just 30 years ago.
The early 21st century has been an era when investing in entrepreneurship, always a function of stock markets, has truly blossomed. In all the gloom of the past period, the fact is that people are on average richer and entrepreneurial companies are just going gangbusters; here’s looking at you, Elon Musk.
Here is one statistic to chew on: if the South African government invested all it garnered in dividend tax and re-invested it on behalf of SA’s population in a JSE tracker fund for 20 years, and the JSE grows at the same rate it has over the past 20 years, the entire adult population of SA would be earning around R14000 a year on dividends alone, even if you paid out all the dividends, every year. If you reinvested the dividends until year 20, the payout would be around R35000.
Don’t believe me? Do the maths. (Using average, inflation adjusted market returns; assuming dividend tax, currently R30-billion a year, increases by inflation; and an average dividend yield of a slightly generous 5%).
It was a pleasure to support the challenge; many thanks to the JSE and congratulations to the winners, who are, in the long run, everybody who took part. DM/BM