Are we snookering ourselves with confirmation bias? with thanks to Allan Gray

Allan Gray photoWe have written regularly about investor behaviour, noting how emotions can be our worst enemy. Driven by fear and greed, many investors buy high and sell low and tend to invest based on past performance. But what causes this counter-productive behaviour?


There are many different psychological theories and explanations, one of these being ‘confirmation bias’ – the tendency to gravitate towards news and opinions that confirm our own views. In our information overloaded world, novice investors and professionals alike can easily find evidence to support their own theories. With evidence in hand, we can justify our actions.


Confirmation bias can manifest itself in the newspapers we read, the websites we frequent and the people we listen to. Online we are deliberately manipulated by search engines, news sites and social media networks that are cleverly configured to deliver us just the information we are looking for, based on our historical behaviour. The result of this bias aggregated across the market often leads to misleading popular market sentiment.


What is to be done?

As we consume information daily, it may help to develop more self-awareness around our own biases, and a targeted strategy for consuming financial media. Many decisions about buying, selling and switching (or not switching) investments are informed by what we read, so it is worth examining how to filter this flow of information.


1. Separate the wheat from the chaff

If you are focused on a long-term goal, the short-term noise is just that – noise. Buying and selling based on everyday events and market moves may cause you to lock in losses that may have otherwise been avoided.


There are some investors who time the market well, due to a combination of luck and skill but, on average, changing your investments in response to a change in your circumstances is a more rewarding strategy.


Generally, unit trust investors need not worry about how to respond to day-to-day events; your fund manager will take these into account, as necessary, during the research process. Similarly, if you use the services of a good, independent financial adviser they will adjust your overall portfolio as the long-term need arises.


There are only a few news events that should encourage you to check in on your unit trust:

  • News about significant changes at your investment management company (e.g. your unit trust company abruptly changes its investment philosophy).
  • News about changes to your specific funds (e.g. the benchmark, mandates or fee structure changes).
  • News about legal changes that may have an effect on your investments (e.g. government changes legal restrictions on endowments or retirement funds).
  • For the more sophisticated investor with niche investments, news about significant shifts in countries or industries (e.g. if you have a mining-specific unit trust and there is a change in laws around mining licences). 

In most other cases, you should only consider making changes to your investment if your goals or personal circumstances change.


2. Challenge your world view

The ‘team of rivals’ approach can help you break out of your safe opinions. The idea is to actively seek alternative views and was used by Abraham Lincoln, who appointed his rivals to cabinet to challenge him. Reading and trying to understand viewpoints that differ from your own can give you fresh insights and leave you with a more holistic view of a situation.


3. Filter for facts

In theory, underneath the opinions and ideas you read in the media there should be a foundation built on facts; facts that you can follow back to their source. Reading the source material allows you to question the interpretation you are given with a deeper understanding. Always try to get the full picture rather than acting emotionally on the first story you read.


4. Watch out for weasel words and orphan opinions

Extraordinary claims are often delivered with words such as ‘likely’, ‘probably’, ‘virtually’, ‘almost all’ and ‘seems’. These words are designed to encourage you to believe the truth of a statement, which may, at its core, be baseless.


Another news trick is the use of orphan opinions such as: “Experts say …”. This should lead you to ask: which experts? In some cases the text may indeed quote an expert opinion; but more often than not the headline is selling the paper. In most cases, an opinion worth listening to will come from someone willing to put their name next to it.



Become critical about what you read, see and hear: don’t let confirmation bias snooker you. Reserve the right to react only after careful consideration.


Commentary by Jeanette Marais, director of distribution and client service, Allan Gray

Allan Gray Proprietary Limited is an authorised financial services provider


The Crest











We are excited to share that we are in the latest edition of The Crest.

Crystal ball investing – Speculation leads to investment loss


24 June 2015 Julie Macleod-Henderson,

Foord Asset Management

The term “crystal ball investing” appropriately invokes images of smoke and mirrors, charlatanism and faux clairvoyance. None of these has any place in investment practice.

This is according to Julie Macleod-Henderson, Head of Retail Investment, for Foord Asset Management in KwaZulu Natal. Macleod-Henderson says that investment has a long-term perspective, the eventual outcome of which is almost certain, whilst speculation has a short-term perspective and an inherently uncertain outcome. The distinction is important.

“While both modes of activity are forward-looking, speculation often involves guesswork, conjecture and an absence of convincing evidence, whereas investment is grounded in a pragmatic assessment of the facts and a rigorous evaluation of the probable scenarios established by the factual background.”

According to Macleod-Henderson, the “crystal ball” myth might manifest more readily in the asset allocation process. “Whether or not to have exposure to one industry or another is partly a function of future economic conditions. With perfect foresight (that perennial impossibility), an investor might know if a good thing will keep getting better, or a bad thing worse. Moreover, such perfect foresight might also indicate turning points: when a good thing turns bad, or a bad thing turns good.”

But perfect foresight is moot.

“The very danger of “crystal ball investing” is that it seeks to divine an advantageous future akin to the products of perfect foresight. This is naïvely inappropriate. The identification of advantageous outcomes can only be predicated on what is known, what has been experienced, and the probabilities of particular outcomes. More particularly, essential in the assessment of future scenarios is a meticulous consideration of the risks of being wrong, the consequences thereof, and the measures necessary to mitigate and manage such risk.”

Some might argue that certain investment managers are more “intuitive” than others in their assessment of future scenarios but this should hardly be construed as support for the “crystal ball investing” mindset.

“Intuition is nothing more than the ability of the human brain to process vast quantities of information quickly; it also draws on previous experience to contextualize information. As with any method of prognosis, it is also not fool proof – nor does it claim to be. But as luck seems to improve with practice, so intuition might improve with experience,” says Macleod-Henderson, who cautions that the very notion of investing being predicated on a “trend” is anathema.

“Momentum of itself is not a successful investment strategy. Time and again, through all manner of investment cycles and over the fullness of a long-term investment horizon, the practice of buying undervalued assets and selling them when they are priced well above their fair value, prevails. It is the discipline of, often, acquiring that which might appear out of favour and selling that which is favoured.”

“If anything, a successful long-term investment philosophy eschews trends. Without doubt, investing successfully takes good judgement – the better your judgement, the more successful you will be as an investor. The fact that good judgement is in short supply amongst market participants leads to market inefficiency and volatility. This increases opportunities for those with longer time horizons and better judgement of the probabilities of a range of future outcomes.”

Macleod-Henderson concludes that “crystal ball investing” is neither an art nor a science. “In investing, there is no scope for the triumph of hope over experience. Rather, investing involves a rational and pragmatic assessment of the facts, combined with a sensible and regular re-assessment of those facts and the probability-weighted assumptions underpinning future scenarios. Alpha is not earned by optimistic guesswork, but by relentless analysis and risk management.”



Life in a month by Chris Tisdall with thanks to Allan Gray

Savings-jars-Original-300x200July has been designated ‘Savings Month’ by the Savings Institute of South Africa. It is a good time to reflect on the choice we make between saving and spending; a choice that pits our future needs against what we need and want now. Many of us struggle with this trade-off because it’s difficult to have a tangible concept of the future and to understand how little time we actually have to save money over a lifetime. Despite procrastinating we think we will have enough time to save the money we need for retirement.

South Africans, especially, have a tendency to delay the decision to save until it is too late, as shown by our dismal household gross savings rate of 0.2% of GDP – a fraction of the savings rate in many other countries of similar means, particularly those in Asia.

Why do we fail to account for the future?
Most of us underestimate the time it will take to complete a future task. This planning fallacy is at work when that little weekend kitchen repair job turns into a month-long saga and it gets worse with more complex tasks. In terms of your financial life few tasks are as complex, or challenging, as saving for retirement.

Many of us will set aside our 40s and 50s as time enough to save for retirement, while living the good life in our 20s and 30s, when the sober truth is that there is no time to waste. We convince ourselves that we will save more of our income later in life to catch up on the years of not saving, but that invites a similar cognitive trap: excessive optimism about the future. It also fails to take into account that time allows our money to grow exponentially thanks to the power of compounding.

A practical thought experiment to illustrate just how little time we have to save is to think about the long term as a very short period of time.

Consider your lifetime as 31 days
Imagine for a moment that your life began on 1 July and ended on the 31st – say, 80 years of a life shrunk down to 31 days. What would your savings picture look like then?

In this scenario, you will typically start your first job promptly at 4:30pm on 10 July at the age of 25, after growing up and completing your education. If you are smart you will start saving as soon as your first pay cheque slides into your bank account 47 minutes later: a month in real-time.

But most of us choose to dally. Instead of starting to save at 25 – we wait until 30 (12 July at 3pm), 40 (16 July at midday) or even 50 (20 July at 9am).

It may seem like there is still plenty of time in this hypothetical lifetime – but remember that although we think of 65 as our normal retirement age, employment often ends at 60. So when 24 July rolls around and the steady stream of employment income dries up, the situation begins to look dire; much like when your salary runs out well before the next payday.

The 13 days of work from the 10th to the 24th make up your entire working life and the only opportunity you will have to accumulate enough savings to last you the rest of your life (i.e. a month in this hypothetical scenario). You only have 13 days to pay for the last seven days (retirement) if you start saving at 25. If you start at 30, you have only have 11 days to save for retirement. At 40 – seven days to save. At 50 – only three days!

The present is a gift
The point of this exercise is to highlight the urgency of the need to save and not delay. Time is an irreplaceable asset that can never be recovered and it allows your money to grow. Starting early and saving consistently in a long-term investment, like a balanced unit trust, will help a lot to create the wealth you need to sustain your lifestyle in retirement.

So the next time you are faced with the decision between waiting or taking action now, think of your lifetime as just one month and remember: the clock is always ticking.

Economics and markets

  • The rand has finally been caught up in the Greek financial crisis. Expect weakness today and elevated volatility through the week.
  • USD/ZAR should open around 12.30, with a potential 20 cents range on the day. EUR/ZAR is more stable and opens at 13.55. The risk on both pairs is to the upside.
  • Event risk is large, concentrated on Thursday and over the weekend.

Greece is one step away from exiting the eurozone. The government’s decision to hold a referendum on accepting creditors’ bailout conditions has seen local banks being cut off from emergency ECB assistance, the imposition of capital controls and the closure of banks. If voters reject the terms on 5 June then a Grexit is almost certain. Even if they do not, the crisis is in a much more dangerous phase.

But how much should we care? Back in 2011, when the Greece problems first emerged, the current news would have sent global markets into panic. But “headline fatigue” appears entrenched and the markets have seemingly got used to the idea that Greece may leave the eurozone.

The initial market reaction to the weekend news was sharply negative. The impact on the rand is coming indirectly through EUR/USD. Losses down to 1.0950 saw USD/ZAR spike to 12.41. A return to 1.10 sees USD/ZAR back at 12.30. Expect further swings in both crosses.

The direct impact on the rand is far more limited. Consider that EUR/ZAR has not reacted this morning, and neither did it on Friday as tensions mounted. This may be dangerously complacent — do not rule out independent rand losses as global risk aversions mounts.

On a multi-week basis, there are two emerging risks. First, that the Greek crisis reignites euro weakness, with EUR/USD sliding towards parity. Second, that Fed hikes get delayed as European stresses mount.

Greece dominated the headlines but there is a lot else that we should be paying attention to. Most importantly, China cut interest rates again over the weekend — the fourth move since November — and eased reserve requirements on certain banks. The move presumably is primarily intended to help the economy but may also be an attempt to stabilise the stock market which has fallen 20% in two weeks.

The data calendar is packed, with data risks evident Tuesday through Thursday. The highlight is the US non-farm payroll report on Thursday afternoon, although there is also a lot of eurozone and local data that could impact as well.

local rates (ZAR)

Once again, Friday’s news headlines were that Greece is on the brink of a default and it seems that that is still the case this morning. With the announcement that capital controls are to be implemented and a referendum is to take place, USD/ZAR has taken a big hit as it’s now close to 12.30.

All the local data this week will be overwhelmed by the news out of Greece as well as the US non-farm payrolls data on Thursday.

key points

It’s been a tumultuous and possibly a historically significant weekend as Greece walked out of talks with EZ creditors and announced a referendum for the 5th July. The implications have been enormous in a very short space of time.It is almost an absolute certainty that Greece will miss its €1.9bn payment on Tuesday to the IMF which could in time precipitate the biggest default in history. Greek banks have been shuttered in response and are only due to reopen on the 7th July when the banks will only allow an amount of €60 per day per person to be withdrawn.

  • This is a massive blow to both Greece and the EZ in that they have not been able to resolve the crisis in a constructive way. EZ law may need to be rewritten in the event that the referendum yields a No vote (i.e. no to signing up to creditors terms and the ECB is no longer able to assist Greek banks with liquidity.In that event, Greece will need to launch its own currency that their own central bank will be able to manage and in so doing may force themselves out of the EZ. This would be the worst case scenario under which massive losses would be crystalised to EZ creditors as a plunging Greek currency (possibly the drachma simply makes Greece’s debts impossible to pay back.
  • Just as they did on Friday, investors are likely to prefer the safety of a long USD position and will likely continue looking for opportunities to buy the USD dips. Although the USD-ZAR has retreated off its highs, one should not be complacent in believing that the adjustment is complete. We are in unchartered territory and there are many different possible scenarios that could play out with Greece, some worse than others that will likely determine direction on the EUR and overall levels of risk aversion. That said, trading off a core long USD base must still be favoured for now and buying dips below 12.3000 is the more favoured stance for the trading session ahead.
  • Range for the day 12.20-12.45

Want to retire early? by Warren Ingram RMB

I have had the privilege of working with many retirees over the last 19 years. A large number of whom retired successfully and far younger than age 65. It has been interesting to note how many of the people who retired early have some common characteristics. If you want to be financially free as early as possible, it might help you to know what they had in common.

They are worried about dying young

Most of the people I have met who have retired early had an overriding fear that they would retire at a normal age and then pass away within a year or two. It is interesting to note that most of them had an experience where their fathers or other family members had this bad luck and it created a lasting impression on them. In many instances this fear was the main driving force for many of their other decisions around money. If you want to achieve financial freedom early, you need to find a source of motivation that will enable you to prioritise this goal so that you can avoid many of the wealth traps that prevent others from achieving their financial goals.

Get and stay married

It is remarkable how many successfully retired people have only been married once and have had a generally happy marriage. Almost all of them work on their financial goals together. When they attend financial planning meetings, they do so together and they have general agreement on their financial goals. Money is rarely a source of conflict in these relationships. This is enormously helpful and you always have a willing “training partner” to keep you motivated to reach your financial goals.

They are happy with what they have

Financial freedom is different for everybody, some people will be happy to live on a monthly amount of R30 000 while others cannot get by with anything less than R200 000 per month. You need to find a way to be happy with what you have and not constantly want more. People who earn a lot of money but are never happy with what they have, are NOT going to achieve financial freedom… ever. This is one of the keys to financial success, it is easier to save and build up your investments if you are not constantly paying off your credit card because you HAD to go on that wonderful skiing holiday like your friends did last winter.

Their parents showed the way

Successful retirees did not necessarily have wealthy families and nor were they particularly financially sophisticated but very often their parents were prudent with money. They instilled an ethic in their children that saving was important. Many of these successful retirees had to work for money as children. Sometimes it was part-time jobs during holidays or working around the house for pocket money. Very few of them were simply given everything they wanted. This is a wonderful lesson for parents today.

Money was not a source of trouble

Finally, they tend to live a stable and predictable financial life. Almost all of them planned their major expenses carefully and they rarely use debt. Vehicles are purchased with cash, credit cards are cleared monthly and they have money saved for emergencies. They tend to budget consistently and save every month. When asked about how they dealt with financial shocks, I was surprised to learn that they had less financial emergencies than most other people. On the surface it might seem like they were lucky but I realised that they tend to plan for rainy days. If they had a financial setback they worked really hard to re-establish their emergency funds quickly so that they could deal with any new problems.

Financial freedom or early retirement takes a lot of sacrifice and hard work –  but it is possible for anybody.


Are we having the most relevant discussions with our clients when it comes to saving towards retirement? There is no doubt that any discussion regarding this topic will be seen as helpful advice, but there are some discussions which are more relevant than others.

This is especially true in an age where longevity is having a significant impact on retirement saving. When your client has no idea what their life expectancy is, Rowan Burger, Executive: Large Corporate Segment at Momentum, feels that the best place to start wholesome retirement planning is at the beginning.

A popular misconception

When a person starts their working life, they are encouraged to allocate 15% of their salary towards retirement planning. This is a safe number; however, there is a grey area as to which salary this 15% applies to.

A person typically receives a pensionable salary, which is regarded as their basic salary and makes up 80% of a person’s salary. Added to this pensionable salary are additional benefits such as traveling allowances, commissions in some cases and other benefits. This makes up the further 20% of the salary.

“There is a misconception that a person needs to allocate 15% of their pensionable salary towards retirement. The difference between allocating 15% of 80% of your salary and 15% of 100% of your salary can be significant,” says Burger.

The longevity challenge

We all know that longevity is becoming a challenge for people who are planning for retirement, but how can we quantify this?

Burger points out that according to the US Bureau of Labour Statistics, the common retirement age in the 1950s was 70 and life expectancy in retirement was seven years. “In 2000, the retirement age reduced to 63 but life expectancy has increased to 82, nearly tripling the period a person would spend in retirement.

For 2015 both retirement age and longevity have moved out two years. We therefore have a system conceptually designed to cater for a handful of years that now requires a significant amount of funding from individuals and the state over a long period of time,” says Burger.

This poses a significant challenge, and employers have passed these risks to their employees in defined contribution funds. Members with inadequate savings purchase a living annuity hoping to die before their money runs out. Burger points out that at present there are few controls governing these products.

“National Treasury have proposed that clients should be invested in a prudent manner and levels at which drawings take place should reflect this. As such, clients should at least aim to cater for a lifetime to remove the reality that the South African population currently faces where only 6% of the population can retire comfortably,” says Burger. Most client plans consider life to 80 or 85, forgetting that you really don’t want to plan to be average for this risk.

Shifting the mindset

The only way to overcome this challenge is to change our mindset on retirement.

Burger points out that in the last century, life expectancy has been increasing by three months for each year of birth. This means that at this rate, a …

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How did Eskom land up in this week’s mess? with thanks to Moneyweb Today

LoadsheddingJust before the Easter long weekend, Eskom ramped up the amount of generation capacity taken offline for planned maintenance by 40%. This was a substantial move (and a very belated positive one). In practical terms, planned maintenance had been hovering around the 4000MW-4500MW mark and this was increased to over 6000MW on the Thursday before Easter.

This was absolutely the right thing to do, given that electricity demand would drop significantly over the long weekend as large industrial users shut down. (Bear in mind that there’s still the 900MW from Koeberg offline till the end of May, meaning that even with an increase to 6000MW, the real maintenance happening on Eskom’s legacy coal fleet is closer to 5000MW – or at 5500MW, closer to 4500MW.)

More planned maintenance, more load shedding

The problem, however, is that since Easter, Eskom has battled to get planned maintenance back down to what had become ‘normal’ levels (in the 4000MW range). Planned maintenance was at 5459MW on last Thursday (April 9), at 5364MW this Monday (April 13) and 5471MW as at today. Eskom does not have the headroom to do this amount of maintenance, without load shedding or without unplanned outages dropping significantly (and remaining )

Now this could mean a number of things. One – Eskom has realised that it hasn’t been doing enough maintenance during summer, and that maintenance would have to be kept at these elevated levels for the foreseeable future. Two – Eskom hasn’t been able to restore generation capacity that has been undergoing planned maintenance as quickly as it had planned. In other words, whatever it has been fixing has taken longer to fix than it originally thought. Three – Eskom misread the reliability and performance of the rest of its fleet and took the chance to ramp up maintenance.

In all honesty, the most likely answer is a combination of all three.

The quandary for Eskom all along is that it has to do proper maintenance when it takes any plant out of commission. There are (more than) some hints that it has continued to rush maintenance and force plant back online to make up for a shortfall due to unplanned outages.

Unusually high capacity forecasts

Then there’s the curious situation over Easter, where Eskom originally forecast it would have over 34000MW of capacity on April 2, 3, 4 and 5 – this despite the elevated levels of planned maintenance. Days later, it was revised lower these to anywhere from 31500MW to 33500MW. In the original forecast, it expected to have 34943MW and 34884MW available on the Thursday and Friday! (We don’t know what capacity it actually had, because Eskom didn’t publish a status bulletin on Monday (given that it was a public holiday) – but this is entirely academic given the far lower than average demand.)

But the last (and only other) time that Eskom forecast it would have anything close to 35000MW of capacity was on February 21 and 22. The original forecast was revised lower to ±27500MW for that weekend, and demand was forced lower (it did not use open cycle gas turbines). It’s difficult to figure out what happened in both these cases. How did Eskom arrive at the over-generous supply forecasts in the first place? Based on that, did Eskom look at these and decide to use the window to do additional planned maintenance?

Predicting this week’s near-constant load shedding

What happened this week, where load shedding was in place from 6am on Tuesday, Wednesday and Thursday (and from 4pm on Monday and 10am on Sunday), was downright predictable. Planned maintenance is still at stubbornly high levels. (This is good news, especially for winter). The fact that Eskom was able to make the call and announce load shedding from 6am on the night before each of these days is telling. But, if it was forced into Stage 2 from as early as 6am, the supply situation was bad. (Thankfully, it ran Stage 1 from 6am on Thursday, meaning it had found another 1000MW (or some diesel).)

However, the situation on Wednesday was downright bizarre. In the morning, it had managed to restore 1200MW of capacity (2 x 600MW) from the 9500MW unplanned outages. It confirmed then that planned maintenance stood at around 5000MW. Yet, by the afternoon it was forced into Stage 3 load shedding (where it removes up to 4000MW of demand).

Do the maths…. There was 9500MW of unplanned outages + 5000MW of planned maintenance as of Wednesday morning. Stage 2 load shedding meant a foreseeable shortfall (at peak) of 2000MW.

But, 1200MW of the unplanned outages were restored during the course of the morning. This left a new theoretical shortfall of 800MW (call it 1000MW), but load shedding wasn’t downgraded to Stage 1. Instead, load shedding was escalated to Stage 3 by 4pm.

This meant Eskom lost the equivalent of all of the capacity it had managed to restore (1200MW) plus another thousand megawatts (or two).

In its status bulletin published yesterday, Eskom says it there was peak demand (“reduced down”) of 27451MW with available capacity of 29301MW on Wednesday.

Something, somewhere does not quite add up.

So how did capacity disappear on Wednesday?

Business Day says it was able to “build a picture of what transpired” and that Eskom reached the “tail-end of… [the] diesel supplies” for its open cycle gas turbines. Compounding this was the depletion of “pumped storage capacity” earlier in the week. This is (somewhat) good news. It means that Eskom didn’t lose any more capacity from its coal fleet.

In fact, Thursday’s system status bulletin further corroborates this, except its not evident Eskom even had the luxury of the “tail-end of diesel supplies”. In the bulletin, Eskom says available capacity on Monday, Tuesday and Wednesday this week was met “considering primary energy constraints”. This is code for ‘we did not run the open cycle gas turbines’. Curiously, it now references a demand picture “excluding load shedding” which is not really a demand picture at all – more on this next week.

Referring to the investigation underway while four executives are suspended, Public Enterprises Minister Lynne Brown said in her press briefing on Wednesday that she is ”digging deep into Eskom for three months to find factual information about what is happening at Eskom”.

“I want a deep dive into Eskom. Don’t you? Don’t you want to know what’s inside Eskom. It’s one of the third largest utilities of its kind in the world. That’s why I am only giving them three months. At least I want to know its liquidity. I want to know how the maintenance is going.”

So the minister and department doesn’t know “how the maintenance is going”?! And the war room? Do they know? Does Eskom itself know? This is the hauntingly worrying part of the minister’s pronouncements.

Brown also said on Wednesday: “I think we need to stick to maintenance – even in winter.”

Hallelujah! Back in February, I called for Eskom to load shed daily until May. This was poo-pooed (indirectly, of course). Seems the reality of the situation is finally obvious to government.

I’ll repeat what I said on Monday: “Get the ramp up of Medupi Unit 6 right, and get some of that planned maintenance done (properly!), and we’ll be alright for winter. Don’t, and watch the unplanned outages and general unpredictability rocket upwards because Eskom simply hasn’t had the headroom to get plant fixed. The vicious circle it’s been battling against all summer will continue.”

At this point, the sane path is to continue doing maintenance during winter. Eskom did so last year. Let’s see which route is chosen…

UNCERTAINTIES – Opinion piece by Gerhard Papenfus – CE of NEASA

More than a century after his death, Cecil John Rhodes finds ‘himself’ in a crate, with a plastic bag wrapped around his face. He is, of course, not at all bothered by this.

This whole saga reminds me of the fact that I may also still have a few bones to pick with Mr Rhodes for what he, directly or indirectly, did to my ancestors a hundred-and-fourteen years ago. I chose not to spend any energy on this though; it will not change anything. I am, however, concerned about the underlying attitudes behind the demand to take down his statue.

Destroying that which was established by those before you is an age old type of behaviour by ‘conquerors’; first drive out the enemy, then destroy what has been established – good or bad. This behaviour is nothing but a misguided form of celebration and revenge. The Mongols, the Greeks, the Romans – they all did this. The Taliban in Afghanistan and ISIS in Iraq and Syria are no different. Now this is also taking place in South Africa, however, surreptitiously and under other pretences.

In certain cases these destructive conquerors eventually succeed in becoming prospering nations; unfortunately, most do not manage to do that, in which case the societies involved remain ruined forever and their countries become areas of desolation. Therefore, before you destroy, make sure that you have the ability to rebuild.

So, after Cecil John Rhodes’ statue has been removed, followed by the statues of perhaps King George V at the University of Kwazulu-Natal, Queen Victoria at Parliament, and then Paul Kruger in Church Square in Pretoria, and more; and perhaps after convincing Mugabe to remove David Livingstone’s statue from Victoria Falls and to exhume Rhodes’ bones from his grave on Malindidzimu (the hill where he would stand in wonder of the landscape in front of him and made reference to the “… peacefulness of it all; the chaotic grandeur of it; it creates a feeling of awe and brings home to one how very small we are”), and after every street and school has been renamed and the history books have been rewritten – then what?

Why only remove Rhodes’ statue? Why still make use of the buildings on campus and the scholarships? Why accept anything from Rhodes? Why not make the sacrifices where it matters, where it is felt personally? Why only remove the symbols?

After the victor’s euphoria of proving a point and settling a score has worn off, what happens then? Will that be enough? Will the focus then shift to reconciliation, nation building, education and overall service delivery? Will we then create jobs, address poverty, grow the economy? I don’t think so. The spirit of revenge does not carry in itself the ability to build; only to destroy.

A vengeful spirit has an endless appetite for creating new issues; it won’t be satisfied with only the removal of a statue. Unless there is a supernatural change of heart, a bad attitude (originating from self-pity, bitterness, revenge, not taking personal responsibility, blaming others, living a life in the rear-view mirror) can never be satisfied; it will always end in disaster.

History is unpredictable; it also has a strange way of repeating itself. Empires and kingdoms come and go; even civilisations cease to exist. Statues are erected and then, sooner or later, demolished. Can it be that, one day, the statue of the late President Nelson Mandela and that of Walter and Albertina Sisulu will be taken down for their policies of non-racialism and conciliation?  Street names will be changed again; and again; and again. This is all so pointless.

No one is perfect. There is so much bad in the best of us; there is so much good in the worst of us. Cecil John Rhodes was just another imperfect human being. His sin, I assume, was that he was an ‘imperialist, an oppressor and a racist’, bringing with it all kinds of evils. But was ‘racist’ then worse than ‘racist’ now, or being a ‘nationalist’ – of the pre or the post ’94 type? Why is the current pilfering of our resources and taxes different from Rhodes’ imperialism? It was inspired by greed then, it is inspired by greed now; the way it plays out can never be pretty.

We bring down his statue for his ‘wrongs’, whilst at the same time enjoying that which he got ‘right’ and tolerate exactly the same evils in our society. We are blind to this, pathetically exposed in our hopelessness, our inability to carve out a new future. So let’s blame Rhodes; that will make us feel better, if only for a while. Then we will have to find new culprits; new excuses. This is all so unproductive and self-defeating.

Why do we refuse to learn from our past? The more we try to deny, twist and hide the past, the more we repeat it. We make the mistake by thinking that humans with different skin colours are inclined to make mistakes of a different kind. In the meantime, we are exactly the same. Given the opportunity, left to our own vices, we make ourselves guilty of the same sins. So, if we do not learn from our past (from people like Rhodes), we will repeat those evils. Yes, we are making exactly the same mistakes as the ones we try to demonise. Humans are humans; skin colour does not determine the content of the heart.

Let’s be frank; our nation faces severe challenges. Those who choose the path of destruction currently drive the agenda, or at least so it appears on the surface. Fortunately, despite all of this, there are those who are constructively working towards change, and there are the millions of South Africans who face their responsibilities every day; focussing on what is right: serving those around them, raising their children, caring for their families (and extended families), often with extremely limited means, building a future. I see them walking, often running, to work, some fortunate to drive to work – whilst it is still pitch dark. This happens throughout South Africa – every day!

These are the true heroes of South Africa. Statues will never be built in their honour, streets will not be named after them. Strangely enough, they are also not demanding the demolishing of the existing ones. It is when you walk amongst these South Africans, seeing how they are cheerfully going about their business, that you are inspired.

Out of the current negativity a new vision can, of course, be born; a vision which might inspire all South Africans, to build a nation on lasting values. This is the challenge we are facing.

What matters about money-with thanks to Money Marketing

 We need to watch our money language
The most common narrative around money today is that there is not enough. Around us we hear about money struggles, how we are not that good at managing our money. You might admit this is true – but consider the effect of constant negative messages. Eventually, it wears all but the exceptionally persistent down.

I’m not always a big sugarcoat person – we need to face the facts that money management is a skill most of us need help with and can do a lot better. But it shouldn’t be a drag. We need to inject some positive messages and stories into our money talk and we need to make managing money fun.

Advice really counts
Hands down. No contest. But it must involve a lot of honesty and more sharing than we are used to when it comes to the money discussions. There are many studies that show the difference advice makes – use it. But use it well and know who is giving the advice and why they are giving that particular advice.

Accountability is everyone’s responsibility
As important as it is to get advice you cannot completely abdicate responsibility. We have a very sophisticated and smart financial services sector – it is a South African asset. When an ‘outsider’ meets it  – it can confuse. You don’t need to become an expert in financial services – but you do need to ask questions, know where your money is and who is managing it and why they should be trusted to manage your money.

Be very wary of high returns, returns that are unmatched, opportunities that are never to be repeated, opportunities that are urgent.

“We must learn to think critically and become more sceptical,” writes James Montier in The Little Book of Behavioural Investing.

Rethink the concept of time and money
Many of us will live for a very long time. We have acquired so much more time – have we adapted our lives to this? Have we made things more urgent and immediate and requiring instant attention? Is this out of sync with what else has happened?

Money doesn’t observe this instant gratification at all. The more time you give it, the better it behaves. Patience is an investor weapon.

Peter Dempsey, deputy CEO of the Association for Savings and Investment South Africa (ASISA) says that we need to distinguish between wants and needs. “Saving for a car or a holiday, for example, is not saving. It is delayed consumption,” says Dempsey.

Old Mutual Investment Group’s MacroSolutions has just completed their 2015 edition of Long-term Perspectives. They note: “On average, a day trader loses money 45% of the time, while holding equities for a year reduces the loss rate to 21%. As soon as you extend your holding period for more than three years, you don’t lose money.”

Inflation is a money enemy
Inflation might be ‘low’ now – and an annual figure of 5 – 6% looks fairly tame. But this is a year on year figure. It is easy and tempting to think about inflation of say 5% in a linear way. R100 today will be R105 next, year, R110 the next. But an annual 5% inflation only recognizes R100 once – the next year it recognizes the R105 and inflates that. It’s almost like compounding in reverse – if the annual inflation figure is 5%, R100 today would inflate to over R150 in nine years.  If your fresh salmon costs R100 today – in nine years time you need R150 for your choice protein.

Inflation erodes the value of money and over time it is exceptionally destructive.

Your ability to earn income could be your most valuable asset
Deciding on your most important asset is an individual thing – whatever you decide – it needs protection and nurturing and care.

Expectations really matter
Not only from a regulation point of view where they are crucial – but also our own personal money expectations. Expectations have to be shared.

Reading matters
Reading widely – a variety of authors, journalists, economists, market commentators, books, journals, long articles, short articles. Money is a big subject – we need a variety of opinions on it to change our thinking, think about our views, and formulate good questions for those who manage money. And enable us to recognise our money blind spots. Reading is learning.

There is only one bad money question
The one that is not asked.

A good quote to end
“Many of the options we face in life are ‘mixed’: there is a risk of loss and an opportunity for gain, and we must decide whether to accept the gamble or reject it.” Daniel Kahneman, Thinking, Fast and Slow.