Finweek UK 20 February 2014

Finweek UK 20 February 2014

finweek MONEY POWER. M

SA: R23.50 (incl VAT)

Other countries: R20.61 (excl VAT)

0 8 9 3 7

The accolades we’ve won over the years are proof that we do.

www.stanlib.com

STANLIB is an Authorised Financial

Success follows passion.

Some choose not to

follow their passion.

finweekMONEY POWER.M

P10 LIFE HACKS FOR

4 Feedback From our readers

6 Rewind & Fast Forward News review and preview

8 Context Corruption in South Africa

10 Cover Life hacks for any money personality

18 Insight Entrepreneur turned activist

22 Right of Reply A view from SA’s accounting body

24 The Gab Why I banned brainstorming

30 Investment Industrials present risk, resources & banks

32 opportunity; Windows of opportunity for miners

34 Killer Trade: Exxaro Resources selling momentum is

36 slowing; Mining’s evil triplets

37 Invest DIY Understanding the retailer sector

38 Pro Pick Simon Property Group

39 House View Punts

40 Traders Analysts giving you the low-down

41 Simon Says Adapt IT, BSI Steel, Satrix

42 Small Cap Steady growth for OneLogix

43 Fund Focus Stanlib Bond Fund

44 Entrepreneur Six ways to raise our kids to be entrepreneurs

48 Start-ups: Understanding Kiril Dobrev

50 Money Born rich; Lessons from death

54 Goodwill in valuation

56 Technology Road Test: Sony PS4; Al to improve Africa

58 Life How we spoil ourselves (and how we afford it)

60 Directors & Dividends Dealings and payouts

62 In Brief Crossword; Sudoku; Tweets

Feedback

PUBLISHED BY MEDIA24 WEEKLY MAGAZINES PRINTED BY PAARL MEDIA AND DISTRIBUTED BY ON THE DOT HEAD OFFICE 40 HEERENGRACHT, CAPE TOWN,

PHONE 021-406-4552 GAUTENG OFFICE

5 PROTEA PLACE, PROTEA PARK, SANDOWN, 2196 OR PO BOX 785266, SANDTON, 2146 TEL 011-217-3053

WEBSITE www.finweek.com OVERSEAS SUBSCRIBERS +27-21-405-1905/7

FINWEEK SUBSCRIBES TO THE SOUTH AFRICAN PRESS CODE WHICH COMMITS US TO JOURNALISM THAT IS TRUE, ACCURATE, FAIR AND BALANCED IF YOU THINK WE ARE NOT COMPLYING WITH THE CODE, CONTACT THE PRESS OMBUDSMAN AT 011-484-3612 OR ombudsman@presscouncil.org.za © FINWEEK 2011 ALL RIGHTS RESERVED TO INQUIRE ABOUT PERMISSION TO REPRODUCE MATERIAL CALL OUR ARCHIVE AT 021-406-3232.

SUBSCRIBERS

0861 000 571 subs@finweek.co.za

SHOPS 0861-888-989 assistance@onthedot.co.za INQUIRIES

Share your thoughts with us on Twitter (@Finweek)

or find us on Facebook (facebook.com/Finweek)

EDITORIAL EDITOR MARC ASHTON DEPUTY EDITOR TANDISIZWE MAHLUTSHANA MANAGING

EDITOR NICOLE BOUCKAERT JOURNALISTS AND CONTRIBUTORS SIMON BROWN, SIMON

DINGLE, GLENDA WILLIAMS, JESSICA HUBBARD, DAVID MCKAY, BRUCE WHITFIELD, KRISTIA

VAN HEERDEN, GLENDA WILLIAMS, DANIELLE GARRETT, BLAIR BURMEISTER, WARREN DICK

SUB-EDITORS WILLEM KEMPEN, STEFANIE MULLER, JUSTINE OLIVIER OFFICE MANAGER

THATO MAROLEN LAYOUT ARTISTS BEKU MBOTOLI, TSHEBETSO DITABO, ZANDRI VAN ZYL

GENERAL MANAGER CHARLENE BEUKES PUBLISHER LEE-ANNE COOSNER PROJECT MANAGER

DEIRDRE MCDONALD CEO: MEDIA24 MAGAZINES JOHN RELIHAN CFO: MEDIA24 MAGAZINES

RAJ LALBAHADUR ADVERTISING SALES AND SOLUTIONS SALES DIRECTOR CRAIG NICHOLSON

011-322-0731 BUSINESS MANAGER (KZN) EUGENE MARAIS 031-566-4178 BUSINESS MANAGER

(DIGITAL) TERANCE WINSON 021-443-9418 NATIONAL SALES MANAGER WEATHERTON NYAMBEU

011-217-3185 CIRCULATION SALES & SOLUTIONS CIRCULATION MANAGER ARMAND KASSELMAN

021-443-9975 SUBSCRIBER ENQUIRIES ELMARIE EYGELAAR 021-443-9828

IN COMPANIES,

UNITY IS VITAL

Good to read Finance for non-financial sorts

and to agree with some, but not all of what

Paul Maughan writes

However, he is correct in detecting my

irritation, irritation that he still peddles the

accountant versus marketers (and

every-one else) argument As a lecturer I would

suggest he should know better This is an

argument that sadly still exists in some

companies, and is debilitating to their

per-formance Not an argument that exists in

top global FMCG (fast-moving consumer

goods) companies Writing as long ago as

1997 in the publication Brand Valuation,

published in London by

Interbrand/Pre-mier Books, I refer to the issue and to the

harm internal strife does to external

per-formance of a company

Fast-forward to last month and the

chief marketing officer (CMO) of Deloitte

(where accountants are grown) was telling

a Corporate Citizenship Conference at the

Harvard Club in New York that 85% of all

corporate value creation comes from

intan-gibles That is worth repeating: yes, 85%

But your writer would be quick to

point out this would not apply in the

min-ing sector!

Just as in any rugby side you have the

specialist skills of a hooker, prop (both loose

and tight head) and that is only three of the fifteen players, so in business you require an array of skills But the bottom line is that you all play for the same team, and teams that play as one are the most successful

have a question related to costs: if I were

to go the route of using a broker instead of buying an ETF through one of the pro-viders, I would obviously incur brokerage

as a one-off cost Subsequently, I would only incur annual charges related to the TER but not the annual platform fee This would amount to a saving of 0.65% per an-num if I use the Satrix platform Am I cor-rect in this?

I guess the only downside to going this route is that if you buy and sell regularly, brokerage costs would be much higher than the 0.1% transaction charge that Sat-rix would charge

blairb@finweek.co.za Lisa Illingworth lisa@lkdesines.co.za Gavin Symanowitz gavin@blockbusterinnovation.com David Mckay

david@miningmx.com Moxima Gama moxima@themoneyhub.co.za Simon Brown

simon@justonelap.com Warren Dick

warrendick7@gmail.com Colette Symanowitz colette@mbaconnect.net Gregg Sneddon gregg@thefinancialcoach.co.za Glenda Williams

glendaw@finweek.co.za Kristia van Heerden kristiav@finweek.co.za Simon Dingle simond@finweek.co.za

For more information, visit

finweek.com

Contact Finweek, P O Box 785266, Sandton 2146, tel (011) 217-3000 or feedback@finweek.co.za

Franklin Resources, Inc is a global investment management organization operating as Franklin Templeton Investments This material does not constitute investment advice or an invitation to apply for securities Investors should seek professional fi nancial advice and obtain a full explanation of any proposed investment before making a decision to invest Investments involve risks The values of investments can go down as well as up, and investors may not get back the full amount invested.

GLOBAL PERSPECTIVE.

LOCAL EXPERTISE.

There’s a world of investment opportunity out there,

if you know where to look With over 600 investment

professionals and offices in more than 30 countries,

Franklin Templeton offers investors a unique perspective

on the increasingly important and complex world of

global investing today.

To put our 65 years of global investment experience to

work for you, visit franklintempleton.co.za or contact

your fi nancial advisor.

INVESTMENT

OPPORTUNITiES

SPAN THE GLOBE

Recently Janet Yellen was sworn

in as the new chairperson of the

US Federal Reserve With the

global economy still fragile,

there are some interesting parallels to be

drawn between the role that Yellen will

ful-fil and the pressures on South Africa’s own

Reserve Bank Governor Gill Marcus

Could they be a force to shape global

finance over the next few years if they

worked closer together?

Vunani Securities economist Ilke Smit

describes the waters Marcus is

navigat-ing: “South Africa is an economy currently

struggling with below-potential economic

growth with inflation expected to breach

the upper limit of the target band (3%-6%)

soon.”

Isaac Matshego, an economist at

Ned-bank, says that one of Yellen’s major

chal-lenges, which is different from Marcus’s, is

ending the massive monetary stimulus that

has been implemented in the US over

the past four years

The US GDP growth rose to

just over 4% in the third quarter of

2013 as both consumer spending

and business investment

strength-ened Yellen therefore has to

normalise US interest rates

as the US recovery gains

momentum and

unem-ployment continues to

drop, says Matshego

A not her d i f

fer-ence bet ween t he

two countries is the

savings rate The US

enjoys a positive

sav-INSIGHT

Rewind

lights that there is another economic factor the two could work together on and learn from one another

Says Smit: “A macro-economic drum especially rife in South Africa, which

conun-is starting to plague the US economy in ever greater terms, is inequality in income distribution Unequal income distribution does not affect monetary policy in the short term, but does lower the potential level of economic growth in the long term, which could be something rising the complexity of

US monetary policy making in due course.”Flow of advice is therefore another poten-tial benefit, says Lings, because no central bank has all the answers “That interaction between the Sarb and the US Fed can be extremely helpful for SA as it can help as well when it comes to policy formulation and studying other models.”

SA’s current Monetary Policy tee (MPC) framework was adopted from the Bank of England MPC, and was strength-ened by former member, Ian Plenderleith Plenderleith was appointed deputy governor

Commit-of the Sarb in 2003 under former Governor Tito Mboweni and worked with Marcus and Xolile Guma as joint deputy governors Despite being different, economic growth and job creation are top priorities for both central banks The Fed pursues a dual mandate of price stability and job creation while the Sarb only pursues one mandate, price stability Lings, however, says that Marcus’s policy suggests that she assumes

a dual mandate and takes into account the growth rate and job creation

Tandisizwe Mahlutshana

tandisizwem@finweek.co.za

A Gill and Janet affair for SA

ings rate, whereas SA consumers are traditionally “dis-savers”

Says Smit: “When interest rates rise consumers do not have a buffer in the form of savings to assist consumption and drive economic growth, and in an environment of positive savings, stimu-latory monetary policy has not driven current account deficits wider and encouraged dis-saving – where in SA, these dynamics have adversely impacted the currency, which is currently the main risk to the inflation outlook.”

Both Yellen and Marcus face different challenges as their macro-economic con-ditions vary vastly But does that mean that SA should not pursue a relationship with the US Fed or vice versa?

Kevin Lings, chief economist at lib, says that a close working relationship with the US Fed could be valuable to SA

Stan-in a number of ways One is the tial for flow of research and infor-mation between the two central banks

poten-The economic research unit at the US Fed is made up of three teams, the Division of Research and Statistics, the Divi-

s i o n o f M o n e t a r y Affairs, and the Divi-sion of International Finance, together employing approx-imately 450 staff members, about half of whom are PhD economists

Smit, too,

ROBOTIC, DRIVERLESS CARS might

sound like inventions from the distant

future (or a science-fiction film) but

they could be arriving sooner than you

think Vehicles capable of driving

them-selves already exist (believe it or not)

and could be driving you to your

des-tination sometime in the next 10 years

PIONEERS

Google has been working on

self-driv-ing technology since 2010, includself-driv-ing

testing a fleet of self-driving cars along

California roadways The project is

cur-rently being led by Google engineer

Sebastian Thrun, director of the

Stan-ford Artificial Intelligence Laboratory

and co-inventor of Google Street View

Nissan has also joined Google in the

race to make driverless cars a reality

and announced in July last year that it

will be ready with multiple,

commercial-ly-viable Autonomous Drive vehicles by

2020

Nissan’s team of engineers has

been carrying out intensive research

on the technology for years, alongside

teams from the world’s top universities,

i n c l u d i n g M I T and Stanford.

Ford, Audi, Mercedes, Toyota and Volvo have also expressed their inter- est in developing the technology, as the cost comes down

Elon Musk, the South African expat billionaire who is CEO and chief prod- uct architect of electric vehicle com- pany Tesla Motors, is trying his hand, too, and has made the promise that his company will produce a driverless ve- hicle within the next three years

However, his three-year timeline is more ambitious than those set out by other car makers Analysts say that it will take 10 to 15 years before self-driv- ing cars become a reality

BENEFITS OF AUTONOMOUS DRIVING

For businesses, the most exciting spect will be the savings that could be made using driverless delivery vehicles that would cut out the cost of employ- ing drivers.

pro-Not having to concentrate on ing could also make the car yet another extension of the office, opening the possibility of efficient remote working while commuting by road.

driv-From a societal point of view, fully

autonomous vehicle

tech-nology has the potential to reduce crashes, ease congestion, improve fuel economy, reduce parking needs, bring mobility to those unable to drive, and dramatically change the nature of travel over time.

Road accidents are one of the top three leading causes of death globally

On average, there are 13 802 fatalities per annum in SA; the estimated cost

of these road crashes (per annum) is R307bn, which is 7.8% of SA’s GDP Thrun helped build Google’s driver- less car, powered by a personal quest

to save lives and reduce traffic dents As he repeatedly mentions in his TED Talk, the mass adoption of a self- driving car may lead to more efficient and accident-free roads

acci-SELF-DRIVING TECHNOLOGY EXPLAINED

Thrun explained to The Huffington Post

in an interview: “The car technology we have been working on at Google uses radar, GPS, cameras, a rapidly spinning Lidar laser, and other devices to navi- gate properly and understand a com- plex driving environment.”

Google hopes its driverless cars will reduce traffic accidents by 90%, reduce wasted commute time and energy by 90% and reduce the number

of cars on the road by 90%.

Potential benefits are substantial but significant barriers to full implementa- tion and mass-market adoption still remain Of course, along with individu- ality, privacy would be sacrificed, since each car or pod would now be a piece

of data with its movements constantly being tracked

Gauteng topped the provincial

charts Reports of corruption

in the Free State increased

*’Other’ includes corruption within municipal owned entities, NGOs and charities, unions, or unknown.

The landscape of corruption in Government shifted significantly this year Reports

on corruption in local and national government make this an area of concern for Corruption Watch At roughly 33% each, local and provincial government shared similar volumes of reports Notably, the dramatic increase in reports, which focused

on provincial government, was driven by our focus on schools in 2013.

Schools were the source of the highest percentage of corruption concerns reported to tion Watch in 2013 Across all categories, the most prevalent type of corruption was abuse of Government resources by a public official, which increased from 32% to 43% Cases in which cor- ruption in procurement processes was confirmed decreased by 7%, comprising 16% of the total number of corruption cases Bribery was confirmed in 13% of cases and incidents of corruption in employment also decreased, taking place in 8% of cases in 2013 versus 12% the previous year.

TOP FOUR SECTORS FEATURED IN CORRUPTION REPORTS IN 2013

Theft

of goods and funds

16%

Corruption in procurement processes

HOT SPOTS IN SCHOOLS

The most prevalent types of corruption reported in 2013 were financial mismanagement, theft of goods and corruption in procurement.

CORRUPTION UNDERMINES THE DELIVERY OF BASIC SERVICES It destroys public trust and

confidence in leadership and in our key public and private institutions It also threatens economic stability and investment South Africa is grappling with corruption, and in 2012 it was ranked 69th

of 176 countries surveyed in terms of corruptness Below, Finweek takes a look at a Corruption

Watch report on the statistics on corruption and how everyone can contribute to its prevention

personality The other day I was asked if I was able to put a

guestimate to my investment portfolio in five years’ time and I said: “Provided that there wasn’t

a complete economic collapse, I think R3m is my number.” That wasn’t always the case and is quite a long way behind my original goal, but considering my penchant for adopting children and trying to fund businesses off my credit card, it is a reasonable improvement The number itself is not so much a boast as it is a mental goal that I have set myself, but there was a period where that goal seemed

a long way off I believe that the single biggest light-switch moment for me was knowing what my strengths and weak- nesses were when it came to my money and then working out how to cash in on them

Colin Long, a Certified Financial Planner at dated Financial Planning in KwaZulu-Natal, says that there are five main types of money personalities and each per- son will fit into two of them, one a primary and one a secondary personality:

pro-to help each other in the areas where each person may be weak and this may help resolve a number of issues that you and your spouse have about managing money."

Over the next few pages, we have taken the various money personalities and tried to identify easy 'hacks' that could help you master your finances.

One 'hack' which we believe should be applied to all personalities is finding a financial adviser that fits your profile A good question for your adviser is to ask them what their personality is and find somebody who contrasts with your own to give you a good balance.

Enjoy!

Marc Ashton

marca@finweek.co.za

THE RISK-TAKER – YOU ARE A RISK TAKER IF:t
:PVSF
BMXBZT
MPPLJOH
GPS
XBZT
UP
NBLF
NPOFZ
BOE
ZPV
TFMEPN
HFU
IVOH
VQ
PO
UIF
EFUBJM

t
"
SJTLUBLFS
XJMM
BMMPX
UIFJS
JOUVJUJPO
UP
CF
UIFJS
QSFEPNJOBOU
HVJEF
JO
UIFJS
EFDJTJPO
NBLJOH
QSPDFTT

t
*OWFTUNFOU
PQQPSUVOJUJFT
HFU
ZPV
WFSZ
FYDJUFE
BOE
ZPV
UFOE
UP
NBLF
EFDJTJPOT
JO
B
IVSSZ

t
:PV
BSF
WFSZ
USVTUJOH
PG
QFPQMF

The downside to this personality is that:

DPOGVTFE
CZ
UIF
GBDUT
BOE
BT
B
SFTVMU
ZPV
PGUFO
NBLF
QPPS
JOWFTUNFOU
EFDJTJPOT
UIBU
DBO
NBUFSJBMMZ
JNQBDU
ZPVS
GBNJMZT
GJOBODFT
JO
B
OFHBUJWF
XBZ

THE SAVER – YOU ARE A SAVER IF:

LIFE HACK: BUY A CAR AT THE END OF A MONTH

OR YEAR… AND, IF POSSIBLE, PAY CASH.

Finweek contributor Simon Brown puts this one to

good use and while it might not win you too many

friends at a car dealership, you have to do what you

have to do A car is an extravagant purchase, and one

of the worst mistakes that you can make is to fall in

love with one and rush to buy it Many dealers work on

commission and targets fall due at the end of a month,

so aim to keep them sweating until late in the month

when you can get the best deal possible The allure

of a cash purchase without waiting for bank approval

can swing a decent saving your way.

LIFE HACK: YOU CANNOT FUND A BUSINESS OFF A CREDIT CARD This kind of personality will believe it can beat the odds and fund a business off a credit card and beat the 18%-21% interest repayments Odds are you can’t and you will simply run up a big long-term debt, which will stop you cashing in on other investments You don’t have the discipline to manage this kind of funding line,

so don’t use it.

L I F E H AC K : S E G R E G AT E YO U R I N V E S T M E N T ACCOUNTS As a risk-taker, you are at your happiest when taking risks, so don’t try to cut this facet out of your personality because making use of it can pay off handsomely Rather segregate your accounts into aggres- sive and defensive portfolios and give yourself some 'risk' money The idea should be to move profits from your riskier assets into more secure portfolios.

LIFE HACK:
FIND SOMEWHERE TO HIDE MONEY.

Almost every trading floor or stockbrokerage across the country has a story to tell you about the client who made R1m in one year and then lost it again the next Find a vehicle where you can hide the money from yourself and won’t be able to extract it A tax-efficient retirement annu- ity (RA) is ideal here

LIFE HACK: MAKE IT HARD FOR YOURSELF.

A risk-taker will watch Bloomberg and see that the price of sugar is going to the moon because a market commenta- tor like Jim Rogers passionately talks up its fundamentals

in a 90-second interview By having a trading app linked

to your phone or easy credit available with cards linked to their bank account, it is easy to make an impulsive decision Rather make it hard for yourself.

THE SPENDER – YOU ARE A SPENDER IF:

:PV
PGUFO
MJF
UP
ZPVS
TQPVTF
BCPVU
ZPVS
JNQVMTJWF
QVS-LIFE HACK: LEARN THIS ONLINE SHOPPING TRICK.

You have accepted that you are a spender, the trick now

is to shop smartly Online retailers from fashion to holiday booking sites are increasingly making use of artificial intel- ligence and your web-browsing history to target you with products and content designed to make you buy While this

is mainly an overseas phenomenon on the big retail sites like Amazon, it is coming to South Africa An easy hack

is simply to clear your web browsing history and delete 'cached' files, to avoid targeted specials being thrown your way.

LIFE HACK: DISCONNECT YOUR CREDIT CARDS FROM YOUR INTERNET BANKING AND START WINDING THEM DOWN If you are honest with yourself, the reason your credit cards are linked to your bank account is to give you

a source of credit to tap You won’t change your spending patterns until they are taken away from you Ask your bank

to either disconnect your cards from your Internet ing profile or, if you can’t go 'cold turkey', ask it to start reducing your facility by R500-R1 000 each month Bet- ter to be proactive than to have the bank take the facility from you.

bank-LIFE HACK : COM PARE YOU RSELF TO TH E RIG HT PEOPLE A key criticism of Generations X and Y is that instead of comparing themselves to their peers, they elect

to live like their parents while being fuelled by credit Get real The average age of a bondholder in South Africa is 31, and if you’re earning more than R30 000 per month, you are amongst the top 1% of earners in the world according to the World Bank The financial crisis and recession of 2008 should have changed the way you think about these issues

LIFE HACK: DOING NOTHING IS NOT SMART.

As we highlight in the Traders section of the magazine

(page 40), a leading investor made a bet with some

hedge fund operators (supposedly the smartest money

managers in the business), wagering that he could gain

greater returns simply by buying the index through a

low-cost savings product than they could with all their

finan-cial know-how He has been proven right by a comfortable

margin You don’t need to be that slick investor who calls

up their stockbroker every few minutes with trading ideas,

but with 80% of South Africans unable to retire, you want

to be building up your savings as quickly as possible.

THE AVOIDER – YOU ARE AN AVOIDER IF:t
:PV
EPOU
UIJOL
NVDI
BCPVU
NPOFZ
BOE
GFFM
UIBU
UIFSF
BSF
PUIFS
NBUUFST
UP
DPODFSO
ZPVSTFMG
XJUI

t
:PV
EP
OPU
IBWF
B
GJOBODJBM
QMBO
BOE
IBWF
OP
EFTJSF
UP
PCUBJO
POF

t
:PV
BSF
WFSZ
DPOUFOU
XJUI
MJGF
BOE
IBWF
WFSZ
MJUUMF
PS
OP
BNCJUJPO

t
:PV
QSPCBCMZ
EPOU
IBWF
B
XJMM
BOE
IBWF
MJUUMF
PS
OP
JOTVSBODF
PS
SFUJSFNFOU
TBWJOHT

t
"O
BWPJEFS
PGUFO
QSFGFST
UP
MFU
TPNFPOF
FMTF
MJLF
UIFJS
TQPVTF

IBOEMF
BMM
UIF
NPOFZ
NBUUFST
JO
UIF
IPNF

The downside to this personality is that:

XJMM
FOE
VQ
JOEFCUFE
XIFO
B
NPOFZ
DSJTJT
BSSJWFT

DBVTF
ZPV
UP
BDU
JSSBUJPOBMMZ
BT
ZPV
USZ
UP
NBLF
UIF
NPTU
ESJWF
ZPV
JOUP
HFUSJDIRVJDL
TDIFNFT
TVDI
BT
1PO[J
PS
QZSBNJE
TDIFNFT
BOE
UIFO
ZPV
XJMM
MPTF
BMM
ZPVS
NPOFZ
t
:PV
BSF
WFSZ
EJTPSHBOJTFE
XIFO
JU
DPNFT
UP
NPOFZ
NBUUFST
BOE
IBWF
B
QPPS
SFQVUBUJPO
PG
LFFQJOH
BOZ
GPSN
PG
NPOFZ
SFDPSET
5IJT
CFDPNFT
B
NBKPS
QSPCMFN
XIFO
ZPV
IBWF
UP
CF
BVEJUFE
CZ
QFPQMF
MJLF
UIF
3FDFJWFS
PG
3FWFOVF

LIFE HACK: JOIN AN INVESTMENT CLUB WITH A WINE PROBLEM Let’s be honest, the idea of investing is hard work Rather get a stickler for admin, a saver and a risk- taker together and host a monthly meeting where you deposit a few hundred rand, and you bring the wine You probably won’t secure your retirement with it, but you will start taking an interest in regular meetings.

LIFE HACK: BUY PROPTRAX EXCHANGE-TRADED FUND (ETF) Love it or hate it, property does give investors access to three very unique characteristics somewhere over a 20-year cycle: leverage, income and inflation-linked asset appreciation An avoider will reach their mid-thirties and not ever have enjoyed these bene- fits, but if they are smart enough to buy the PropTrax ETF, they will at least cover two bases and potentially give themselves enough cash to be able to take a lever- aged purchase should they mature as investors

LIFE HACK: SCHEDULE AN ADMIN DAY ONCE A MONTH If your life is defined by avoiding Metro Police roadblocks because you haven’t bothered to renew your licence or if you never file tax returns because you don’t have the inclination to collate the documentation, then you are actually making your life more stressful Face up

to the stress, allocate a day and get it done.

MONEY HACK #1:

SHOP FOR A BANK

Bank charges have a way of stealthily

depleting wealth If you are paying

more than R100 in bank charges on a

cheque account, you are paying too

much Take your latest bank

state-ment and add together all the costs

from your bank If you don’t know

what that inconspicuous R3 charge

was for, assume it’s from the bank

If you are paying transaction costs

on debit or cheque card purchases,

you need to move If you’re paying

to draw money every time, you’re

paying too much Shop around for

a bank with the lowest bank charges

for your financial needs, move your

accounts across and put the money

you save towards a monthly ETF

debit order

MONEY HACK #2:

TRY PREPAID FOR A MONTH

Buying prepaid airtime is a good

way to determine if you’re paying

too much in telephone charges

W h e n yo u r ce ll p h o n e co ntra c t

comes up for renewal or before

taking out a contract at all, switch

to prepaid for a month Buy R100

airtime and R100 data and use until

you run out of money before

buy-ing more airtime See how much

you spent on airtime and data in a

month before taking out or

renew-ing your contract If you spent R200

on airtime and data during your

pre-paid experiment, you shouldn’t be

paying more than R200 for your

cellphone bill Remember, there’s

no shame in remaining a prepaid

customer No one will ever ask

MONEY HACK #3:

HAGGLE FOR INSURANCE

Here’s a little secret: the insurance

industry is highly competitive If

you’re not phoning your insurance provider once a year to negotiate your premium, you’re paying too much When negotiating a better premium, ask for the highest pos- sible excess amount Make R1 000 excess the goal and negotiate with that in mind Also ask to have a courtesy vehicle included so you have wheels if something happens

to your car Now phone insurance providers until you find one that is cheaper than your insurance and request a quote Phone your exist- ing insurance provider, tell them about the cheaper quote and ask them to lower your premium Most

of the time your current provider will try to accommodate you If not, move.

MONEY HACK #4:

UNDERSTAND UNIT COSTS Comparing prices when grocery shopping is a very easy way to save money every day To really save, however, you have to be sure to compare apples with apples The easiest way to do this is to break a product down into its smallest part

Let’s say, for example, you’re buying toilet paper Baby Soft 2 Ply White Toilet Paper costs R53.99 on Pick n Pay’s online store The way to work out if this is cheap or expensive is to work out how much the toilet paper costs per roll Divide the price per pack by the number of units in the pack – in this case nine – to get the price per unit In this case it works out to just under R6 per roll Now work out the price per roll for dif- ferent brands and quantities to tell whether you are really getting the best value for money Compare the price per 100g for foodstuff, price per litre for liquids, price per kilo- gram for cheese and meat and price

per egg for eggs

MONEY HACK #5:

GET MARRIED Getting married is an awesome way to save money Consolidating the cost of two households essen- tially cuts expenses in half Marriage means you share the cost of rent, electricity, insurance, shopping and housekeeping If you’re not into mar- riages of convenience and not cur- rently in love, consider other types

of money-saving marriages Move in with a friend who shares your money values, advertise for a roommate online or even consider moving in with a colleague to save on transport costs to work

MONEY HACK #6:

BRING YOUR OWN Bringing your own instead of buy- ing is a good rule of thumb for most things Going to work? Pack your own lunch If you save R20 a day on buying lunch, you can save R5 200 per year, which means you could take

a trip to the coast on lunch money

Paying a corkage fee at a restaurant means you can bring your own wine

A bottle of Haute Cabrière Pinot Noir costs R80 per bottle when you order

in bulk from the estate The average price for the same wine at a restaur- ant is R170 per bottle If you pay R50 corkage fee at a restaurant, you save R40 per bottle of wine by bringing your own Going to a concert? Pack a picnic Eat before you go into the sta- dium and pack a sandwich for after the show, save on the price of how- ever many boerie rolls you consume

at a time and avoid the frustration of standing in line for food

Kristia van Heerden

He put his name in the history books

when he scored the first goal of the

2010 FIFA World Cup the first time

it was held on African soil With that dramatic goal, Siphiwe Tshabalala also became South Africa’s darling and an inspi- ration to many.

Subsequently, the soccer ace became a sought-after name as numerous brands vied

to cash in on his prominent status As a result, his bank balance would swell well beyond his imagination, but the Kaizer Chiefs FC star was determined to approach money management

in a different manner than one would typically expect from local football players.

Finweek deputy editor Tandisizwe

Mahlutshana finds out more about the player’s money personality.

Siphiwe Tshabalala celebrating

his 2010 FIFA World Cup goal

IT IS SAID THAT THERE ARE FIVE TYPES OF MONEY

PERSONALITIES, NAMELY: THE SAVER, THE

RISK-TAKER, THE SECURITY-SEEKER, THE SPENDER AND

THE AVOIDER WHICH DO YOU THINK YOU FIT INTO?

Honestly, I am first and foremost a security-seeker I

ensure that I get as much information about a particular

investment as possible Not only the good things but the

ugly stuff as well

I am also a risk-taker in that I like to spot

opportun-ities that some people may not see I have taken some

risks that have paid off well and some that have not But

that is all part of life

DO YOU HAVE A FINANCIAL ADVISER AND HOW DO

YOU UTILISE THEM? DO YOU DEAL WITH THEM ON

A REGULAR BASIS AND WHAT DECISIONS DO THEY

HELP YOU WITH?

Not really I prefer to manage my own financial affairs

and have been doing so, sometimes with the assistance

of my manager, but I am the man in charge

However, over the past year I have engaged the

pro-fessional services of a financial adviser and I meet with

her twice a year to go through all my investments and

she helps me decide on whether to keep certain

invest-ments or change my position on them Even though I

go to her for advice, I still make the final decision

WHAT IS THE MOST IMPORTANT CHARACTERISTIC

OF A GOOD FINANCIAL ADVISER?

Honesty! Nothing beats honesty when money is

involved People can’t easily be trusted but when they

deal with you in an honest way, you can begin to build

that trust

WHICH INDIVIDUAL DO YOU BELIEVE HAS HAD

THE BIGGEST INFLUENCE ON THE WAY THAT YOU

APPROACH MONEY?

It’s not a person, in actual fact It is the fact that since

growing up I have always wanted to play football

pro-fessionally, and for many years a lot of football players

in this country had not been investing their money for

a rainy day

The eye-opener for me was that a football career

can be short-lived and if you did not invest your money

wisely, you will be left with nothing So I make sure

that even when I don’t play football anymore, my

investments will take care of me and still help me to

grow as a person

IF YOU WERE GIVEN R100 000 TODAY AND TOLD

YOU HAD TO PROTECT THAT R100 000 FOR THE

NEXT FIVE YEARS, WHERE DO YOU THINK THE MONEY WOULD BE SAFER – IN THE BANK, IN A BUSINESS OR INVESTING IN THE JSE?

As the security-seeker that I am, I would invest it in

my property to extend it and make other renovations I know my money would be safe there I wouldn’t neces-sarily put R100 000 in a business

WHAT IS THE BIGGEST MONEY MISTAKE YOU HAVE EVER MADE?

I wouldn’t like to give details but I made some bad investments that went horribly wrong I did not do the research or speak to any relevant people and I got

my fingers burnt

Right now I am still recovering from those loses, but personally I am over the pain The thing about getting into business is that it is a journey and one has

to be patient It is not for the faint-hearted Sometimes you can make it and sometimes you will lose It’s the nature of business

One must just keep on taking lessons along the way You will also meet different people that can make

or break you You will meet good, relevant people and sometimes you will meet crooks as well You must learn not to trust easily but you must also learn to move on because life goes on

OVER THE LAST 15 YEARS, A LOT OF EFFORT HAS BEEN PUT INTO EDUCATING YOUNG SOUTH AFRI- CANS TO MANAGE THEIR MONEY IF YOU LOOK AT YOUR PEER GROUP, DO YOU BELIEVE THAT THIS EDUCATION HAS PAID OFF?

Yes, definitely These days, players invest in good properties and some have financial advisers So it was

a good thing to have that kind of education because I can see that it is now paying off

WHAT IS YOUR FINANCIAL MESSAGE TO THE

FIN-WEEK READERS?

There’s a piece of advice I got when I started playing professional football: “If you look after the cents, the rands will look after themselves.” I still live by that today If you understand the value of money, you will look after the small change as well

"Shabba", as the soccer player is affectionately known, also let slip that he’s working on adding further investments to his wealth portfolio Among those is another Taste Holdings franchise The Fish

& Chip Co He currently owns one store ■

Insight

LIFE IN THE PALESTINIAN WEST BANK

Entrepreneur

turned activist

WANTING MORE OUT of life, South African entrepreneur Sarah Robinson took

time out of her role as an entrepreneur to experience firsthand the political conflict in the H1 and H2 zones of Hebron in the Israeli-occupied West Bank, Palestine Hebron is known as one of the more volatile areas in the Palestinian West Bank, where Israelis are trying to force Palestinian residents out of the area by force

As part of a group of international visitors, Robinson hoped to use her ence at the Israeli checkpoints and in the streets to record the many undocu- mented human rights violations against local Palestinian residents by Israeli settlers and soldiers By threatening to expose the atrocities via social platforms and releasing the material to the international media, she, along with the group that she was travelling with, hoped to quell the violence at least somewhat

pres-Robinson was stationed in

Hebron to act as a human

rights observer with the

World Council of Churches

run Ecumenical Accompaniment

Pro-gramme in Palestine and Israel (EAPPI)

Her reception by the Palestinians was

not your average welcome as she found

that being South African made the

reac-tion to her arrival different to that of

oth-ers The Palestinian cause was supported

by the late Nelson Mandela and on

hear-ing that Robinson was South African the

Palestinian people automatically felt that

she was aligned with their cause On the

announcement of the passing of

Mande-la, Robinson received notes of condolence

from the Palestinians she had met

BEAN THERE COFFEE

Company established: 2005

Founders: Sarah and Jonathan

Robinson

Mission: To source and roast the

best beans that Africa has to offer

Notable achievements: The

company was the first roaster of

certified Fairtrade coffee in

South Africa.

Goal: It strives to make a

sustainable difference in the lives

of African coffee produces by

personally sourcing quality coffee

through direct fair trade.

As an operations director in her

start-up business, Bean There Coffee

Compa-ny, she learnt how to understand, manage and motivate people − how to actively listen to those around her and respond appropriately to get the job done These lessons were crucial in Hebron, too, where as a member of a group of four in life-threatening situations, listening and responding appropriately with almost no time to think was necessary to stay alive

As an entrepreneur in South Africa, Robinson enjoyed certain freedoms of conducting business in a relatively safe environment that is conducive to grow-ing the company she has worked so hard

to establish and was struck by how feren the situation was for those in simi-lar positions in Hebron

dif-“There is very little entrepreneurial freedom in the H2 section of Hebron

Approximately 25 000 Palestinians and

700 Israeli settlers live in the Israeli military-controlled H2 At any given time there are 2 500 soldiers in the area protecting the Israeli settlers, controlling access through checkpoints, and provid-ing security of sorts

“Twenty years ago this part of Hebron was the commercial centre of the city and many of the markets and businesses were located along Shuhada Street In 1994, after the Goldstein Massacre at the Ibrahimi Mosque, where an Israeli settler gunned down

29 Palestinians during prayer, hada Street was shut down, businesses closed, and all access was denied for Palestinians This action severely dis-rupted commerce in Hebron The heart

Shu-of Hebron became a ghost town and any hope of entrepreneurship was suf-focated The movement of people and goods are intensely controlled reducing any hope of new businesses developing

“A local NGO, the Hebron tation Committee (HRC), is partnering with interested Palestinians in Hebron

Rehabili-to bring them back Rehabili-to the old city and

the souk [market] to encourage business

development and the rejuvenation of this beautiful part of the city However, even when new shops open, they struggle to survive because so many Palestinians

are restricted from entering H2,” explains Robinson

The role of the EAPPI and Robinson in Hebron was to create the threat of interna-tional exposure and one of their daily tasks was to monitor the checkpoints near a school to make sure that the children were able to attend school without the harass-ment of officials as they passed through the checkpoints “Clashes, tear gas and sound grenades were a regular occurrence and on one occasion a 12-year-old boy was hit by

a sniper in the leg with live ammunition,” says Robinson

“We conducted tours with international guests to open their eyes to the situation that most of the world doesn’t know about

In one instance, I drew the attention of a tour group to a young Palestinian boy being assaulted by Israeli soldiers and encouraged the group to take photographs of the inci-dent Immediately the abuse stopped and the boy was released as the assailants feared being identified by their faces appearing in photographs.”

ECONOMIC PRESSURE

Robinson is not alone in her quest for peace within the volatile country, the cause for the rights of Palestinians is fought on a larger scale by an organisation called Boy-cott, Divestment and Sanctions (BDS), which calls on South Africans not to ignore what is happening to Palestinians and bring awareness of the human rights atrocities Robinson came into contact with the organisation in her orientation ses-sions before leaving for Hebron Its aim is threefold: end the Israeli occupation of the West Bank and Gaza, the right of return for refugees that currently reside in refugee camps and for Palestinians living in Israel

to be treated equally and have equal rights The main tool which the organisation uses

is to create awareness of the human rights abuses among students at university level Muhammed Desai, the national coordi-nator of BDS, explains why “We follow the same strategy of how apartheid was fought and conquered, with day-to-day activism that starts with those that are most likely

to change themselves and then become the future leaders – those at university level.” The organisation does not follow any spe-

INSIGHT

Sarah

Robinson

cific ideology but unites various societies,

Chris-tian, Jewish and Muslim alike to put economic

pressure on Israel to address the current situation

“The projects are aimed at local and

interna-tional businesses to stop indirectly funding and

perpetuating crimes against others These

pro-grammes include boycotting SodaStream

prod-ucts manufactured in the settlements, Dead Sea

beauty products being sold in shopping centres

and there is even an investigation into

Wool-worths products that are being imported from

Israel and sold locally,” comments Desai To date,

the group has some landmark successes in the

divestment of Dutch, Swedish and Norwegian

state pension funds withdrawing from Israel and

recently the UK government issued a statement

to all companies in Britain urging them not to do

business with Israeli companies in settlements or

those operating in Israel

THE ROAD FORWARD

Robinson has recently returned to SA after

suf-fering from an undiagnosed medical condition

“While in Palestine it became clear to me that

human rights, justice, and conflict-related causes

are where my heart is I fell in love with the

tension, the stress, and unpredictability I felt

the immense importance of sharing the story

of others’ suffering and hardships in order to

instigate change

“I want to be on the frontline and I feel that

my experience in Palestine made that

exception-ally clear

“I am not Palestine or Israel but

pro-justice, pro-fairness and pro-peace

“I want to make a difference on the ground

I want to give a voice to those caught up in

injustice and are either unable or unwilling to

tell their stories I don’t want to sit on the

side-line when my heart is screaming for hands-on

involvement Many people think I’m crazy to

consider giving this all up to start from scratch

in a war zone But nothing excites me more

On a Skype call with my mother while I was in

Hebron, I was telling her about a devastating

child arrest I had witnessed In the conversation

she commented that she had never heard me

sound so alive before Maybe I am a risk seeker

or adrenaline junkie? But I know, without a

doubt, that my place is on the frontline,

stand-ing shoulder to shoulder with the oppressed and

the victims of injustice.”

Lisa Illingworth

lisa@lkdesines.co.za

FACT BOX

IN 2009, the Human Sciences Research

Council released a report, which found that Israel was practising both coloni- alism and apartheid according to the legal definition in occupying Palestinian territories

There are 19 Palestinian refugee camps in the West Bank, which shelter

741 409 inhabitants.

The World Bank issued a report on the economic effects of the restricted land access in the West Bank, stating:

“The effects on the Palestinian

econo-my of the current territorial distribution extend much beyond its most obvious manifestations The physical access restrictions are the most visible, with 38% of the land area reserved by the government of Israel to serve settle- ments and security objectives and a system of checkpoints, road closures, the separation barrier, and permit requirements for access that constrain movement of people and goods within and out of the West Bank Recurrent destruction of trees, private homes and public infrastructure, as well as settlers’ encroachments on private land create

a permanent state of insecurity that deters Palestinian investment.” Israel’s wall in the West Bank, according to a new report by the United Nations Conference on Trade and Development, has caused a direct loss of more than $1bn to Palestinians

in Jerusalem, and continues to incur

$200m per year in lost opportunities ■

INSIGHT

RIGHT OF REPLY

Reply

A view from SA’s

accounting body

This is in response to the

opinion piece (Why you

should think twice before going for that accounting degree) by economist

Johan Fourie which was published on 20 January

on Finweek.com

char tered accountants

[CAs(SA)] in South Africa

was developed over many

years and the process was one in

which the universities participated

fully on a voluntary basis The

aca-demic programme together with the

training programme has remained

dynamic and responsive to the needs

of the economy, seeing many minor

and major changes over the years

CAs(SA) have enjoyed an enviable

reputation throughout the world for

many decades SA has a very strong

accounting and auditing profession

(The World Economic Forum has

rated SA number one for auditing and

financial reporting in its world

com-petitiveness report for the last four

years) and there is a strong demand

for CAs(SA) We live in a dynamic

eco-nomic environment, which requires

that education and training remain

responsive to the needs of the

econ-omy – the South African Institute of

Chartered Accountants (SAICA)

together with the universities ensures

that the education, training and

assessment processes remain relevant

to the needs of SA

It is our view that many of the

‘alle-gations’ are unfounded, inaccurate

and one sided While we welcome

constructive criticism, it is important

that prospective students are not

mis-informed

Allow me to elucidate:

“Accounting degrees should not

be a default option for most of SA’s brightest kids.” South African learn- ers are the ‘new generation’ of young- sters who are smart and they are mostly aware of the career paths that are open to them It would be grossly erroneous to underestimate their intelligence, especially as far as career choice goes SAICA uses a targeted marketing strategy to attract talent-

ed learners to the profession, given the chronic shortage of chartered accountants SAICA is competing to secure a share of the limited pool of candidates who achieve over 60% in core maths (only about 15.6% of the

2013 matrics who wrote the maths paper met this requirement).

“Accounting departments in SA are perfectly positioned to deliver students capable of thinking outside the box.” I couldn’t agree more! But there are many challenges being faced

in the tertiary environment today, despite academics being passionate about their calling to the academe, their best intentions, well-designed programmes and courses Academics are torn between fulfilling university requirements for research and having little time to do so because of these other challenges SAICA agrees that appropriate research and scholar- ship are critical to a high-performing accounting department and SAICA

continues to encourage universities

to find ways to meet both objectives.

“The current accounting syllabus does not allow students to develop the skills necessary for top-level managers.” Qualifying as a CA(SA) requires more than just complet- ing four years at university (three- year undergraduate degree and the postgraduate year that follows) The subsequent three-year training pro- gramme that follows the four years of academic study is a period in which prospective CAs(SA) further develop and garner experience that enhances the building blocks that have been developed through the university degree Further than that, as profes- sionals, CAs(SA) are required to con- tinue to develop and enhance their competence through appropriate continuing professional development relevant to the role they undertake, post qualification The ability to

be a life-long learner is one that is entrenched through the initial seven- year qualification process.

Qualification as a CA(SA) is not solely related to competence It is also the culmination of education, training and assessment processes aimed at assessing the combination

of intellect, aptitude and the ability

to respond to demanding situations

It is clear that the accounting sion is a dynamic one and once these skills are entrenched in the persona

profes-To read the article, visit finweek.com

RIGHT OF REPLY

of the CA(SA), success is the end

result It is these skills that enable the

CA(SA) to be successful in a wide

range of demanding work

environ-ments It is intuitive to note that over

30% of CEOs of listed companies are

CAs(SA).

Some university programmes have

challenges in teaching students to be

creative thinkers – the extent of the

challenge however differs from

uni-versity to uniuni-versity It would be

crit-ical to point out that this is a feature

of most university programmes – not

just accounting programmes SAICA

recognised this problem many years

ago and has been working together

with interested universities to find

ways to address this Changes include

the introduction of a competency

framework and a new final

assess-ment (the Assessassess-ment of

Profes-sional Competence to be introduced

in 2014).

Introduction of the competency

framework:

framework in place since 2009 This

framework sets out competencies

(or more broadly: outcomes which

include knowledge, skills and

attrib-utes required of CAs(SA) at

entry-level into the profession – the point

at which they register to become

CAs(SA))

on international trends and significant

input from the academic community.

significantly more emphasis on the

pervasive skills which are categorised

into three broad areas: ethics and

pro-fessionalism, personal attributes and

professional skills

been of great benefit to the so called

previously disadvantaged universities

where SAICA is successfully engaged

with its university partners in assisting

such programmes in capacity-building

projects (The University of Limpopo,

which obtained SAICA accreditation

in 2011, the University of Zululand and

Walter Sisulu University, which are part

of a capacity-building project and the

University of Venda, which will shortly

join the capacity-building project.)

framework should be viewed as a guideline

“The accounting fession follows a narrow rule-based compliance philosophy in educa- tion, whereas univer- sities generally follow

pro-a bropro-ader

principle-b a s e d a p p r o a c h ” Accounting departments are encour- aged by SAICA on an ongoing basis

to ensure that their teaching and learning models speak to a more prin- ciple-based approach The university has the final say.

“ To sum it up: SAICA runs accounting departments.” Uni- versities have full control of their programmes and structure them in any way that they choose SAICA’s approach to the accounting depart- ments who offer programmes leading toward the CA(SA) is simply this: to maintain the appropriate standards

of the CA(SA) qualification route so

as to ensure the delivery of tent CAs(SA) with relevant skills to the

frame-work with the input of both ics in the accounting departments and profession.

and monitoring process in line with requirements set out by the Council for Higher Education (It is absolute-

ly voluntary for universities to seek SAICA accreditation.)

standard-setting assessments, which allow a broad range of candidates from multiple accredited programmes

to be assessed against standards required of the profession.

“Why don’t scholars in ing departments resist this influ- ence? Because SAICA pays.” The SAICA philosophy is simple – in order

account-to run high-quality programmes and produce the most competent accounting graduates, universities require excellent people As CAs(SA) typically have the opportunity to earn higher salaries in commerce, SAICA uses its subvention fund to attempt

to retain key staff on the CA(SA)

pro-gramme It is by no means a salary;

it is an annual amount that is based

on current year performance and contribution While the lump sum attributable to each department of accounting is determined by SAICA, the individual amounts are deter- mined by the head of each depart- ment of accounting and ratified by

a local subvention committee The subvention, once divided by the large number of participants, is often not a significant amount

SAICA is convinced that it plays a critical role in developing world-class accounting professionals who will continue to serve SA and international economies in a variety of roles

To blame SAICA for generations of accountants being trained without a broader understanding of complex- ity, problem-solving or trends in the global economy is myopic

Yes, with the advent of com- puters there are many jobs that will need to evolve including the role of

an accountant, and I quote Sizwe Nxasana [CA(SA)] in saying that:

“Accounting and auditing of the kind done by CAs(SA) requires a lot of analysis and decision-making which computers will never do in a million years.” It is intuitive to note that over 21% of CAs(SA) are economically active outside of SA The world-class quality of CAs(SA) remains a non- negotiable objective for SAICA.

In our opinion, it is scandalous

to encourage the youth not to con- sider qualifying as a CA(SA) given the career choice and leadership oppor- tunities which the designation affords

Mandi Olivier CA(SA)

Senior Executive: Professional Development at SAICA

Why I banned

brainstorming

INSIGHT

The Gab

Brainstorming is the oldest

and most widely used tivity technique in business today So if everyone uses

crea-it then crea-it must work, right?

Wrong! Brainstorming might work reasonably well for generating medio-cre ideas with incremental impact, but

it is completely useless for coming up with truly innovative breakthrough ideas I’ve banned brainstorming in

my business – here is the reason why

IT’S A NUMBERS GAME, OR IS IT?

“Come up with as many ideas as you can Focus on quantity, not quality!” This is the first fundamental rule of brainstorming and on the surface it seems to make sense Nobel prize- winning scientist Linus Pauling said:

“The way to get good ideas is to get lots of ideas, and throw the bad ones away.” A bit like picking strawberries – the way to go home with a good bas-ket is to pick lots of strawberries and then just throw away the rotten ones.Pauling also said: “When an old and disting uished person speaks

to you, listen to him carefully and with respect – but do not believe him Your elder, no matter whether

he is a Nobel laureate, may be wrong.” I’m afraid in this case, he is Ideas are

not like strawberries

HERE COMES THE BRIDE

Let’s say your wedding is coming up

next month You’ve been dreaming

about the big day since you were a

lit-tle girl and you want everything to be

perfect – especially your hair You’ve

done your research and have narrowed

it down to two hairstylists, each with

a very different approach

So the first hairstylist says, “I can do

70 different hairstyles for you!”

“Okay,” you say, “but are you any

good?”

“Well, that’s not really important

to me, it’s much more important that

I can do a lot of different styles, who

cares what they look like?”

She hands you a book with

exam-ples of her work You go through it and

can’t believe what you see Each photo

looks worse than the one before, now

you’re feeling quite depressed

Then you go over to the second

hairstylist She says: “Look, I don’t do

a lot of different hairstyles; in fact, I

specialise in only three It’s not a wide

variety, but they’re immaculate, done

to absolute perfection.” She holds up

a card with just three photographs,

each displaying one of the three styles

she specialises in Your mood changes instantly You can’t decide which of the three photos is the most beautiful

Now the question is which stylist is going to do your hair for your wedding? Obviously it’s the specialist

hair-Who cares how many styles a ist can do if she does all of them badly?

hairstyl-Who cares how many ideas you’ve got if none of them are good? The real-ity is, asking people to forget about quality and focus on getting as many ideas as possible is a sure-fire recipe for rubbish Do you really want 70 rubbish ideas? I don’t I want one great one

It reminds me of the old joke about two friends discussing business The one says, “I’m really excited, I just opened up a hamburger joint.”

“Fantastic” says his friend “How much are you selling the burgers for?”

of R10 on each burger that you sell.”

“Oh, don’t worry,” says his friend

“I’ll make it up on volume.”

No, he won’t – no matter how many

he sells, he’ll still on the losing end And the same with brainstorming – if you come up with 70 loser ideas, at the end of the day, whichever one you pick – you’ll still end up with a loser idea You can’t make up for it on volume

A DIAMOND IN THE ROUGH

In reality, most great ideas don’t start out great They start out as seeds that need to be developed and nurtured in a structured approach And brainstorm-ing ensures that the seeds of great ideas are not given the attention that they deserve There simply isn’t the time to devote to building that one great idea when you’re focused on generating as many (bad) ideas as you can

In addition, your company is

unlike-ly to have the resources to properunlike-ly pursue more than one or two big new product ideas a year If that’s the case, why would you want 70 ideas? The unfortunate truth is that as we increase the number of ideas we pursue, the odds of any one idea being successful declines

ARE YOU JUDGING ME?

The second fundamental rule of storming is that we are not allowed to judge other people’s ideas Again, this

seems to make sense on the surface

People interpret an attack on their ideas

as an attack on their self-esteem, and

their natural reaction is to get defensive

or to shut down and stop contributing

If we want people to feel safe in putting

forward their ideas, we must be very

careful not to criticise their

contribu-tions

So at the start of most

brainstorm-ing sessions, the facilitator will remind

participants: “Don’t judge – there are

no bad ideas.” The problem is that this

rule is a recipe for even more rubbish

The reality is that there really are bad

ideas In fact, most ideas are bad ideas

And the only way to make them better

is to identify their flaws and fix them,

which means that you absolutely need

to judge them to make them into better

ideas It’s a crucial part of the process

“What doesn’t kill you makes you

stronger.” It’s exactly the same with

ideas – if an idea is subject to the

high-est level of scrutiny, and can weather

the storm, then it emerges a much

stronger idea – and much more likely

to succeed

A great example to illustrate this is

the way the butterfly emerges from its

cocoon While struggling to push its

way through the tiny opening of the

cocoon, the butterfly pushes fluid out

of its body and into its wings This

strengthens the wings, and without

the struggle, the butterfly would never

be able to fly It’s the same with ideas

You can’t be easy on ideas – you need to

struggle with them, identify their

prob-lems, and work through them – and

through this process they will emerge

much stronger on the other side

So instead of telling participants not

to judge each other’s ideas, we should

rather encourage this behaviour The

key is to get people engaged around the

idea, because no idea can go forward

without some level of engagement

Being silent about an idea is much

worse than criticising it

As a contributor of ideas, we have

to understand that if our ideas are

going to take hold, they will have to

change – it’s a given You might have

heard the old joke: “A woman marries

a man expecting he will change, but

he doesn’t A man marries a woman expecting that she won’t change, and she does.” When it comes to our ideas,

we should expect them to change We shouldn’t get upset or take it personally when that starts to happen We should expect judgment and accept it with open arms as the first step to making the idea a reality

is scheduled to start at 13:00, and by 14:00 we are expected to have come

up with the next big idea for the ness Unfortunately, creativity cannot

busi-be ordered on demand Big ideas don’t stick to meeting schedules

GOOD BUT NOT GREAT

I remember talking to a colleague who had just come out of a brainstorm-ing session “How did it go?” I asked

“Brilliant!” he replied, “We were on fire We generated 50 ideas!”

Sadly, the success of a brainstorming session is often measured by the num-ber of ideas generated rather than the end-goal of actually solving a problem

or improving the business We hand out post-it notes and tell people to

“Write as many ideas as fast as you can for 15 minutes Come on, I want as many ideas as you can It doesn’t mat-ter what you write, just write!” Next thing you know, the wall is covered

in hundreds of small yellow pieces

of paper, perhaps with little coloured stickers indicating which ideas people liked Then the time is up, the meeting

is over, and everyone disappears back into their offices to carry on with their daily work And, inevitably, very little happens after that

According to Jim Collins, an ican business consultant: “Good is the enemy of great.” Unfortunately, this applies to brainstorming as well It yields good results, which is why the practice is so prevalent in the corporate world and has stood the test of time However, it very rarely yields great results And that’s why I’ve banned brainstorming in my business I don’t want a good business I want a great one ■

Amer-Dr Symanowitz is an actuary and

BECOME A

MEMBER TODAY!

PER WEEK

Take out a premium subscription to Finweek magazine and become a member of The Finweek

Club for only R1 470 per year All members will be entitled to unrivalled discounts from great

brands The club benefits will include a full-year subscription to Finweek magazine (print or

digital), discounts to various products and services and invites to member-only events Some

of the discounts include 20% off wine purchases through 5 Ounces website, 20% off tailored suits at Frank Bespoke, 12% off all online Hertz bookings, premium vouchers to the MyEdit app, exclusive access to stock data through the McGregor BFA app, and Apple iStore discounts.

IN PARTNERSHIP WITH

F R A N K

BESPOKE

Terms and conditions

Subscribers will qualify to become a member of The Finweek Club once the annual membership fee has been paid in full Members who qualify for the tailored suit will go into a draw and one

win-Finweek delivered to your door every week;

20% off tailored suits;

20% off premium South African wines;

12% off car rental services;

Discounts on great apps.

STAND A CHANCE TO WIN A TAILORED SUIT

WORTH

R 8 000

BY FRANK BESPOKE

Contact us on:

to join the club

1

2

2

F

There have been many

recommen-dations that local investors

should consider adding defensive

stocks to their portfolios as a

possible antidote to the weakening rand

and the US Federal Reserve tapering off its

quantitative easing programme

One fund manager, however, is going

the other direction Andrew Vintcent, head

of the Stanlib Unconstrained Equity

Fran-chise and portfolio manager for the

Stan-lib Growth Fund, says that investors will

do well to avoid the big industrial stocks,

such as British American Tobacco and

SABMiller He says that these stocks have

stretched valuations, and are also not well

positioned for the current cycle The JSE

Industrials Index grew some 32.9% in 2013

“The performance of the Industrial

Index has been driven by a combination

of strong earnings growth, and a

price-to-earnings (P/E) multiple that has risen to 21

times current earnings Only three times in

the last 50 years has the Industrial Index

P/E expanded to above 20 – we would

caution investors against expecting much

more in the way of a re-rating from current

levels,” says Vintcent

A fund manager survey by

multiman-ager firm Investment Solutions show that

68% of the market views the industrials

sector as least favourable for 2014 while

56% seem buoyant about the resources

sec-tor According to the survey, 55% of

man-agers see the JSE All Share Index ending

the year within a range of 44 000-48 000

INVESTMENT

Investment

current valuation for the big banks, trading at P/E multiples of between 9 and 10, due in part to the sell-off experi-enced last year, present competitive earn-ings opportun-ities while global resource stocks like Anglo American boasts Tier

1 global assets and its share price recovery has been encouraging He adds that the mid-cap sector presents good opportuni-ties for above-average returns, punting stocks such as Grindrod, Omnia and Brait as possible outperformers

Tandisizwe Mahlutshana

tandisizwem@finweek.co.za

Industrials present risk,

resources & banks opportunity

EXPECTED RETURN GROWTH

With the JSE All Share Index returning a able 21.4% for 2013, albeit lower than the 26.7% for 2012, analysts have warned investors to tame their return expectations going forward Silverman says that the next five years could

palat-be very tough for local markets – valuations are high, and off these levels, future returns have tended to be low.

He adds that an even weaker than expected rand, though, could mitigate the weakness, ensuring a more flat All Share performance, rather than a sharp fall

Vintcent says for South Africa to turn this corner, the country needs a stronger productive element – either from the mining or construction sectors He says the growth catalyst that needs

to be unlocked is the country’s multibillion-rand infrastructure development roll-out The details

of the roll-out are expected to be revealed by finance minister Pravin Gordhan when he tables his 2014 Budget Speech on 26 February

It seems, therefore, that caution and focus on valuations and quality of assets should be top of mind for investors, whether or not one is a buyer

a far weaker rand, and ‘QE4’ scenarios to play out That would likely benefit both the resources sector, and rand-hedge stocks, in general Locally, our man-agers, too, have indicated a preference for resources for 2014 There is however

a strong divergence within the sector as the majority of managers are steering clear of the gold miners in favour of the platinum and diversified miners

“Within financials our mangers view the banks as still offering value The valuations of the large caps that make

up the bulk of the Industrials are erally very stretched Momentum and their rand-hedge qualities could push these prices higher still, but this sector presents the highest risk in local equi-ties in 2014 The retailers have pulled back recently so valuations are now more interesting, but they face a rather challenging environment where further interest rate hikes, a slowing economy, full margins and ratings, and high for-eign ownership, would likely still pose challenges to them advancing.”

gen-Top holdings in Vintcent’s folio include Anglo American and Barclays Africa Group He says the

port-TERMS AND CONDITIONS

As one of our valued customers, you’ll recieve finweek for as long as you wish However,

if at any time you choose to discontinue your subscription, simply call 0861 000 571 or email subs@finweek.co.za We may amend the fees payable from time to time We will notify you before implementing the change We may alter the payment instruction to cor- respond with any change in your fees *Price of print subscription excludes delivery costs

of R13 per month RSA residents only International subscribers please call +2721 405

TEL: 0861 000 571

The line from the mining sector

is that it is almost in complete

agreement with Government

on proposals to amend the

Minerals and Petroleum Resources

Development Act (MPRDA), the

sec-tor’s centrepiece legislation The

impor-tant part of that statement is the

qualifier, almost

Two clauses continue to stick in the

craw of the industry

One is that any mining company

seeking to export a ‘strategic mineral’ –

which can be identified at any time at

the discretion of the mines minister –

must request permission to do so

The second clause is that the minister

can then subject that mineral to a

two-tier pricing structure such that domestic

sales discounted to the going market

price

According to Peter Leon, head of

energy and minerals at Webber Wentzel

and perhaps one of the most outspoken

critics of the legislation, these clauses

are enough to switch off foreign

invest-ment permanently

INVESTMENT

Roger Baxter, COO of the ber of Mines, thinks that the bill will progress and doesn’t believe asking the minister to export minerals is a problem

Cham-“We do that with diamonds and precious metals already; it’s just an extension of an existing regulation.”

The problem is, however, that ernment isn’t trying to exert control over any of those mining industries in quite the same way

Gov-According to Paul Miller, a resources banker with Nedbank Capital, Govern-ment is trying to re-assert ‘levers’ over the industry “Government knows that it

Window of

opportunity for miners

However, there are two opportunities

to yet influence the amendments One is when the Minerals Portfolio Committee meets again According to mines minis-ter, Susan Shabangu, the committee met

on 29 January to approve the bill’s draft and formally end the public consultation phase of the proposed amendments

Fortunately, at least for the ment’s critics, the committee meeting was adjourned and won’t recommence until 18 February That gives the mining industry valuable time to continue lobby-ing for changes to the amendment bill

amend-Then the matter has to go to the National Council of Provinces, the upper house of South Africa’s parlia-ment Owing to an oversight in the pro-cess of the amendment, the council was not given time to pick over the proposals

According to Leon, that must still happen, raising the possibility that the amendment bill won’t be promulgated before national elections, scheduled for

7 May If that happens, the bill may be

in trouble and require fresh vetting by the authorities

KEY DATES

18 FEBRUARY: Parliamentary minerals portfolio committee to re-convene on the Minerals and Petroleum Resources Amendment bill.

MID-MARCH: National Council of inces to vet Minerals and Petroleum Resources Amendment bill.

Prov-7 MAY: National Elections