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October 2019: The perils of October

The Mark Twain Effect

In his novel “Pudd’nhead Wilson” written in 1894, Mark Twain makes the assertion “October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” 

Mark Twain, was, of course, a great writer. Unfortunately, he was an incompetent businessman and a notoriously bad investor.  Over his lifetime he lost a fortune in bad investments. He just couldn’t seem to make any money from his speculation! Similarly, that other great genius, Sir Isaac Newton, was also a hopeless investor who lost millions in the stock market. Newton’s on-going losses in the stock market prompted him to state: “I can calculate the motions of the heavenly bodies, but not the madness of the people.”

Neither Twain nor Newton had any success with investments nor did they have any special knowledge about investments. Both lost fortunes during their lifetimes so should one accept the assertion that October a peculiarly dangerous month for speculating in stocks?

The October Effect

The belief that stock markets tend to decline in October is known as the “October Effect.” Is this true? Is October a peculiarly dangerous month for speculating in stocks? 

The belief that October is a peculiarly dangerous month is a psychological belief that shares tend to decline in October. However, if one analyses the returns for the past century there is no evidence to confirm that October is a month in which shares decline more compared to any other month.  Actually, September has seen more declines than October!

Of course, our response to Mark Twain’s saying is that speculation is probably always dangerous! There is a difference between speculation in shares, which is generally of a short term nature and investing into shares for medium to long term capital appreciation or in order to receive dividends that appreciate over time. There is no doubt that a well-constructed portfolio of shares, bonds, cash and property should produce acceptable returns in the long term.

Our philosophy has always been to create wealth for our clients by investing in prudent investments. We are not enticed by the latest get-quick-rich fads; cryptocurrencies, 4th Industrial Revolution funds and the like! Let’s face it. How many investors actually know what they are buying when they buy a cryptocurrency or how they actually work!

Our approach is to provide investment funds that have excellent long term performance records and that have demonstrated their ability to create wealth for investors in the long term. With this in mind, October doesn’t seem peculiarly dangerous for sensible prudent investors. Time is one of the most important factors that make investments a success! So for speculators, October probably is a dangerous month but not more so than any other month. However, with time a long term investment perspective, October is not better or worse than any other month.

Save the date!

We will be hosting an investor presentation on Wednesday 30th October 2019 from 11h30 to 13h00. We are delighted to have Peter Kempen, head of retail distribution for Coronation Fund Managers as our guest speaker.

Please contact Leonie at info@kevinmillsfs.com to reserve your seat!

“I am so glad to live in a world where there are Octobers.” L. Montgomery

Presentation by Coronation Fund Managers

Invitation to attend a presentation by Coronation

Kevin Mills Financial Services is pleased to host an investment presentation. Our guest speaker is Peter Kempen, head of retail distribution for Coronation Fund Managers.

Peter has a B Com (Honours) in Investment Management and is a Certified Financial Planner. Peter Joined Coronation in 2011 and is a member of the management committee of Coronation’s personal investments business. His key responsibility is to ensure exceptional client service through the dissemination of relevant information to the investment advice community. Prior to Coronation he spent 12.5 years as a wealth manager for Investec and was a member of the Exco of Investec Wealth and Investment.

Coronation was founded in Cape Town, South Africa in 1993 by a group of investment professionals. Today, Coronation is 24% employee-owned and a leading brand in the South African investment industry. Coronation is solely focused on asset management and have a track record of delivering competitive long-term returns to their clients over the past two decades. An active investment manager with a long-term valuation-driven investment approach, Coronation currently manages R579 billion in client assets (as at end-June 2019).

We are delighted to welcome Peter!

Date: 30th October 2019
Time: 11h00 for 11.30
Venue: Allan Gray Offices, 1st Floor, Brookes on the Bay, Brookes Hill, Port Elizabeth, 6001
To Rsvp please contact Leonie Els at info@kevinmillsfs.com or 041 373 0601

June 2019: Offshore Investing

Let’s get real about Investing offshore!

So you haven’t invested offshore yet? What are you waiting for?

For some time we have been reminding investors of the wisdom of diversifying their investment portfolios offshore. The reasons for diversifying investments offshore remain compelling.

  • Offshore investments provide access to companies and industries that are not available in South Africa.
  • The South African Rand is likely to continue depreciating in the medium to long term. (This means that as the Rand weakens in value the investment value increases and vice versa)
  • Investing offshore provides access to investment funds denominated in “hard currency” such as US Dollars, Euro and Sterling.
  • Investing offshore reduces the geo-political risk associated with South Africa.
  • There is a wide array of global and regional funds to choose from.
Investec Global Multi-Asset Income Fund

The Investec Global Multi-Asset Income Fund was launched in 2011 and has a five-star rating by Morningstar and it was a Raging Bull Award winner in 2018. The fund is a relatively low-risk fund that attempts to provide an attractive income with capital growth over the long term. The fund targets a sustainable yield of 4-6% per annum distributed on a monthly basis.

Investments can be made into the fund via Investec’s Global Select Access product.  The product has a number of estate planning benefits:

  • Investors can nominate multiple beneficiaries.
  • No capital gains tax is payable when the policy is transferred into the name of a beneficiary.
  • If an investor nominates a beneficiary, no executors’ fees are levied.
  • If an investor’s spouse is the nominated beneficiary, no estate duty is payable.
  • The proceeds are transferred directly to the beneficiary, instead of being frozen with other assets in your estate.
  • If the investor is a South African resident on death, no foreign inheritance taxes will be payable. This is because the investor owns a policy domiciled in Guernsey, and no foreign inheritance taxes are currently payable in Guernsey. However, estate duty may be payable in South Africa.
  • There is no requirement to apply for an offshore grant of probate (appointing a foreign agent to wind up foreign assets) if a beneficiary has been nominated who is able to receive the benefit.
Marriott Income Specialists Investment Presentation

Kevin Mills Financial Services is pleased to host an investment presentation. Our guest speaker is Duggan Matthews, Chief Investment Officer at Marriott Income Specialists.

Duggan has attained the following qualifications; BBA (Hons), Strategic Mgmt (Hons), CFA, MBA and has been in the investment industry since 2006 has a wealth of investment knowledge. He leads the Investment Team and is responsible for both primary and secondary research in the securities market, as well as monitoring broad macro-economic variables. Duggan is a member of the Investment Analysts Society of Southern Africa.

Established in 1862, Marriott Asset Managers is one of the oldest financial services businesses in the country. They currently have over R23 billion in assets under management, and offer a number of investment products including South African unit trusts and investment products, international unit trusts, an offshore share portfolio and a direct UK property solution.

We are delighted to welcome Duggan! To book your seat please contact the office on 041 373 0601.