Fight to keep your wealth, BJM PCS advises SA’s rich
Don’t panic. Don’t cut and run. Fight to maintain your wealth in the current financial crisis. That’s the advice the rich are receiving at the moment from Barnard Jacobs Mellet Private Client Services (BJM PCS), wealth manager and investment adviser to some of the country’s richest individuals and families.
The professional confidante to high net worth individuals crystallises the decisions facing investors as a fundamental choice between ‘fight or flight’, the primitive option faced by all animals when dire threats arise.
The BJM PCS advice is firmly that it’s time to fight.
Tony Barrett, Durban-based head of Wealth Management at BJM PCS, notes: “In these volatile and uncertain times, with negative news and rampant turmoil in the financial markets, it may be instinctive to take the flight option and panic.
“We would like to encourage our clients to take a contrarian view and fight with all the weapons at their disposal.”
He acknowledges that panic is understandable when a blue-chip share like that of Lehman Brothers can fall in a year from $65.39 to 17 cents. But successful resistance is possible.
Barrett recommends four ‘weapons’:
- Strategic planning – in The Art of War classical Chinese military strategist Sun Tzu emphasises the importance of developing an appropriate plan and a relevant strategy. Barrett says the advice is still relevant today as investors need to develop plans that reflect their unique needs and circumstances.
- Quality focus – the adage that form is temporary, quality permanent (coined by English cricketing great Ian Botham) applies to investing as well as sport. Barrett says quality players come out on top when the going gets tough and so do quality companies with good business operations and solid earnings. The current environment enables investors to buy these counters at ‘sale’ prices – though for added peace of mind, stock selection should be guided by credible research.
- Innovation – when the only constant is change, an astute investor must be alert to new trends and investment innovation. Blindly sticking with outdated modes of investment is “like driving a 10-year-old Formula One racing car and expecting to be competitive in a current grand prix”. Barrett observes that almost all of the JSE’s September losses were cushioned by at least one multi-manager investment fund – a relatively new type of investment product.
- Diversification – an essential element in all wealth management, though in volatile times well-judged ‘tweaks’ to a portfolio mix were necessary for optimum results. The principles of diversification are enshrined in the approach of the world’s most successful investor Warren Buffet and his Berkshire Hathaway investment company, a business that has grown shareholder value while others had seen values tumble.
Barrett adds: “Our clients have the advantage that they can develop an appropriate, customised response to current volatility after thorough discussion with their relationship managers.
“But even the relatively small investor-saver can benefit by applying a strategy appropriate to his or her needs and tweaking it rather than abandoning it. Applying diversification principles while staying alert for appropriate investment innovation should also pay off in the long run.
“The wealthy benefit from expert consultation and research, but investors in all income groups are able to draw on their own common sense. In investment markets, common sense may be in short supply on occasion, but it’s accessible to all, though you sometimes need strong nerves to apply it.”
