Wealthy are riding out the storm – BJM PCS

Billions in value may at times be disappearing from the JSE, but the country’s wealthiest individuals and families seem to be riding out the equity storm.

That’s the feedback from Barnard Jacob Mellet Private Client Services (BJM PCS), investment managers and advisers to some of the country’s wealthiest individuals.

Tony Barrett, head of BJM PCS Wealth Management, noted: “Currently, markets are extremely challenging, but for us the most difficult period was between Easter and mid-year when some clients found our advice hard to accept.

“After years of gains, making a case for strategic revision and portfolio rebalancing can be a challenge. A client may have seen a particular share’s value double in a relatively short time. It seems like an act of betrayal to sell something that is serving you so well.

“Profit-taking was only prudent, but making that case earlier in the year was the real challenge for our relationship managers. Today’s market news can be depressing, but the response of the vast majority of clients is that it might have been a lot worse and they are relatively well placed and adeqautley diversified.”

Even in cases where a setback had been experienced, there had been no panic.

Said Barrett: “The relationship manager system that underpins a business focused on private clients enables regular adjustment and tweaking in terms of following a chosen strategy. If the risk profile is correct and the time horizons and objectives are unchanged, there is usually little to fix.

“As the number one equity research house, we closely scrutinise company performance, management teams, balance sheets and macro factors. As a consequence, our clients usually have a diversified spread of quality companies in their portfolios and utilise an appropriate asset allocation strategy.

“A temporary setback in turbulent market conditions does not mean these are suddenly poor companies. They stay good companies and they will recover. Selling now only realises a loss. We may well advise the opposite – beef up the position now value opportunities are beginning to emerge.”

What about the average saver-investor; the person without an asset base that would warrant specialist attention from a wealth adviser to private clients?

Barrett has good news for those in this category. It is possible to ride out volatility and build wealth. The ordinary saver-investor may not have access to in-depth analysis and award-winning research, but the application of basic principles can prove helpful.

Barrett has four tips:

1. Don’t put all your eggs in one basket. Diversify across asset classes – equities, cash, property and some international allocations.
2. Don’t begrudge fees spent with a good adviser. Some advisers might simply tell you what you can read for yourself in yesterday’s business pages, but real professionals provide additional insights and help you understand your risk tolerance and objectives.
3. Apply common sense. Incurring extra costs by flitting in and out of investments never helps. Think before you buy and sell. Apply a long-term strategy. If you’ve had a good run, it never hurts to take a little profit. It’s simple prudence.
4. You see further by standing on the shoulders of giants – Warren Buffett, for instance.

One insight from the world’s most successful investor was that you sell when the champagne corks are popping and buy when there’s blood in the streets.

“This means you don’t dump your shares and panic near the bottom of a market slide,” said Barrett. “Learn from an investment giant like Buffett and take some of your earlier profit to buy at bargain prices. That’s what some extremely wealthy and sophisticated investors are doing right now.”