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It's My Money with Magnus Heystek · Strictly Business

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You're listening to Strictly Business Podcast with Lindsay Williams.
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This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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for global wealth creation.
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Welcome to It's My Money.
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It's My Money is brought to you by Brenthurst Wealth, South Africa's
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multi-award winning boutique wealth manager.
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With me now the founder of Brenthurst Wealth and that's Magnus Haystack.
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Magnus, you kindly sent me a piece which was quite thought-provoking actually
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because it goes
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back to 2025 which we've already spoken about.
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What a great year it was for the JSC.
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But then we look at the month of war, the month that has just passed.
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And it's the complete antithesis of last year.
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And it really puts things into context, I think.
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Indeed it does, Lindsay.
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The drivers of the market last year upwards was exactly the same drivers that
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pulled it down the last month.
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Just to put into context, from early March, April last year, 2025, be.
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Gold price, gold shares started rocketing and launched as it was going to the moon.
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I mean, the gold index went up like 200%.
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The gold price went up 50%, 60%.
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So our market was dragged up by the performance of our big three gold mines.
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In fact, only three gold mines.
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And together with that, process NOSPAS also had...
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a very, very strong rally, especially Nuspash, which is our biggest single
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company.
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So the end result was that the JSC on an index level looked extremely positive,
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both in Rand terms up 40% and in dollar terms up 61%.
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So Mr.
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Haystack at Brentis was eating humble pie.
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Yes, people took to social media to have a go at you, Magnus, but you're used to
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that, aren't you?
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Well, there were guys having a go at me saying I got it wrong.
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Am I bringing my money back?
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And I actually spoke at the business conference about a month ago on this
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issue.
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And I actually said, I referred to this one particular tweet where some guy had a
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go at me.
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And I said, I'm not bringing back one cent.
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And I explained why not.
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I said, the upward movement was so concentrated into five shares.
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And if anything goes wrong with those five shares, we're going to see a massive
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pullback.
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And that's exactly what happened.
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you know, March.
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Because the gold price collapsed, gold shares collapsed,
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Nospash has been having a torrid run for some reason.
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Boom, our market is suddenly the second-largest, worst-performing market in
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the world.
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And the headline in the
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Business Day this morning says 3 trillion rand lost in a month.
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Okay, that's what newspapers do.
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They focus on the bad news.
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So I was always a little bit worried about the...
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the drivers behind that uplift.
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The broad-based market wasn't doing much.
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So what you're saying is a very narrow, before you go into that, it was a very
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narrow rally.
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Five stocks really drove most of that, whatever the rise was, you said 61, was it
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61% or 41%?
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Sorry, the numbers.
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Oh, there you go.
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In round terms, the JSC was up 41%.
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Most of that, or a good percentage of that anyway, was five stocks.
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And that's very dangerous, It's almost like the potential...
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vulnerability of the US market because of the focus on the Magnificent Seven.
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Similar sort of situation.
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Much more amplified in the sense that there were five shares and they made up
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about 25% to 30%
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of the JSE at their peak, which was very, very narrow and very focused.
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And as it so happened, exactly those five shares started tumbling a month or two
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ago.
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And that dragged the market down just as quickly.
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So you would have suffered from severe bad whiplash if you looked at the one-year
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number
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of the JSE end of April, sorry, January, and said, wow, time to get in.
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Well, you're down 15% in rand terms and 20% in dollar terms.
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So that was an extreme bout of volatility.
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And it looks like it's going to continue.
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because today gold shares were absolutely slaughtered again, NASPAS down again.
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So those guys who follow the index will perhaps understand why they need some
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active management.
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It does reduce the volatility.
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So there's a heck of a long, big push.
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And I've always said I like index investing across the world, but the South
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African market is different.
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And we see it again, the volatility.
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And that's when you...
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operate in the real world.
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It's money that goes up and money goes down and what are you going to do as an
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investor?
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That's why I kind of like the value style active management in the South African
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context.
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The returns have been far more stable.
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and been excellent.
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But wow, it's been a sharp drop for the last month.
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It really has, you know, and it's quite ironic that we're pre-recording this
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podcast on the year
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anniversary of Mr. Trump standing up there with a wooden board on his, well,
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he called it Liberation Day.
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It was the day that tariffs were mooted by him.
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And the market over the next two to three days came down very, very sharply.
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And then we started the rally.
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that you spoke about on the JSE, which led to an extraordinary performance for the
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whole year.
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I spoke to a money manager yesterday, and he didn't want to speak at first because
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of what's happening to the RAND
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and to the capital market in South Africa.
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And I said, you've got a duty to do so, because I gave you the chance when in
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November, December,
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when everything was set fair.
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For the fixed income market, you know, everything was, the rand was so strong, it
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was going to 13, 13.50 in many people's eyes,
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and so on and so on.
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And yesterday, he wasn't eating humble pie,
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but he recognised that when you look back at the history of South Africa, the rand
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and the interest rates,
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etc., when everything looks good, be very careful.
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And it's exactly what's happened, I think, Magnus.
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It has, you know, and the point you make is absolutely correct, you know.
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That person does owe it to speak the truth or at least give a balanced view to the
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market,
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not only a one-sided view all the time, which happens quite a lot.
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And in the context, you know, it's notable that most South Africans today have, well,
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people who have got disposable income, high net worth individuals,
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have a very large percentage of their cash offshore and in South Africa.
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So the currency becomes a very big factor in the lives of...
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people.
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So, you know, what you win on the one side, you lose on the other side.
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But my golly, it's been volatile.
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It's been volatile.
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What do we do now?
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Because this month of war is going to be two, three months of war in whatever form.
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We don't know yet.
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It's all up to Mr.
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Trump and also to the foe, the Iranians.
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But I do think it's here for a while.
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And I do think Iran is still vulnerable.
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That's my opinion, not Brenta's opinion.
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What do you think?
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You know, I spoke to a client this morning and, you know,
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one can give general advice and it's normally good advice, don't panic, etc.
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But it's a different situation when you're looking into someone's eyes and you're
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saying, you know,
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your pension fund is down 15 or 20 percent.
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What do you do?
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You know, then all that good advice of staying in there for the long term just
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disappears
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and you actually have to make a call and say, sir.
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For you, I'm taking out of the market, I'm putting into lovely old cash until there
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is some kind of stability into the
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market.
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So, you know, that's not what the fund managers want to hear.
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But, you know, when it comes down to real life individual cases, that sometimes is
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just the best option.
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Just put it into cash, especially with pension money, living annuities where
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there's no capital gains tax,
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there's no fees, etc.
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You should put in cash and wait, protect the downside.
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and we'll come back to fight the war another time.
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And that's what I'm doing with my big clients, especially with the
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non-discretionary capital.
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Put it in cash.
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What can you lose?
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You know, if you're wrong, you go back into the market.
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But if the market continues dropping, you've assisted that client.
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Because clients are always bullish when the markets go up.
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But the minute it turns, they become very negative and nervous.
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They question the investment strategy and then you have to do what you have to do.
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Magnus, we have to talk a little bit about
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Bitcoin because Bitcoin was above 125,000 not that long ago.
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It was October, I think, mid-October.
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It has been down to close to 60,000.
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I'm publicly quite anti the cryptocurrency scene until it's properly regulated
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and until people properly understand it.
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Are you of the same view?
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I am indeed, Lindsay, and I'll tell you why.
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It's quite funny.
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I joined some Bitcoin business grouping where people comment on Bitcoin all the
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time.
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And my golly, I expressed that kind of opinion that you just expressed.
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And was I slaughtered for being out of touch and stupid and old or whatever?
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And I said to the guys, you sound like...
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All I did was I tweeted, I said, guys, do you realize the Bitcoin price?
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I think it was at $65,000 was the same price as it was five years ago.
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I just made that point that was kind of lost in this discussion of, I said, you've
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made no money in five years in Bitcoin.
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Do I see that?
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Do I hear that?
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And then the guy said, no, no, no, don't talk about that.
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I agree with you, Lindsay.
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These guys are like evangelists.
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If you don't believe the goddess of Bitcoin,
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you are cast into the hellfire of eternity.
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It's just incredible how they can slaughter you and turn and twist the
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arguments.
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And then I said, guys, Bitcoin is down 50% in one year.
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You've made no money in five years.
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And you want to tell me.
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This is going to replace fiat money, the so-called fiat money,
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and going to replace the dollars.
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I said, you are smoking your socks.
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It's not like the tulip mania of centuries ago.
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It's not like South Sea bubble.
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It's not like that.
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It's not quite as bad as that.
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But I do believe the downside is more likely than the upside.
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The line of least resistance is to the downside is what I'm trying to say.
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On that particular WhatsApp grouping, it's called the BizNews Bitcoin grouping.
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They are worse than the Tulip Mania of 1650 or whatever.
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They are guys, they're proudly proclaiming now for years, I have sold everything and
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everything in Bitcoin.
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That is the new...
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And I just, I just, I just, as if I...
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It's this echo chamber.
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They're trying to convince everyone else and themselves that this can only go up
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and it's going to replace the
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dollar.
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And I just said, guys, I've heard this story so often that it's the end of the
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dollar.
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And what has happened now?
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Everybody's rushed back to the dollar.
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So these guys, it may or may not have a place in the financial future of the
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world.
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Am I qualified to confidently… put my client's money in there?
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No, I can't.
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And I'll tell you why.
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If I put a client into Bitcoin and it drops by 50%
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and the client goes and lodges a complaint at the
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FSEA or some judge who has to judge my quality of advice,
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he only has to ask me one question.
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And the question is, Mr.
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Magnus, Do you fully understand?
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Bitcoin.
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Precisely.
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And the answer to it is, I don't.
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And all he will say is, pay the man, pay the man.
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So that's my standard reply.
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I say, cannot recommend it because I do not honestly understand it 100%.
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The icing on the cake for me, and this is me being bigoted.
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And again, this is not your Brenta's views when I saw the two sweaty faces of the
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Trump boys.
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at a Bitcoin conference or a crypto conference in Dubai, I think it was.
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It doesn't matter.
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I saw them there also being evangelical when it came to cryptocurrencies.
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And I thought, yeah, well, I knew I didn't like it anyway.
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Now I really don't like it.
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Moving on from that, please, Magnus, just the final point I want to, or the final
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question to you is,
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are you fearful of the South African economy?
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Because we're going into this crisis, or South Africa is going into this crisis on
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a slightly firmer footing than it would have been going.
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into the same thing four or five years ago.
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The RAND was relatively strong.
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Interest rates were going down.
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The public finances were slightly better.
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We'd been upgraded.
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We're off the grey list.
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So we're slightly cushioned.
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But how long before that cushion gets pulled from beneath South Africa and the
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economy goes into crisis mode again?
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Yeah, you know, the increase in the oil price, which historically always hits us
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very badly, and the longer there's...
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Trump carries on with this crazy war.
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You know, the worst it's going to get.
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We're extremely vulnerable to higher oil price, higher diesel,
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and it will just filter through into the economy that's already weak.
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Consumer expenditure will become under much more pressure.
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Government finances, they've graciously cut the fuel levy by three rand,
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but they need to get that money from somewhere else, and they will get it.
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They need to get it because our debt levels.
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or at 78% of GDP.
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And in the budget earlier this year, they confidently said, well, now we're going to
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get the debt levels under control.
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Well, that's been blown out of the water.
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So that's where our problem lies, is the debt levels.
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It's just going to continue to increase and increase.
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And at some point, I don't know where that point is, the debt levels become a major
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factor.
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And then that's where you'll get the collapse in the currency.
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I don't know if it's close.
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I don't think it's close, but it's slowly but surely moving in the wrong direction.
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So this has hit our economy at a very, very bad time.
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And I just don't see the ANC government under the current thinking of Ramaphosa.
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making any difference to the trajectory of our economy at its present.
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Just to summarise, you say in the piece that you sent me, final sentence is this.
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Over 10 years, offshore markets have returned double the JSE and we still
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recommend offshore
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investing as our primary investing strategy.
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Magnus, thank you very much for your time.
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Magnus Heysdek is from Brent Aswell, founder of that organisation.
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And that was It's My Money.
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It's My Money was brought to you by Brenthurst Wealth, an award-winning
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boutique wealth management company.