CEO editorial – Quarter 3 2023

Gary Mockler
Group Chief Executive Officer

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If Elon can do it, so can we…

Reading some of my recent quarterly editorials from past Trendline’s, I reflect on a recurring theme of reporting on legislative changes and how this will or should influence our investment perspectives.

Reading through these articles (all in one session), also highlighted my consistent theme of concern, caution, and opposition to some of these changes.

Whilst it has probably been the responsible thing to do – showing our clients who aren’t (or shouldn’t be) legal or technical experts, a perspective of how these tax and retirement fund laws will shape financial savings – I do think I’ve fallen into the same trap that so many South African thought-leaders, commentators and journalists have.

I have bemoaned the changes, by-and-large.  For instance, I’ve noted how the Two-pot retirement system is politically appeasing low earners, rather than dealing with the root causes of poor retirement savings, noting how the increasing tax burden continually falls on a diminishing taxable population.  Perhaps I haven’t been bemoaning our fate, maybe I’ve just been moaning?

The South African press, in general, has, for a long time, been labelled as being unduly negative.  Government especially believes they’re often unfairly criticised.  Well, whether the complaining is fair or not, and whether it’s productive or not, I think we at GTC can, in any event, change our outlook.

When addressing GTC staff meetings I periodically bring up my own perspective that there are only two types of people.  Those that can do, and those that can’t.  We each have a choice. This attribute is about attitude only and has no bearing on the skill set required.  Doctors, software engineers, and game rangers (to illustrate divergent walks of life) all have the propensity to be one or the other.

This holds true for all of us as when it comes to our success in investing.  Sure, inherited wealth helps, and so does a good job.  Luck and timing are also always omnipresent watchdogs.  But through all of this, there will always be those who make it happen and those who don’t.

Samir’s article in this quarters Trendline on compound interest is fundamental to the construction and sustainability of wealth creation.

Of course, ‘interest’ here means ‘return’ and not necessarily fixed interest as per bank deposits.  Elon Musk has understood and courted (and risked) compound interest his whole career. Making some $175 million from his portion of the PayPal sale to eBay, he then used these proceeds to buy or create additional businesses which included Neuralink, SpaceX, the Boring Company, Tesla, and X (or do we still say Twitter?).  From what was a healthy profit some 21 years ago, Musk has used compounding to create a fortune never before seen by any single individual, in the history of man.

Musk has overcome (or simply ignored?) naysayers, regulators, adversaries as well as popular sentiment.  He’s the epitome of a can-do person.  He’s also a successful scholar of the fundamental understanding of compounding interest, traced back to ancient Sumerians 2 500 BC.

So, from now, I have several resolutions to fulfil (and there’s no need to wait for the year-end to start these).

• Educate and promote the principles of successful compounding (start as early as possible, stay determined and unwavering, reinvest the proceeds, and defer spending as far as possible).
• Avoid blaming everything else for failure, including cumbersome and counter-intuitive regulations. There are enough opportunities despite these obstacles.
• Report factually, whilst seeing positives in place of negatives,
• Be a consistent can-doer and surround myself with like-minded people.

Taking a leaf from Tim Cohen’s daily column, (editor of the Daily Maverick) – happy investing.