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How to Invest in Global Brands

Big global brands today attract higher ratings than governments, with many fund managers claiming they are the companies to be invested in.

Eamonn Ryan

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In an environment of low growth and uncertainty about the future direction of the global economy, investing in high quality, global franchise businesses may be the soundest investment decision.

It is this philosophy which led the RE:CM Global Feeder Fund to be the top performing equity fund across all unit trust funds available to the South African retail investor in 2011. The fund was also the second-best performer among all South African unit trusts for the year. The RE:CM Global Feeder Fund was the only fund in the top five that is not a global bond fund.

Global attractiveness

Piet Viljoen, executive chairman at RE:CM, says that this was achieved by avoiding emerging markets and other ‘fads’, which many investors favoured over the same period. Viljoen says that the team focused on including strong cash generators in the fund, through powerful brands such as Johnson & Johnson, Microsoft, BP, Vodafone and Berkshire Hathaway.

“A year ago, many investors thought emerging markets were the place to be, due to their strong growth prospects and the developed world’s debt problems. One year later and emerging markets have underperformed even the European markets, while the US market has delivered good returns,” says Viljoen.

More recently, he says, “The fund’s exposure to Europe has almost doubled to just over 10% and we continue to find very attractively priced securities in that geographic area. As always, it takes turmoil to produce bargains, and Europe is enjoying its fair share of turmoil.

“In fact, one of our biggest purchases by value was Coca-Cola Hellenic – the largest independent Coke bottler by revenue globally. It services a range of developed and emerging markets, and happens to be listed in Greece. In short, it’s a global powerhouse available on a free cash flow yield of 10%,” he says.

Franchising success

According to Clyde Rossouw, portfolio manager of the Investec Global Franchise Fund: “Big global brands, which include companies such as Johnson & Johnson, Nestlé, Pfizer, Coca Cola and Philip Morris International, typically enjoy consistent earnings growth and create wealth for their shareholders year after year – even when the wider economy has been struggling.”

Rossouw says high quality global franchise businesses tend to have better balance sheets, better credit ratings and a lower default probability (in terms of their five-year debt) than most governments. “This is particularly pertinent in the current era of heightened sovereign risk and high aggregate levels of public sector debt. Johnson & Johnson, for example, currently has a AAA credit rating, while Japan has a AA sovereign debt rating.”

For instance, SABMiller, the world’s second largest beer brewer, was able to raise debt capital in January 2012 to finance its acquisition of Foster’s in Australia at an interest rate substantialy lower than the interest rate on new debt for Italy, the third largest economy in Europe.

Rossouw also points out that these companies have relatively stable margins and profits, and he believes they are most likely to be able to sustain an earnings recovery.

Furthermore, Rossouw says, valuations remain undemanding. “Many global franchise stocks are currently at multi-decade lows. In contrast to long bonds and high yield credit, they should offer growth in the event of sustained high inflation.”

Excellent financial shape

This view is endorsed by Paul Hansen, STANLIB Retail director, who says investors should not be misled by what they read in daily newspapers or hear on international news broadcasts. “Many companies in the US, Europe, Japan and in emerging markets like Brazil, China and South Africa, are in excellent financial shape, with strong balance sheets, lots of cash and generally good earnings growth, though earnings are expected to be down 7% year-on-year in Europe and to slow into single digits in the US.

“Valuations offshore look attractive (price-to-earnings and price-to-book) especially in what is likely to be an ongoing low interest rate environment,” says Hansen.

As to how to access these top brands, there’s any number of global unit trusts available locally, including the above two. For others, Hansen says you need to open an account with a stockbroker that provides research on these brand-name global companies. “Check if your bank has an offshore stockbroker.

Preferably open an account with a foreign stockbroker who is in a similar time zone, such as the UK or Jersey,” he adds.

Individuals are now eligible for R1 million a year in foreign exchange without tax certification – and a further R4 million a year with certification.

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

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11 Things You Need To Know About Bitcoin

The cryptocurrency has had a tumultuous existence so far.

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11 Bits about Bitcoin

Even the most tech savvy among us have a hard time wrapping their heads around Bitcoin. It’s a hot topic and a frequent point of discussion among investors, entrepreneurs and stock traders, so you should want to know all about it.

For starters, here’s an overly simplified explanation of Bitcoin: It’s a digital currency (there are more than 800 now) that isn’t controlled by a central authority such as a government or bank. It’s created by “miners,” who use computers and specialised hardware to process transactions, secure the currency’s network and collect bitcoins in exchange.

Supporters say it allows for more secure transactions over the internet. That’s in part due to blockchain, a technology that records cryptocurrency transactions chronologically in a public digital ledger.

Bitcoin is only eight and a half years old, but it’s the oldest and most highly valued cryptocurrency out there. In such a short time, it’s had a rocky and controversial history, but it’s also attracted a fair share of high-profile supporters.

Related: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

Click through to read 11 bits about Bitcoin that will make you at least sound like you know what you’re talking about next time it inevitably comes up.

The birth of Bitcoin

birth-of-bitcoin

Starting point at 2008

The origins of bitcoin trace back to 2008, when its creator, who went by the pseudonym Satoshi Nakamoto, published a proof of concept for Bitcoin.

The proof was then published to a cryptocurrency mailing list in 2009. Nakamoto left the project in 2010 and disappeared, but other developers picked up the work.

Bitcoin’s birthday is Jan. 3, when Nakamoto mined the first 50 units of the currency.

An elusive creator

elusive

No one really knows

The true identity of Bitcoin’s creator has never been confirmed. Newsweek claimed to have found Bitcoin’s creator in 2014, identifying Temple City, Calif, resident Dorian Satoshi Nakamoto. He has vigorously denied it.

In 2015, an Australian entrepreneur named Craig Wright said he was Bitcoin’s creator, but he couldn’t produce the evidence to support his claim.

Whoever Nakamoto is, that person is very rich, as the creator is estimated to have mined a million bitcoins in the currency’s early days.

Very expensive pizza

pizza

We wonder what was on the pizza?

The first transaction involving bitcoin was reported on May 22, 2010, when a programmer identified as Laszlo Hanyecz said he “successfully traded 10,000 bitcoins for pizza.”

As of June 14, 2018, 10,000 bitcoins are worth about $64.8 million.


Fintech: Fusing Finance And Technology

Fintech has become a disruptive force in the financial sector that is threatening the current status quo of banking and finance. The main beneficiary of that is the consumer.


You can spend bitcoins

spend-bitcoins

How to spend your bitcoins

While it may not seem like it, people continue to use bitcoins to buy stuff.

Related: Make The Most Of SA’s Law And Initial Coin Offering

The largest businesses to accept the cryptocurrency include Overstock.comExpediaNewegg and Dish.

Federal Bureau of Bitcoin

Federal Bureau of Bitcoin

The banning of Bitcoins

At one point, the U.S. government was one of the largest holders of bitcoin.

In 2013, after the FBI shut down Silk Road, a darknet site where people could buy drugs and other illicit goods and services, it took over bitcoin wallets controlled by the site, one of which held 144,000 bitcoins.

Investors have been making a killing by bidding on government-seized bitcoins.

A mountain-sized setback

Mt. Gox

Mt. Gox

In early 2014, Bitcoin suffered a devastating loss after the alleged hacking of Mt. Gox, a Japanese exchange.

About $460 million of the currency (in 2014 value) was stolen. It was the largest loss of bitcoins ever and raised concerns about how secure the currency was.

The billionaires’ takes

warren-buffett

Warren Buffett

Warren Buffett, perhaps the most famous investor in the world, was not so keen on Bitcoin one of the only times he addressed the currency.

“Stay away from it. It’s a mirage, basically,” he told CNBC. “The idea that it has some huge intrinsic value is a joke in my view.”

Fellow billionaire investor Jamie Dimon, chief executive of JPMorgan Chase, had even stronger words about Bitcoin:

“You can’t have a business where people are going to invent a currency out of thin air. It won’t end well … someone is going to get killed and then the government is going to come down on it.”

But not all billionaires are against Bitcoin. Mark Cuban has said its value is inflated, but he recently invested in a venture capital fund that backs cryptocurrency. Richard Branson, however, has spoken more optimistically about it.


The Currency Revolution

The rise and rise of digital currencies – and how they’re affecting your business.


Wealthy twins and a smart teen

Cameron and Tyler Winklevoss

Cameron and Tyler Winklevoss

Other notable investors in Bitcoin include Cameron and Tyler Winklevoss (the Harvard-educated twins who sued Mark Zuckerberg claiming that Facebook was based on an idea they’d had).

They invested $11 million into Bitcoin in 2013, an amount said to be about 1 percent of all bitcoins in circulation at that time. The Winklevoss twins have been petitioning the SEC to create a bitcoin exchange traded fund.

The agency rejected the idea earlier this year.

Another is investor and entrepreneur Erik Finman, who invested $1,000 into Bitcoin when he was 14 years old and is now a millionaire.

Celebrities want in

ashton-kutcher-2017

Ashton Kutcher

Celebrities have also expressed enthusiasm for the cryptocurrency.

Actor and Goop founder Gwyneth Paltrow advises Abra, a Bitcoin wallet, and Ashton Kutcher, Nas and Floyd Mayweather have all invested in Bitcoin start-ups.

Support from a big financial institution

Fidelity Investments

Fidelity Investments

In August 2017, Fidelity Investments became a rare standout among financial institutions in embracing Bitcoin and other cryptocurrencies.

The company allows its clients to use the Fidelity website to view their bitcoin holdings held through digital wallet provider Coinbase.

“This is an experiment in the spirit of learning what these crypto assets are like and how our customers may want to interact with them,” Hadley Stern, senior vice president and managing director at Fidelity Labs, told Reuters.

A hard fork

Bitcoin Cash

Bitcoin Cash

On Aug. 1 2017, Bitcoin experienced what’s being called a “hard fork” as a result of a few issues, including the limited number of transactions that can be processed per second. Essentially, the cryptocurrency split into two, with Bitcoin Cash debuting.

Here’s how Rob Marvin of PCMag explains the situation:

“The Bitcoin fork speaks to a fundamental ideological rift over what’s more important: Preserving the decentralised nature and independent control of the Bitcoin network, or accelerating transaction speeds to make the cryptocurrency more viable for mainstream ecommerce and payments.”

Bitcoin Cash allows larger blocks of currency and more transactions per second.

This article was originally posted here on Entrepreneur.com.


Related: 10 Ways To Make Money While You Sleep

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9 Warren Buffett Quotes That Will Teach You More Than Just Investing

While he is one of the most famous investors in the world, his expertise goes beyond money.

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Check out these nine quotes on time, success, mindset and more

There’s more to learn than finance from one of today’s most famous investors, Warren Buffett. In fact, the businessman, financial guru and philanthropist can teach you a thing or two about life. From taking risks to coping with change, Buffett’s expertise that expands far beyond stocks and dollar signs.

From a young age, the billionaire investor was destined for success – selling garbage bags to neighbors and delivering newspapers. By age 15, Buffett was already worth thousands of dollars and investing in real estate.

However, fast forward nearly 70 years and the “Oracle of Omaha” is now worth a whopping $77 billion, according to Forbes, making him currently the second richest person in the world (behind only Bill Gates).

Related: 5 Worthwhile Investment Lessons I Learned From Warren Buffett

There’s much to learn from Buffett too.

On time

warren-buffett

Warren Buffett

“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.” – Warren Buffett

On risk

Warren Buffett

Warren Buffett on risk management

“I don’t look to jump over seven-foot bars: I look around for one-foot bars that I can step over.” – Warren Buffett

On change

warren-buffett

Be the change you want to see in the world

“The most important thing to do if you find yourself in a hole is to stop digging.” – Warren Buffett

Related: 5 Things Warren Buffett Does After Work

On success

Warren-Buffett

What you need to know about success

“You only have to do a very few things right in your life so long as you don’t do too many things wrong.” – Warren Buffett

On empowerment

Warren-Buffett-billionaire-successful-entrepreneur

Image Credit: Art Streiber

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” – Warren Buffett

On opportunity

Warren-Buffett-problem-solving

When looking for an opportunity…

“You do things when the opportunities come along.” – Warren Buffett

On mindset

Warren-Buffett-billionaire-close-up

Mindset management

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett

On leadership

Warren Buffett

Warren Buffett

“Someone is sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffett

On motivation

Warren Buffett

Look for motivation

“Predicting rain doesn’t count. Building arks does.” – Warren Buffett

This article was originally posted here on Entrepreneur.com.

Related: 21 Inspiring Quotes About Success, Persistence And What It Means To Be An Entrepreneur

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Decrypting Cryptocurrencies

Your guide to understanding cryptocurrencies, why they are so popular and how you can use them.

Brenton Naicker

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brenton-naicker-cryptocurrency

Cryptocurrencies, like other forms of currency, provide a means of transacting goods and services. While other forms of exchange, such as fiat currencies (paper money) are issued, circulated and centrally controlled by governments and regulated by banks, cryptocurrencies are electronic and decentralised.

This means that transactions are peer-to-peer, negating the need, or additional expenses, of third party involvement such as banks or governments. The cryptocurrency market penetration will be facilitated by universal Wi-Fi and global mobile phone dispersion, enabling anyone to move money and assets, peer-to-peer, seamlessly and at almost no cost.

This clearly shows that it’s important that businesses and entrepreneurs understand this market in order to plan for the inevitable shift in the way the world transacts finances.

Related: Make The Most Of SA’s Law And Initial Coin Offering

How does a cryptocurrency transaction work?

The infrastructure supporting the cryptocurrency system is called the Blockchain, a digital ledger that stores all transaction information, and addresses three of the most obvious problems of the current money transmittance system:

  • It is decentralised, so transaction data is dispersed and not centrally controlled – this also means that the data is a lot more secure than with more traditional systems because there is not one point of entry for hackers.
  • There is no third-party involvement (ie, banks), which makes transaction fees significantly lower.
  • Transactions are in real-time and not encumbered by trading hours or bureaucracy.

Who controls cryptocurrency?

bitcoin-and-internet-accessLike conventional banking, cryptocurrency has a complex underlying structure issuing currency, recording transactions and allowing people to transact. The main difference is that an algorithm issues the currency and ledgers (not banks or governments), storing the information in blocks. Transactions match up public codes relating to user-held private passwords from their cryptocurrency Wallets.

The transaction amounts are public, but who sent the transaction is encrypted. Whoever owns the password to the Wallet owns the denoted cryptocurrency amount shown on the ledger. Even though transactions are added sequentially, many may be added to the ledger at the same time. These chains of transactions grouped in blocks make up the Blockchain.

Related: 11 Things You Need To Know About Bitcoin

Are Cryptocurrencies Here to Stay?

Cryptocurrencies, and with it the Blockchain, have unlocked value and opportunities for commerce that would’ve been hard to imagine even a few decades ago. Here are 5 reasons why Cryptocurrency is here to stay:

  1. A transaction, once confirmed, cannot be reversed or tampered with. So, they are secure and indelible.
  2. Cryptocurrency is transferred between Blockchain addresses. So, no real-world entities are associated with the accounts.
  3. Transactions are processed instantly and globally. Therefore, there is no delay in transfers.
  4. Cryptocurrency uses cryptographical processes. So, funds are locked and only available to private key owners.
  5. Generally, cryptocurrency does not require permissions from an authority.

Investing in cryptocurrencies

When looking to invest in cryptocurrencies, keep in mind that they are just like other stocks and subject to change in value based on supply and demand. In fact, since cryptocurrencies are not insured, and exposed to market fluctuations, they bear the same risks as stock markets.

Some exciting work has however been done to address these potential fluctuations while also continually optimising cryptocurrency value by companies such as Krypteum, who offer an advanced A.I enabled investment crypto coin.

Read next: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

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