A Partnership for Life: transparency and your financial advisor

“There’s no single professional that’s right for all clients.” ~ Gerri Walsh, vice-president for investor education, Financial Industry Regulatory Authority (Finra).

Service is generally about politeness, competency and going the extra mile to help a customer. But the service provided by your financial advisor is a different story altogether – because here you are looking at the very epitome of trust, the basis of a partnership for life.

And therefore it should be a relationship that is open, honest, forthright and enduring. In fact, a friendship. And the key to this, is transparency.

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Thirtieth Anniversary of Foster Wealth

The 1st of June 2018 marks the thirtieth anniversary of the founding of Foster Wealth.

Honesty, integrity and loyalty to clients were the cornerstones on which we started to build the business and these values still remain integral to our business thirty years later.

While we celebrate what we have achieved over the past thirty years, we reflect most of all on what a great privilege it has been to serve our clients. Many of the families that became clients in 1988 remain clients today, even though some of them no longer live in South Africa.

There are many events to reflect on:

  • We didn’t think in 1988 that a number of our clients would leave South Africa.
  • In 1988 there were 36 unit trust funds to choose from, however, little did we realise that by 2018 they would have mushroomed to 2103!
  • We were all generally concerned about the political landscape and had no idea that Nelson Mandela would be released in 1990 and that there would be a democratically elected government by 1994.
  • “State capture” was unheard of.

Nevertheless, despite all the political changes over the last thirty years, our clients’ investments have grown. This is, perhaps, the most significant reflection: we should not be influenced by short-term political issues.

We have survived major stock market crashes:

  • Most notably 1987,
  • The so-called Tech stock implosion of 1998,
  • The global financial crash of 2008/2009,
  • At least one major South African currency crash being that of 2001,
  • Several downgrades of the countries credit rating.

Consequently, we feel that it is worth reflecting on what long-term investment truly means: it means staying in the market, sticking to your long-term objective and not being distracted by political issues, stock market crashes or credit rating downgrades.

Our founder, Peter Foster, retired in 2017, handing over the reins of Foster Wealth Management to his son, Thomas Foster. Thomas and his team are passionate about maintaining and enhancing the honesty, integrity and loyalty that our clients have come to expect.

With this, we would like to express our sincere gratitude towards our clients for their loyalty to Foster Wealth and consider it a privilege to continue to serve you in the future.

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World Debt and Investment: risk and reality

“Everything we get, outside of the free gifts of nature, must in some way be paid for.” ~ Henry Hazelitt ‘One Lesson: The Shortest and Surest Way to Understand Basic Economics’

Debt is a complex issue – and depending on how it is controlled – can have either positive or negative effects. In its simplest form, debt could well look like this: if you owe more money than you earn, you are bankrupt, actually poor. Yet the world seems determined to ignore this reality and continues to spend beyond means and borrow beyond ability to repay. The effect is the same whether you’re an individual, a company, or a country.

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The Cyril Effect

The political landscape in South Africa is changing by the day. As I write this, the State of the Nation Address has been postponed for the first time in our young democracy, the ANC National Executive Council has set up, and then subsequently cancelled an emergency meeting, rumours abound that Zuma is on the verge of resigning and uncertainty is the order of the day. The stock market, South African bonds and the currency have been volatile and everyone appears to be waiting for what is coming next.

While one should be very careful of reading too much into politics when assessing markets and it is exceptionally difficult to make a call on these short term outcomes, we try to look through all the news flow and assess what is likely to be our reality in the medium to long term in South Africa. The election of Cyril Ramaphosa as ANC president in December last year has provided large sections of the South African populace with a sense of optimism and hope for the future. A hope that he can provide the leadership that the country needs to combat corruption and manage the economy in a sensible manner to ensure growth. On a medium to long term view, it is safe to say that South Africa finds itself in a better position post his election.

While the positivity is not unfounded, the reality is that the starting point for any recovery is not an ideal one. Ramaphosa takes over at a point where there are numerous challenges facing South Africa’s economy – corruption is endemic, growth is negligible, debt levels are rising and unemployment remains our core challenge. The change in leadership doesn’t result in any immediate improvement in any of these issues and implementing the various changes will require much hard work in the short term to deliver on that medium to long term potential.

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Future Hot Stocks: where the smart money is going

Thus far, through 2017 and as we head into 2018, markets have been in a bull run for nearly nine years. However, it’s not time to lose focus. There are many options to consider as trends and hot tips make the rounds. The pick includes some stalwarts who will still dominate in 2018, but also new choices that may prove valuable while appearing offbeat and somewhat tempestuous.

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