Cover Story – 50 years and still going strong

‘What lockdown showed me is that I don’t want to retire, because you miss that connection with people,’ says David. ‘Investing is not difficult. Managing your client’s expectations is the tricky part. So, I will carry on as long as I can – until people finally get on my nerves,’ he jokes.

After all these years, David still enjoys the challenge of the job. ‘I enjoy trying to work out what trends will influence the world economy, who has got the money and where they are spending it.’

He describes himself as a ‘theme investor’. ‘I like to see where the global economy is going, what is driving lifestyles and business, what is coming next and are we on the right track … At the moment it’s all tech and digitisation. I like to determine which companies will benefit from this. These are the types of trends I enjoy studying.’

BACK IN THE DAY …

David joined the stock market in 1972, the day after he qualified as a chartered accountant. ‘All that means to me is that I’m old,’ he laughs.

However, things have changed a lot since then. ‘There’s the good and the bad,’ he explains. ‘We are much more efficient now. Markets are far more efficient, open and vibrant. You can invest anywhere in the world at the touch of a button. I can monitor markets across the globe on a 24-hour basis.’

On the other hand, David feels the way businesses are run and the way people relate to each other has also changed. ‘When I look at the pictures of being on the (stock market) floor years ago I can’t help but remember how much of a community we were. We knew everybody – we were even friends with the opposition. There was something very special about that period. I’ve got plenty of stories of the boys on the floor, but they are unprintable.’ David was even part of the stock exchange football team! ‘We don’t have that community or that central point anymore.’

David’s father was also on the stock exchange for many years. ‘When he celebrated his 50 years, there was a huge banquet on the trading floor, with people from all over the world in attendance, presenting him with silver coasters, dishes, trays and everything. When I celebrated, I got an interview with a magazine,’ he laughs. ‘That was it!’

David believes the stock exchange is the one industry in which women thrived in a time where there was a push for equality. ‘For as long as I’ve been around, woman analysts and economists have always been at the forefront and were always highly respected. They are smart, astute and they’ve got a different instinct. In my view there was never any overt discrimination – I can’t talk for pay though.’

They weren’t always the best traders (the physical trading on the floor) but behind the scenes there were many women who reached very high levels. ‘In general, women are not speculators. They are far more cautious when investing than men and don’t enjoy taking risks as much as the men do. I find it fascinating …’ He admits he would rather deal with a male than with a female. ‘Women are more ruthless when it comes to negotiations than men. If a woman has a view in her mind, she drives it home. Men just want to get the deal done and go for a beer,’ he laughs.

Another thing he distinctly remembers from his days ‘on the floor’ was the constant ups and downs. ‘During the heady days of the 1987 boom, a lot of small companies came to the market. We tended to list everything and there were hundreds of new listings. We got caught up in the swing of things and fell in love with businesses overnight. Although we didn’t lose money, very few of these companies survived. It was the same with all the listing booms.’ David explains. ‘There I got scars on my back and learnt valuable lessons about being cautious about how you look at companies.’

STICK TO YOUR GUNS

One of the many achievements throughout his career David is most proud of is the fact that he started investing offshore more than a decade ago – long before it became popular. ‘Sasfin Securities benefited tremendously from being “first in” and we built a very strong base. Today, 80% of my business is offshore even though there was quite a bit of cynicism (from outside and inside our business) at the start. This was definitely the biggest financial achievement I have made.’

Over the years, the stock exchange has changed dramatically, especially with deregulation. ‘By the ‘eighties and ‘nineties, the South African investment market was very much run by the big institutions. As a broker, you would offer these companies research, and in turn, they would give you brokerage at a set rate. So, your institutional arm became the most important, where you made the big money. This led to a lot of abuse as the institutions had massive power. It was a difficult time.’

After deregulation and going electronic in the mid-‘nineties, the way business was done changed completely, according to David. ‘There was a shift to the private client. At the time I decided to build my clients one by one, which I did.’

When it comes to investing, David is very careful to only invest in companies that he knows, have researched and understands. ‘People get carried away on the stock market. When you are dealing with a client’s money, you have to be extra careful. Know what you are buying and play the long game.’

REPUTATION IS GOLD

Reputation is of utmost importance to David. ‘When you do something wrong, it will follow you for your entire career. No matter how hard you try to redeem yourself, you will never get your reputation back. The temptation to do something dubious is often there, and you have to learn how to deal with it in the right way. Avoid the temptation to do something that you know is questionable, even if the rewards seem enticing. Rather work hard at preserving your skills. Try learning something new every day. Go to bed smarter than when you woke up.’

David believes CAs(SA), especially, need to be non-negotiable when it comes to ethics and morals. ‘The profession has dropped a lot of catches. There have been a lot of compromises and a lot of firms have fallen as a result of that.’

For him, dealing with other people’s money is still a big responsibility and burden. ‘I still ask myself every day whether I am doing the right thing,’ he admits. It angers him when other CAs behave unethically. ‘But the signs are always there. That is why you have to learn everything you can about a company. Don’t just fall in love with a company before you know it inside out and understand it. It’s hard work and you can’t wing your way through it. You have to ask the difficult questions.’

WORST CA THAT EVER LIVED!

Looking back on his life, David jokingly says he would have rather become an artist or professional football player if he could. ‘I enjoyed art and architecture much more than economics. I became a CA out of default and today I love it, but my initial love is art. I still draw a lot; I’ve had exhibitions and I’m a cartoonist and caricaturist. Although it’s my passion, it’s unfortunately not a money-making passion, so I had to become pragmatic.’

With three children and seven grandchildren spread across the world, David is happy that he made the choice to become a CA. ‘I wouldn’t have been able to support them by drawing caricatures on the side of the road, but I am the worst CA that ever lived! I just make my decisions to buy a company or sell a company based on the balance in the cashbook. It’s a very simple approach to business,’ he laughs.

On a more serious note, he emphasises the value of the CA qualification. ‘If you want to go into financial markets, do a CA, because it teaches you how the balance sheet is constructed. It teaches you the processes that go into the construction of the financial statements. If you’re a CFA, you’re presented already prepared statements. You have to then re-engineer something that CAs already know.’

His advice to young CAs is to go to a small company. ‘Avoid the big ones. When you go to a big company, it’s too big for you to understand how the overall business works. Small companies teach you how everything works, all the processes from raising money, using it, costing, selling, shipping – all the ins and outs. It’s invaluable.’

David’s tips on doing business

• The hardest thing is to build up a client’s trust. Don’t try to overwhelm your client with how clever you are − you have to build a relationship.
• Never bring your phone into a meeting. It is a distraction and looking at your phone sends a message that you are not focused on your client. You need to maintain eye contact.
• Leave your watch in your briefcase, too. Once you look at your watch, it shows you are bored. It takes time to create trust. You have to listen intently to your client. Leave enough time in a meeting to get to know what your client wants from you and for you to explain what services you provide. Building a relationship is not speed-dating.
• Don’t try to impress people by using buzzwords or industry talk. Don’t show off. Explain things in an easy-to-understand way. If you can’t explain what you can do in simple, everyday language it means you don’t really know what you are talking about.
• Don’t pressurise or force the client. When they are ready, they will come back.
• Always dress neatly and appropriately. It’s a reflection of your character.

Author Marteli Brewis