Cooking up a great portfolio with Josh Viljoen

Join us in the Easy Does It kitchen for a conversation with Josh Viljoen, senior auditor, founder of the Smart Money SA blog, and finance content contributor for FinMeUp.

We chat to Josh to get an understanding of how he chooses his own investments and navigates the markets. He introduces us to his “Two-bucket” system, the ingredients to whipping up a good portfolio (i.e. diversifying across different sectors), and more.

We also find out about Josh’s favorite ETFs (Exchange Traded Funds) and stocks, with Josh giving simple and technical insights about why he likes certain stocks so much.

Make sure to listen to this episode for gems from the finance maverick in the making. Share the love with us on social media by letting us know what you think of the episode by tweeting @EasyEquities @thejoshviljoen or tagging us on the gram.

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DISCLAIMER: EasyEquities is a product of First World Trader (Pty) Ltd t/a EasyEquities which is an authorised Financial Services Provider. FSP number: 22588. This material is not intended as and does not constitute financial advice or any other advice and is neither exhaustive nor prescriptive. The views expressed by the contributor are his or her own (as an independently registered financial services provider, financial adviser or other independent capacity), and not necessarily endorsed by EasyEquities (as a separate financial services provider).

Chapters

• 3:00 Never-Have-I-Ever
• 5:39 Josh Viljoen’s Money Story
• 7:38 Beginning of Josh’s Investing Journey
• 8:59 Insight into Josh’s Investment Portfolio
• 11:06 Key Ingredients to Cooking up a Great Portfolio
• 14:58 Sneak-peak into Josh’s Investment Portfolio

Transcript

Introduction

[background music] We’re cooking up a great portfolio with an investor. It’s easy. I think there are a few important ingredients to cooking up a good portfolio. The first for me, I think a good starting point is to finding a platform that you can invest on that has low fees because well, the difference between a 1% fee and a 2% fee may seem very small…when you actually compounding that fee over you investment lifetime that could end up being the difference of hundreds of thousands even millions of rands when those fees are compounded at the end of the day.

Welcome to Easy Does It. A podcast by Easy Equities, where we simplify money and investing. No jargon. No complications. Your cool guide to investing. Easy. 

Once again, we’re putting on our aprons and turning the stove all the way up as we cook up another great portfolio with an investor. My name is DJ @Large – hmm, hmm, hmm…and welcome to the Easy Does It podcast. Your cool guide to investing. Now, today’s investor and chef in the Easy Equities kitchen is Josh Viljoen, a senior auditor by day and by night a man who loves tracking the pulse of global equity markets and investing. He’s also a mentor and content creator on the FinMeUp app and through his blog Smart Money SA, he talks about all things investing.

Interview

DJ @Large: Josh welcome to the Easy Does it podcast, brother!

Josh Viljoen: Thank you, DJ. Thanks for having me. That was an awesome introduction.

DJ @Large: Yes, yes! Before we get cooking, and we turn on the stove. I’ve got a random money question for you, right? If you could have a sneak-peak into somebody else’s portfolio, who would it be and why?

Josh Viljoen: That’s a great question. Before I answer this, I think it’s important to note that I think for other investors it’s very important when building your own portfolio to try think independently as far as possible and not to necessarily purchase a share just because someone else has bought it. Although that being said, I do think following investors that have a similar strategy to you can definitely put stocks on you radar that you can then later research yourself. So that being said, an investor I do look up to, that I would love to have a sneak-peak into their portfolio is a man named Sean Piche and he runs the Ranmore Global Equity Fund. I really like his investing style. He has a strong focus towards value and he’s someone that doesn’t necessarily just follow the herd. He often has slightly contrarian ideas that maybe go against what is happening on the headlines or what most people are doing. 

DJ @Large: Yeah, what you said is really important – following people that you look up to and people that don’t necessarily agree with everything you think about when it comes to shares. They can almost give you a different perspective. Perhaps there’s a certain share or ETF that you’re very keen and they give you a different perspective. You happen to be the person that I follow…[laughter] so I absolutely love that. So, are you keen to play a little bit of a game with me? I want to keep you on your investment toes. 

Josh Viljoen: Haha, let’s go for it.

DJ @Large: Yes…so, it’s a game of never-have-ever. We’ve got three statements. The first one Josh is – Never have I ever showed off my investment portfolio online. Is this something that you have done?

Josh Viljoen: So, I can safely say I’ve never shared any portfolio screenshots of my account… [laughter] but that being said I do share with my audience if I’ve bought a new stock in my portfolio or if I’ve sold something I’ll often share those decisions and be very transparent about why I’ve bought something. Or, if I’ve sold something what’s changed or why I no longer hold something cos I think it’s often important to understand biases when we’re reading certain investing content. Because if someone owns a share and they’re writing a blog about that share they’re obviously gonna be a little bit more biased and optimistic when speaking about that company if it’s something that they already own. I think that’s something that’s important to note when you’re consuming some financial content. Just consider where it’s coming from and does this person actually have an interest in what they’re writing about. 

DJ @Large: Yeah, that’s so important. The next one is – Never have I ever bought a share or ETF because I had a good feeling about it.

Josh Viljoen: I’ve never bought a share without doing any research, atleast not in recent years. Maybe when I was starting out my investing journey but now before I buy a share I like to have a good amount of conviction in that stock and that will usually come from me actually spending time researching and understanding the business because I think if you buy something…if you don’t actually have a good understanding about why you bought it or an understanding of the business, the minute things maybe go bad and the share starts to drop in price, you won’t actually feel comfortable holding onto that if you don’t have a good understanding of why you bought it in the first place. 

DJ @Large: Mmm…and the question of research also comes up as well and that’s something that we’ll talk about a little bit later. The last one is Never have I ever sold a share or ETF because I panicked…something has happened in the market you absolutely panic and you sell. Have you ever been in that situation before?

Josh Viljoen: So, I have been in a situation where I’ve panic-sold because of some news or any sudden movements in the market but I can definitely think of a few instances where I’ve bought something, and it’s gone up in price quicker than I have expected and then I’ve maybe sold out but potentially sold out too soon and left a bit of profits on the table.

DJ @Large: Mmm…I’ve definitely been in a similar situation as well. Josh, I wanna get into your money story. I’m keen to know did you always know that you’ll end up working in the financial education and finance space? 

Josh Viljoen: That’s a good question so no, when I was in high school I definitely did not think I was gonna be going into finance, when I was picking my subjects and looking at university degrees, I was initially gravitating more towards something in the tech or IT space. But I ended up deciding to study accounting and pursue becoming a chartered accountant and it was only then at university that I really started to develop a passion for finance and I think that’s what sparked my interest in the markets and I think that interest has only grown ever since university and I think that’s just led to me sharing my interests with others online.

DJ @Large: Yeah, and I love the fact that you share this interest and you educate people and you don’t make it super complicated as well. Growing up, Josh…was money and investing openly discussed within your household. Is it something that you guys discussed around the dinner table?

Josh Viljoen: So, I wouldn’t say that money was something that was discussed around the dinner table but it definitely wasn’t a topic that was off-limits or seen as taboo. But when it comes to investing, I think that that’s something that wasn’t really discussed much at home. I think growing up I wasn’t really aware that an ordinary retail investor could manage their own money or build their own portfolio. I think I always had the notion that investing and managing your own money was only seen for the elites and someone had to manage your money for you. But I think that platforms like Easy Equities have made it so accessible that anyone can actually take charge of their finances and have some control in where they’re investing their money.

DJ @Large: Yeah, and hopefully as this newer generation when we start to have our own families and kids, that we open up the conversation around saving and investing and managing your money using the knowledge that we have. It’s almost like a generational thing that we start to share with our families which I think is really, really important. I wanna take you back to the beginning of your investment journey, right. What was the first share that you ever bought and by any chance do you still own it? 

Josh Viljoen: That’s a great question. When I was doing some research for this interview I really had to go and dig through the archives of my Easy Equities statements cos I couldn’t actually remember what the first share I bought was. I had a look and the first share I bought was in 2019 and that was Goldfields. The reason I bought it was I had decided to upscale myself and learn about technical analysis and once I had done that I was looking through some charts of some JSE shares and I came across Goldfields and I saw textbook trading pattern and I decided okay, this is a good entry point let me make my first purchase. So, I bought some Goldfields shares and I think I sold it about a month later. So, sadly I don’t still hold that and I’m really kicking myself now because gold and gold shares in particular really have an incredible run since the beginning of the year so sadly I don’t still hold that. 

DJ @Large: [laughter] Yeah, I think very few investors still hold onto their first share but you know everybody reminisces about you know, ‘my first share’. Some people knew exactly what they were buying, and other people didn’t know what they we buying but that experience of really getting the skin in the game is really, really great. I want us to start talking a bit about investing and in particular your portfolio. How would you describe your investment strategy? 

Josh Viljoen: So, when it comes to my personal investment strategy, I essentially follow a two-bucket approach. So, in the first bucket is low-cost ETF’s that I use to just try and track the markets and I do this in my tax-free savings account just to maximize the potential return I can get to avoid any tax when I do eventually realise those gains and withdraw the money one day. So, that’s the first part of my investment strategy. It’s just a low-cost ETF that I will contribute to consistently every month and just try track the market because if you look at the long-term performance of stock markets, equities have been the best performing assets I think over the last hundred years so that’s the first part of my strategy. Just try follow the market. The next part of my strategy is where I’m actually trying to pick individual stocks to try and outperform the markets. So, when it comes to this side of my investing, this is where I really will drill down and do a lot of research into individual companies. So, my own personal style of investing I have a strong focus on value so I’m really looking for shares that I think are trading at much less that what their fair value is. So, these often tend to be stocks that are potentially not as likely covered by most analysts or stocks that are often not making the news. So I really like to take a deeper look at these companies and just get an understanding of what are they worth and try find good businesses that are trading at a fair evaluation.

DJ @Large: Yeah, I love this…your approach. On the one side you’ve got these low-cost ETFs that give you stability and diversity then on the other side you’ve got a little bit of your own flavour where you looking for these value stocks that might not necessarily be sexy, they’re not trading. Nobody’s talking about them but there’s actually some real value there. Uhh, there’s companies that are doing really well so I really love your approach in terms of your investment strategy. Josh, for those who are new to the world of investing, what are the key ingredients to cooking up a great portfolio but also achieving financial freedom?

Josh Viljoen: That’s a great question so I think there a few important ingredients to cooking up a good portfolio. The first for me, I think a good starting point is to finding a platform that you can invest on that has low fees because well, the difference between a 1% fee and a 2% fee may seem very small…when you actually compounding that fee over you investment lifetime that could end up being the difference of hundreds of thousands to even millions of rands when those fees are compounded at the end of the day. So I think definitely focus on trying to find a platform that is secure and offers low-cost fees. The next thing that I think is very important is to diversify. So, we touched on ETFs earlier so I think ETFs are a good way to diversify because you’re essentially owning hundreds of companies just through one instrument. So, if one company doesn’t perform as well in your portfolio then the actual price change in that ETF is going to be very small because the weighting of that company ETF will be very small given how many companies you actually own. So, I think ETFs offer a good way to diversify but the if you are looking to build a portfolio of individual stocks I would then say it’s important to diversify not only by having more than one company but also by investing in different sectors of the markets. So, maybe the financial services sector like a bank or a retailer like Foschini or a commodity company like Goldfield or Sibanye Stillwater so I think it's important to diversify across different sectors so that if one sector is underperforming you might have other stocks in the portfolio that are from different sectors that might counteract that. So, diversify not only across multiple shares but multiple sectors and I think also across multiple regions. So, if you’re investing in companies that only own money in South Africa, if let’s say consumers start to feel the pressure or feel the pinch then a lot of the shares in your portfolio could all decrease in value because of the same reason. So, having exposure to global markets I think is very important and that’s I guess where platforms like Easy Equities have really come in and offered investors low-cost access to the USD markets to the Australian stock market to the European stock market and the UK stock market. So, diversify globally and across sectors. And then I think another important thing that’s often overlooked is to be consistent in your investing. It’s no use just investing once-off and then never again. It needs to be something continuous, as you are growing and as your income is growing you need to be consistently putting aside money into your portfolio if you really want to see long-term returns. It’s not just gonna be a once-off exercise I think be consistent and always be willing to keep learning. I think building financial freedom and building a good portfolio is not a static once-off thing. It’s something that constantly needs to be refined and be looked at. Jah, just be eager to learn and just keep growing your knowledge as you go along in your journey. 

DJ @Large: Yeah! Some important ingredients around being careful around fees, diversity, consistency in investing. And then one of the really important things that I really like to stress to people is have that spirit of wanting to learn and to understand and to ask a lot of questions which people don’t normally do so really important ingredients. Let’s get a sneak-peak into your investment portfolio, Josh. What are your three favourite shares or ETFS? 

Josh Viljoen: I’ll give you one ETF and two shares. So, on the ETF side one of my favourite ETFs is the Satrix MSCI World Index. So, this index basically tracks the MSCI World which is a global equity index so this is kind of the core of my portfolio so in the first bucket I’m just trying to track the return of the markets. I think this is a product that offers a low-cost way to gain that exposure to hundreds of different companies across different stock markets. So, I think that’s a good ETF, one I like that’s performed quite well over the last few years. And then looking at individual shares – two of my favourite companies are both JSE stocks. The one is Santova, that’s had quite a good run over the last month or two after their release results. So, they are a fourth party logistics company and essentially what that means is they help businesses outsource their entire supply chain. If a company is looking to, let’s say, import a new product they will manage everything from the customs, clearance to the actual physical transport of that good from point A to point B. So, I think that’s Santova in a nutshell and then the next company that is one of my favourites in my portfolio is Argent Industrial and this is a SA based company that also has some footprints in the UK and the US that’s trading at a very attractive valuation multiple and management are actively returning capital to shareholders in the form of share buy-backs and in the form of regular dividend payments. So, I think those are my two favourite shares in my portfolio at the moment.

DJ @Large: Yeah! I was smiling while you’re speaking cos those are two that also feature in my portfolio so clearly I’m doing something right in this investing game. [Laughter] Are there any shares in your portfolio that you’re holding onto because you’re convinced that eventually they will rebound?

Josh Viljoen: So, one share that I’m hoping will rebound is AliBaba and they are a Chinese e-commerce giant. If you haven’t heard of them I think you could compare them to Amazon. Many have called them the Amazon of China. So, that’s a company that I bought just over a year ago but I thought it was looking cheap but it has subsequently gotten a bit cheaper and the shares have gone down in value so that’s one I’m still holding onto that I’m hoping will rebound in years to come.

DJ @Large: Mmm…we all have that one share that sitting in our investment portfolios. Is there one share that you absolutely regret selling?

Josh Viljoen: Definitely! I think one share I bought that many other investors might have bought in the height of COVID was Sasol when the company was crashing and oil prices were plummeting. I bought some Sasol shares and after I saw they were up over a 100%. I thought okay, no, I’m gonna sell them, lock in the profits but since then the company has continued to recover and I think the shares are now trading at above R200. When I initially bought them around R40 a share. So, that I’m kicking myself for not holding out a bit longer and being a bit hasty to sell but I think it’s important to look back at past trades and reflect on them to help us grow and become better investors.

DJ @Large: Mmm…definitely! There’s something that you do brilliantly on social media and I’d like for us to get into it a little bit. When buying shares in a company or you’re selecting an ETF, what lind of research do you normally do? 

Josh Viljoen: That’s a good question. So my research is usually a combination of fundamental analysis and technical analysis. I like to phrase that and ill use fundamental analysis to determine what company I want to buy and I’ll then use the technical to help refine my entry and decide when to buy.  So, most of the time I will spend researching on the fundamental analysis of the business. When doing this I will be looking at the company’s annual financial statements, looking at the balance sheets and saying how is this company structured, what is the capital structure like. Are they mainly funded through debts or equity and do they have sufficient assets to pay off their liabilities cos I think that’s very important cos if a business’ balance sheet isn’t healthy, the business could end up being a financial distress and not necessarily have the financial support to undergo bad times when profits start to dry up. So, I think balance sheet health is something that is very important for me. I like to invest in companies that have little to no debt and then when looking at the income statement and the cashflow – I wanna find businesses that are cash flow positive and are growing cash flow year on year and not necessarily only projecting positive cash flows long into the future. I’d rather buy something that is producing cash flow now than buy something in the hopes of positive cashflows in the future. 

DJ @Large: Interesting way to view a company to see exactly…how is it ticking, how is it ticking, what’s exactly going on? And it’s something that you do really brilliantly on social media. Josh, what would you say is more important…time in the market or trying to time the market?

Josh Viljoen: So, I definitely think for 99.9999% …[laughter] of investors time in the market is your friend cos at the end of the day, I think most of the listeners here we’re long-term investors. We aren’t traders. We aren’t trying to get in and out of stocks and make a quick buck. We’re here to make generational wealth and achieve financial freedom. So, I think through that, the best thing you can do is to invest fir the long-term and invest early and invest often. So, I definitely think for most people time in the market is the best way to go and I think a lot of us would benefit from checking our portfolios less often than everyday.

DJ @Large: [laughter] Definitely! It goes back to this thing you spoke about around consistency which touches on time in the market which is really important. Josh, what advice do you have for those who’re new to the world of investing, perhaps they’re a little bit scared and they’re afraid to get started? 

Josh Viljoen: So, I think starting your investing journey can definitely be very daunting and it is scary making a first step. I thin it’s important to just start off small. You don’t have to be investing big amounts in the beginning. Even if you’re just putting away R50 a month just to get an understanding and a feel of how the platform works. Get an understanding of how to research a share. So, I think it’s important to start small and understand that in the beginning you are probably gonna make mistakes so rather make those mistakes early on when you’re only investing small amounts of money than years down the line when you’re actually making larger contributions.

DJ @Large: Mmm, yeah and don’t be afraid to do research and to ask questions and to listen to these type of podcasts, to follow people like you on social media…to ask them questions as well. I think that’s also really important in terms of what you’ve mentioned as well. Lastly, Josh…what’s currently in your stock watch list? What’s got you, you know thinking and doing a little bit more research? 

Josh Viljoen: So, currently on my watchlist there are two shares. One on the JSE and one on the American Stock Exchange. So, on the JSE I’m currently researching a company called Lewis, so they are a South African furniture retailer and then on the US side I’m currently looking at a stock called Micron. So, they make memory chips and we’ve seen companies like Videa have a huge run up in the last year with all the hype of AI given their chips. But Micron makes less glamorous memory chips and the actually own most of the market share along with Samsung, so I think that’s the interesting business that I’m looking into. It is quite cyclical, but I think we are potentially at the bottom of that cycle so that is something I’m keeping my eye on.

DJ @Large: Ahhh! Lovely! Josh, thank you so much for your time! Thank you for stepping into the kitchen and of course, cooking up a great portfolio with us.

Josh Viljoen: Thank you so much for having me DJ! 

Thank for pressing play on the Easy Does It podcast. A big shoutout to you for hanging out with us. Don’t forget to subscribe. We are on Spotify and Apple Podcasts. Let us know what you think of this episode on Twitter and Insta. Our handle is @EasyEquities.