When global equity specialist David Shapiro sits at his desk in Johannesburg, he relishes the fact that technology allows him to buy shares in companies anywhere in the world.
“The beauty about saving and investment is that you no longer have to be confined to your geographic area,” Shapiro said on 15 February in part one of Chabad House Johannesburg’s Responsible Living Series on saving for the future. “You can invest anywhere in the world and buy any stock or any product. Thousands and thousands of investments are available to us.”
Now is a good time to invest, Shapiro said. “I think it’s going to be a great year globally in the market. We’ve already seen market records broken, certainly in America.”
Interest rates are going to start coming down in South Africa as we get on top of inflation following an incredibly difficult few years, he said. “No-one was prepared for the COVID-19 pandemic. We had never seen this before. We closed down the world. We closed down economies, cities, suburbs, everything. Of course, it had to have consequences. When we found the vaccine and people started to get their lives together again, we came up against the Russian invasion of Ukraine. We’ve had all kinds of other issues around that.”
Shapiro said the markets had prevailed over these obstacles and disruption to supply chains. “On top of this, a lot of things that are now driving the market, we never knew in lockdown. You talk about artificial intelligence. This is serious stuff. It’s a big theme that’s going to change the way we live, and has become an area in which a huge amount of money is being spent.”
Shapiro compared buying equities to being in a relationship. “You meet someone, go on a date, and don’t propose marriage to them straight away. You get to take them on further dates, you learn about their characteristics, and eventually you decide this is a person I want to live my life with. It’s the same thing with equities.” You research companies and by learning about them, “you start to make decisions and feel comfortable about putting your money into those businesses”.
Shapiro encourages people to keep in touch with what’s happening in the markets. “I wake up at 04:45 in the morning, and I turn on Bloomberg. For about 15 minutes, I watch what happened overnight. Why do I do that? Just to know that the shares I’ve bought for clients or the path that I’ve taken for them is still intact. Every day, I have to remind myself that the reason for buying these shares is still relevant. If it’s not, you’ll make changes.”
Shapiro shared the example of Disney. “I started to watch my grandchildren. They weren’t watching Star Wars and Mickey Mouse anymore. They were going on YouTube and watching completely different things. You suddenly say, ‘Hold on a second, where’s Goofy?’ Things can change. When a company no longer fulfils the expectations you had, just move out.
“The South African economy isn’t made up of high-level technology shares that are driving markets upwards, so you have to know where the growth is coming globally, and what businesses are going to prosper over the next five to 10 years,” Shapiro said.
His advice to people in the 21 to 30 age group is to start saving by investing in equities. “Maybe you want to retire when you’re 75. That’s in 45 years’ time. You know what happens? You’re going to live until you’re 90 or 95 with the kind of drugs that we have. The biggest problem is that we’re outliving that money. So, in those 35 years that you’re working, you’ve got to save enough for those retirement years. You’ve got to know who you are financially.”
When Shapiro looks at an index like the Standard & Poor’s 500, he notes the top companies and does research on them before buying equities. The kind of companies catching his eye are Microsoft, “with its $3 trillion market capitalisation”, as well as Alphabet, Google, and Amazon, “all companies benefiting from artificial intelligence”.
“What’s important about these businesses isn’t just that they’re growing, but that they generate huge profits. They reinvest that profit into maintaining their dominance in those markets.”
ASML Holding in Holland is also grabbing Shapiro’s attention. “This is a company that makes the machines you need to make chips and semiconductors. It’s kind of a monopoly because it’s so advanced in its technology, it’s difficult for other companies to catch up.”
Shapiro likes buying equities in luxury brands such as Ferrari and LVMH. “I always have the saying, ‘Buy the shares, not the product.’” As many cars as Ferrari produces it sells, he said. “That applies to LVMH as well. Buy H&M, but invest in LVMH.”
The emergence of companies that create weight-loss drugs has also whetted Shapiro’s appetite. “Every kugel – not only female but male – who is slightly overweight, beats their chemists up for Wegovy or Ozempic, or something like this. Why has this taken off? Obesity is now a disease. Before, it wasn’t. Why do we buy equities in these companies? Because there aren’t enough factories to produce these drugs.”
