Have you ever wondered how some investors seem to see the future? Meet Jean Pierre Verster, the man behind Protea Capital Management. His career isn’t just about managing money, it’s about anticipating market earthquakes. Remember Steinhoff and African Bank’s dramatic falls? Verster called those shots – and acted on them. As a hedge fund manager, he is laser-focused on protecting your investments while aiming for growth. We sat down with him to uncover the secrets behind his financial philosophies.
What key financial principles do you prioritise in your personal life and why?
There are two. The first is to delay gratification where it is feasible. Do I really need to buy this item or spend money on this experience right now? Delaying spending is a useful behavioural finance trick to promote responsible money management. The second principle is to be aware of hedonic adaptation. This comes down to asking yourself if the positive feelings associated with a specific purchase will endure, or if they will be fleeting. As they say: money can’t buy you happiness, so I try to avoid spending on things that will only cause a short-term dopamine rush, but I’m more receptive to expenditures which will benefit me over the long term.
If money could talk, what would it say about your spending habits?
That I am much more inclined to spend on experiences than on material objects. I have been driving the same car for the past 14 years (a Honda Accord, which is still in excellent condition!) but I also enjoy travelling and try to visit a couple of far-flung destinations every year. Outside of travelling, I am quite conservative in my spending habits and I put money aside to invest in the hedge funds under the management of Protea Capital Management on an annual basis.
If there’s a stock you wish you’d invested in earlier, what would it be and why?
Nvidia. I considered investing in the company roughly five years ago, but concluded that the market for high-end graphics chips was mature when assessing the demand from gamers and bitcoin miners. I completely missed the nascent demand for these chips in the development of AI, which has been costly!
What’s the most extravagant purchase you’ve ever made, and do you still think it was worth it?
The house I live in. My wife and I had our eye on a property due to its elevation, with unobstructed views over Joburg. It came onto the market shortly thereafter, so we bought it, knocked down the existing house and built our dream home. We completely overcapitalised, so from a purely financial perspective it was not a wise decision. I still believe it was worth it, though, considering that we’ve now been living in the house for a decade and it has given us a lot of enjoyment, including being a comfortable sanctuary during the Covid lockdowns.
What’s an unconventional asset class you’ve considered investing in?
I don’t hold any unconventional investments, and though I had considered buying cryptocurrencies, in the end I decided not to. All my excess cash is invested in the hedge funds I manage. What is somewhat unconventional, though, is that a lot of my time is spent looking for shares to short. These are shares of companies that are misunderstood and trading at significantly overvalued prices. Shorting such shares is a valuable (if unconventional) tool utilised by a hedge fund manager to manage risk and to generate better risk-adjusted returns for investors.
What advice would you give to young professionals about building wealth and managing their finances?
Don’t buy a new car, rather go for a reliable second-hand car you can comfortably afford. Don’t live beyond your means. Pay off expensive debt as quicky as you can. Start investing some money as soon as you can, and keep at it. The moment others become dependent on you, such as elderly parents, a spouse, or children, you need to consider life insurance. Keep your eyes open for entrepreneurial opportunities, since the best way of building wealth is to own an equity stake in a successful business.
What is your retirement plan?
I plan on not retiring. I want to continue managing money and making investment decisions for as long as I am mentally and physically able to. Many professional investors work well into their 80s (and sometimes even into their 90s!). Over such a long investing career, as long as one maintains prudence, financial security is guaranteed.
What financial trend do you think is overrated, and why?
Cryptocurrencies. In my opinion, there is a valid use-case for cryptocurrencies, but it is quite limited. The extent of the general retail excitement surrounding cryptocurrencies, the extensive involvement of dubious players, and the plethora of scams make me cautious.
If you could give your younger self one piece of financial advice, what would it be – and would you actually listen?
It would be nice to go back 20 years and tell my younger self to buy Apple, Amazon.com and Nvidia shares! But, more seriously, I have no regrets regarding my past financial decisions. As the Danish philosopher Søren Kierkegaard once said: “Life can only be understood backwards, it must be lived forwards.” I would just tell my younger self to learn from others’ financial mistakes, rather than learning from your own financial mistakes, which can be costly.
How can South Africa achieve widespread financial literacy and inclusion?
South Africa has immense human potential, but significant barriers stand in the way of addressing widespread poverty more effectively. The most pressing challenge is to fix our public education system. Financial literacy follows from numerical literacy, and unfortunately we are not equipping most school-leavers with the numerical skills required for the modern age. To improve financial inclusion, we need to address South Africa’s alarming unemployment levels. This can be achieved if the government were to create a conducive environment for job creation, including delivering basic services efficiently, reforming restrictive labour laws, and clamping down on waste and corruption.
ALSO READ:
Sign up to Currency’s weekly newsletters to receive your own bulletin of weekday news and weekend treats. Register here.
