My Monday contributions to this newsletter are about the asset management business.

According to an article in the Financial Times in late December, investors pulled a record $450 billion out of actively-managed mutual funds (sometimes known as unit trusts in South Africa) in 2024.

Apparently, the exodus from high-fee stock-picking funds has gathered pace as older investors, who typically favour them, cash out and younger savers turn instead to cheaper passive, index-tracking strategies.

So, where does Vestact's offering fit in? How do we justify our actively-managed portfolios, if most investors are better suited to buying low-cost ETFs?

There are three reasons our approach works. (1) We select stocks from the top-end of the market, the big-cap leading stocks, so we don't stray too far from the overall index. (2) We are very resilient, and do our best to prevent clients from selling shares at inopportune times, like in the brief market slump of the Covid pandemic. (3) We charge modest fees, only 1% per annum.

The Amazon Ads business has absolutely exploded. Last year it had sales of over $50 billion and has reached a point where demand has outstripped supply. In other words, there is not enough space on the top, sides and bottom of the Amazon website and app to put any more adverts.

In order to continue to grow the business , they have launched an ad tech product which allows retailers to use the same performance-heavy advertising technologies on their own websites. Amazon advertising has huge amounts of data and great AI capabilities which can make adverts very effective. Although these ads will not be on Amazon.com, using Amazon technologies will still be very useful.

Amazon Ads was built from scratch in-house, just like AWS (Amazon Web Services). This is testament to a very innovative, hardworking and entrepreneurial culture created by Jeff Bezos and his successors. We are very happy and loyal Amazon shareholders.

The fires in LA have been devastating. It's hard to imagine how entire neighbourhoods can burn to the ground. This has prompted people to ask what can be done differently to avoid future tragedies. A key will be changing how houses are built. Given the scale of destruction, whole neighbourhoods will rise like a phoenix.

I'm sure that regulators will update building codes to make houses more fire resistant. I suspect that insurance companies will act faster than the regulators, updating their requirements for being insured in high risk areas immediately, which will force homeowners to act.

I'm interested to see how the LA building industry changes. Builders must move quickly to build fire-resistant houses at scale, which means some companies will make super profits and others will go out of business. The quicker the change, the bigger the extremes of gain and loss.

Bloomberg wrote about some of the features of fire-resistant houses - These homes withstood the LA fires. Architects explain why.

In the mid-1990s, the hottest asset wasn't a tech stock or a big IPO - it was small, pellet-filled stuffed animals called Beanie Babies. These squishy toys became an unlikely investment phenomenon.

Created by Ty Warner, the Beanie Babies craze was fuelled by a savvy marketing strategy centred on artificial scarcity. Warner would "retire" certain models, creating panic-buying among collectors who believed these plush toys would one day be worth a fortune. It was the kind of FOMO-fuelled frenzy that makes crypto bubbles look tame.

At its peak, Beanie Babies were selling for hundreds or even thousands of dollars on secondary markets. Books were written on "how to invest in Beanie Babies," mall kiosks popped up like mushrooms after rain. People truly thought their stuffed bear collections would pay off their bonds or send their kids to university.

By the early 2000s, the Beanie Baby market collapsed. The same Princess Diana bear that once fetched $15 000 on eBay was suddenly worth less than a takeaway meal. Oversupply, combined with waning demand, turned the Beanie market into a plushie clearance sale. Ty Warner, the mastermind behind the madness, walked away fabulously wealthy, leaving collectors holding piles of toys that had become utterly worthless.

The Beanie Baby saga offers timeless lessons for investors. Scarcity doesn't automatically equal value - true usefulness has to back it up. Emotional buying, driven by hype and the fear of missing out, can lead to regrettable decisions. Liquidity matters: an asset isn't valuable if you can't sell it when you need to.

Ultimately, Beanie Babies were a reminder that markets driven by hysteria rather than fundamentals, are destined to deflate. If your "investments" depend on finding a greater fool to raise real cash, it might be time to rethink your strategy.

Our new parliament building has been unveiled. Like most high-profile structures, people have divided opinions - South Africa's new multi-billion rand Parliament.

Jawline workouts, feathered bangs kits, and cologne overload. Some young men are getting into extreme self-care - Do you even maxx bro?

Asian markets got a lift after a call between Donald Trump and Xi Jinping boosted hopes for easing US-China tensions. Stocks were up across the region, with gains seen from Hong Kong to India, Japan, and mainland China. Trump's call to delay the shutdown of TikTok must have helped too.

In local company news, Ithala's dream of becoming a full-scale bank has come to an end as the Prudential Authority stepped in to liquidate the institution, aiming to protect the funds of more than 257 000 depositors. The management team at Ithala has called for an intervention by higher powers.

US equity futures are dead quiet, given that there is no US session to front-run. Currency markets are also very thin and the Rand appears to be trading at around R18.70 to the greenback.

Have good week!