Some Good News?
Late winter can be a depressing time, reinforced this year by a torrent of bad news on many
fronts.We have an economy which continues to stall or even worsen, infighting within the ANC,
which is diverting attention from the pressing need to address a whole host of issues and the
increasing likelihood of an investment downgrade by Moody’s.
It is difficult to remain optimistic in the light of all the dark forces which seem to be present.
We have some good news, which we hope will help to cheer you up!
Over the last 6 months we have seen investments grow, after a 4 year slumber. Our preferred
fund selections have grown this year compared to a more lacklustre longer-term performance.
Figures are all shown in Rands, so the global funds comprise investment performance plus
exchange rate shifts.
3 year and 10 year numbers are annualised July to June returns.
In spite of this recent growth, more than 80% of local share prices are regarded as being in a
bear market, having fallen more than 20% from recent highs. This presents an opportunity for
fund managers, many of whom have reduced cash to buy equities.
On the other hand, the US stock market is at a record high, having grown for a decade, so the
potential for good returns there in the future is now lower. A point to consider however is
whether Trump is playing the trade war game now, in order to be able to back off and stimulate
the US economy next year ahead of the elections.
At a time such as this, it is important to guard against our emotions overruling rational thought.
It is tempting to sell low and buy high because we are unable to believe that circumstances
locally will improve. We should rather let our investment decisions be governed by our long
Two highly respected investors had this to say:
Be fearful when others are greedy and greedy when others are fearful.
Sir John Templeton
The time of maximum pessimism is the best time to buy, and the time of maximum optimism is
the best time to sell.