The 6-month snapshot

We have reached the halfway mark for 2018 and things are limping along. Look at the following snapshot for the first six months of 2018:

JSE All share  -3,18%
Top 40 -1,94%
Resources 10 16,08%
Financial 15  -9,70%
Property -24,24%
S&P 500 1,67%
Nasdaq 8,79%
Brent crude ($) 18,90%
US$/Rand 10,83%


As you can see, it was pretty much a matter of which sector you were invested in over the last six months. Your Resources did well, recouping a lot of the value they had lost a few years ago, but if you were in Financials or Property, you did not do well. In Europe equity performance was also a bit of a flat line, but in the USA the social media and online platform shares did well. As a South African investor, the 10,83% weakening of the rand against the dollar also helped your offshore investments a lot. As we have said before, picking stocks in the USA has been much easier than picking stocks in SA over the last couple of years. We have seen most of the stock picks from our international fund managers giving us double digit returns, but not many stock picks from our local equity fund managers have performed well.

We have to understand that we are in a low-return environment and we only have to get 4,4% to match inflation. SA Bonds currently give you around 8,8% return and the Money Market around 6,5%. Financial markets change constantly and today’s winners will be tomorrow’s losers. Remember the predictions for oil going down to $20 a barrel when it was trading at $40? Now it is trading in the high $70s. Sasol was trading below R400 per share the other day, now it is touching R500.

One of the most prevalent ways of permanent destruction of your capital these days happen in the cases where you do not invest in the new disruptive enterprises, but rather in the older generation companies. An example would be Nokia being blown out of the water by Apple. As we have mentioned before, South African investors have to ensure that they are not focused solely on South African investments. There has been a paradigm shift in the way we live, spearheaded by companies not on our local stock exchange, like Apple, Google, Amazon, Facebook, Tesla, Netflix, Alibaba and many more. The only company listed on the JSE that shares in the profits of those industry disrupters is Naspers with its shareholding in Tencent.

As a South African investor you have to diversify your assets offshore. This is not due to a lack of national pride or emotions, it is purely a strategy that will help you participate in global developments. Look at it this way: South African investments should over time give you higher returns than your international ones, but that is because you take so much more risk investing here. Fifty years ago South Africa was a mining paradise, now mining is dying and we have to reinvent ourselves. We have to ask ourselves the question, “What do we have that others want?”

Our economy is not in good shape. The new government has to find money somewhere to fill all the gaps without merely taxing the few remaining taxpayers more heavily. They are redistributing wealth rather than creating it. They are creating a culture of getting a grant instead of getting a job. They are treading on very dangerous ground by not communicating clearly what they mean by land expropriation without compensation. Over the past ten years we have seen corrupt officials pillaging the little bit we have and we  have heard of competent people being replaced by incompetent people for all the wrong reasons.

So let’s hope that we see a dramatic change in the way our country is managed over the next six months. Let’s hope we see some high-profile people going to jail and not just being reprimanded for their crimes against our country. Let’s hope that political correctness gets toned down a notch and that we do not act like the soccer players faking injury, but rather focus on doing the right thing for the country.

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