The JSE continued its strong run into October, leaving the local bourse up 33.4% YTD. Over the first nine months of the year, precious metal miners were responsible for two-thirds of the JSE’s YTD performance, with gold and platinum miners rallying by 184% and 173% respectively. Meanwhile, stocks geared to the domestic economy were up 4% in aggregate over the same period. During October, though, the precious metal miners were a drag on JSE performance while the domestically geared companies rallied by 8% MoM collectively. While the gold price was up in October (+3.7% MoM), it dropped by 8% in the latter part of the month, breaking some of the momentum which had taken it to an all-time high of US$4,381/oz on 20 October in an incredible run of +110% since the start of 2024.
On the U.S. market we are seeing wild swings in the performance of individual shares. Some of the beneficiaries of the AI run, like Oracle, is down 14% for the month and even a star like Palantir is down 12% from recent highs. These moves come on the back of very good financial results, indicating the fact that investors are pushing the share price up past fair value and then taking some profits when the financial results come out. We will see this phenomenon repeating itself over the years to come. This volatility should not deter you from investing in these companies, though. We are entering an era where investing in something we don’t understand, is necessary to reap the benefits of the value it will one day unlock. Listening to feedback from people directly involved in the activities of the new kids on the block, namely Crypto and AI, it is very clear that they are here to stay, with wide acceptance and application, but the ultimate winners are still not certain.
As we move into a new age of advanced technology and a worldwide digital payment system, we have to get comfortable with things like blockchain, stablecoins, autonomous driving and humanoid robots. If you have investments in international equity funds, you are already part owner of some of the leading companies in these new fields, and you have already benefitted from their good performance. Over the next five years we will see an exponential increase in the adoption of these technologies, causing more familiar enterprises to change radically or even disappear. But as they advise when you are caught in a rip current: don’t try and fight it, just wait for it to take you along and release you safely in a new place.