Drifting along on a windless ocean

If it seems to you that the investment markets have been going nowhere over the past few months, you are absolutely right. The JSE All Share index in South Africa is up only about 2% year to date. It started the year with a bang but has fizzled out over the last six months or so. If we look at the figures, we see that the one-year return is about 9% and the six-month figure is -1%. We see the same trend in the UK, Europe and China. The two markets that have not stagnated over the last six months are the US and Japan. The S&P500 is up 15% and the Nikkei up 22% over this period.

The problem in South Africa is that things are not improving. Without electricity and a political will that favours business, everything that has been achieved in our country over the last century, will disappear the same way the shifting sands swallowed the ancient Egyptian civilization. The most powerful asset we have in our arsenal is our people. If you invest in South Africa at the moment, you are betting on a down-and-out business, but with amazing people working for it. The only obstacle in this business is the management.

When one listens to South African fund managers talk about where they find investment opportunities, it is clear that they have maximized their offshore exposure and are holding back on aggressive strategies as far as South African asset classes go. As for everything else in life, there is a time and place for investment. Over and above the Eskom problem, we have a tax collection problem. Because of our struggling resources companies and the fact that thousands of high net worth families have emigrated, the tax collection shortfall for this year is estimated at R50 billion. This will, of course, force government to issue more government bonds; which will simply extend their decline, increase the debt-to-GDP ratio and put more pressure on the rand.

These are all struggles we have to endure due to the complexities of life. A good way to limit the impact of these exogenous elements on your personal life is to keep it simple. The Japanese have a concept called ”Ikigai”, according to which the key to a happy and fulfilling life is to do something you love; something you are good at; something that is needed in the world; and something you get paid for.

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