I have been told that those who eat Fruit Loops for breakfast, often have a favourite colour and would even avoid eating some of the other colours because they “do not like the taste”. Fact is, all the colours taste exactly the same. If you are older than five, you will probably have to take my word for it or visit the shops to buy Fruit Loops if you need to find out for yourself.
In the case of investments, it is important to get these types of preconceived ideas out of your head and focus on the facts. Equally important, is understanding that investment opportunities change over time, and that we have to adjust our portfolios accordingly.
Currently, shares on our own JSE are performing well. This is counter to many things you hear, see and even experience as a citizen. But we have to remember that only around 30% of companies listed on the JSE derive the majority of their income from South African sources, which will be impacted by our country-specific challenges. The rest of the companies are multinationals and more dependent on international markets, especially on what happens in China.
Currently the consensus view of fund managers for the future is as follows:
- South African shares are still better value than most USA shares.
- European shares are better value than USA shares.
- Any shares linked to China offer good value owing to the re-opening of that country.
- Our commodity shares will benefit from China’s re-opening.
- Companies that are able to pass on inflationary costs to clients will perform well.
- Future company earnings will impact the price of shares heavily.
- Local and USA bonds offer value.
- Current higher interest rates on cash provide you with some time to phase in your investment plan.
- Listed property must be treated with caution.
As always, there will be surprises and challenges going forward but one thing you do not have to worry about is the longer-term performance of your investments managed by JWR. We do not have a favourite colour Fruit Loop. As a matter of fact, we never eat them because they are simply unhealthy. We would much rather start our day with organically grown fresh fruit!
