You can never swim in the same river twice, because the water is always changing.
We have spoken about our rapidly evolving world caused by technological innovation previously (see chart), and how we have to consider these changes when investing. The difference between good and great is that “good” can see the issue where it is today, but “great” can see where the issue is going and pre-empt it. If we consider the investment universe in South Africa we have to admit that it has changed a lot over the years. The graph below (borrowed from David Shapiro), shows you the composition of the JSE. It shows that 73% of the companies do less that 25% of their business in SA. It was not always like this. It is also concerning to see how dependable SA companies are bought by bigger international companies and then de-listed from the JSE; shrinking the investment universe for SA-focused investors.
For investors with a lot of cash in their portfolios, the last few weeks were somewhat uncomfortable, owing to the relatively small banking meltdown. Not so much for investors with cash in SA banks, but definitely for investors with cash in international banks. This seems to have been contained, but now the South African Reserve Bank has gone and raised interest rates by 0.5%. It is good news only to those with cash in the bank, as they will be earning more on deposits. But, with a recession looming and so many people with high debt levels, it does not look so great.
At the end of the day life goes on and it can still be great. We have our spectacular winter sunsets starting to appear and if you choose to travel light through this life, focusing on the basics and appreciating the extras, all is good.
