It is amazing how social media can affect your mood. Because of our inherent attraction to bad or controversial rather than good news, social media platforms tend to shove the bad news to the forefront when we open, for example, Twitter. If we click on such articles, the algorithms in the background take note and provide you with more of these topics, resulting in a self-propelling deluge of bad or controversial news. This can be super dangerous due to the fact that we often act on how we feel.
So if you have been fed ten negative stories about the current economic climate in South Africa, there is a very good chance that you will sell all your South African shares and emigrate to Mauritius. There is currently a documentary on Netflix called “The Social Dilemma” which gives you insight into what is happening behind the scenes on these platforms.
It is therefore important to realize that more often than not, a currently unfolding situation that seems to be a permanent game changer, will not be, and the mantra “this time it’s different” does not hold water. Just look at the performance of stock markets so far this year in the graph below, and you will realize that had you been swayed by that tsunami of apocalyptic news at the end of March and sold your shares, you would be sitting on cash which will give you no return on international markets, and 50% less than you would have received at the beginning of the year in South Africa.
Currently people are obsessed with the US elections where Joe Biden is leading in the polls. As we have mentioned in our previous blogs, if Biden should win, taxes in the US will go up and presumably stocks will come down. But perhaps there will be more stimulus packages and better relations with China, which would be equity positive. So as we have mentioned before, trying to predict the future is just silly. As always, the best you can do is to diversify your assets across the world and re-balance where needed.