We now set our sights on conquering the seas of 2023

It is almost the time of year when you can light the braai fire as the sun dips behind the mountains, and sit back with a cold one in your hand. You will probably contemplate the happenings of the last three years, starting with 2020 when a once-in-a-generation disaster struck the world in the form of Covid-19. You will remember how we were locked up in our own homes for all intents and purposes and could not even visit loved ones who succumbed to the virus and passed away. You had to watch how equity markets were sucked downwards, like the receding ocean just before the tsunami wave hits. But, we survived it all. People proved that by caring, sharing and perseverance they could rise to the challenge. We defeated the virus and gained compassion not only for our neighbours but also for strangers.

Then, in 2021, our portfolio values came rushing back, like the onslaught of that first tsunami wave hitting. The markets crashed through previous record highs and carried everything with it: the bad shares, the good shares, even the crypto coins, and some never-before-seen investments called SPACs (special purpose acquisition companies) left us with a sense of euphoria. It made investors happy – and we deserved to be happy after 2020. We deserved to celebrate the things that made us human but which we were denied during the lockdown: like sharing a cup of coffee with a friend in a public place, or taking the dog for a run on the beach, or flying to an exotic island for a honeymoon.

But 2022 came around and the tsunami receded. We woke up to some nasty surprises: the effect of severe supply chain disruptions caused by Covid-19, a war in Ukraine causing oil prices to spike and therefore inflation to spiral out of control, and China implementing a zero-Covid policy, effectively taking the world’s second-largest economy out of circulation. Investment portfolios lost most of what they had gained in 2021.

So here we are at the end of 2022 and we see some good things happening. Inflation seems to be moderating and there are even signs of it rolling over. This will provide central banks with the opportunity to slow down their interest rate increases, which will be very beneficial to your investment portfolios. We might see a mild recession in 2023/24 but we might also see China relaxing their zero-Covid policy, thus evening out the playing field. We see supply chain constraints abating, which further reduces inflationary pressures, and all of these things will bring the valuations of the companies you are invested in closer to their level of fair value.

So, at the end of 2022, we see the shoreline returning to where it should be. We will remain vigilant because investing is always volatile and unpredictable over the shorter term. But, if we know where we want to go and have a plan, we will overcome any adverse shorter-term surprises and we will be able to focus on those things that make us happy.

Our offices will be closing on 22 December at 12:00 and we will reopen on 3 January 2023. Please take a moment to give us some feedback on your experience with JWR this past year: Click here to complete survey.

Thank you for your partnership, and your continued trust in us.

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