Joy Immelman (Main Author)

The broader, global view…

• The ongoing and often vicious trade dispute between the US and China has led to a material slowdown in global trade during the first half of 2019;
• Major Central banks, in particular the US Federal Reserve (FED) and the European Central Bank (ECB) have indicated that they will probably provide additional stimulus during the second half of the year to help offset some of the weaknesses caused by the slowdown in global trade;
• South Africa has not been immune to the negative effects of the trade disputes and export performance in 2019 has been adversely affected by the slowdown

With so much negativity in the news of late, coupled with an election year, investors have understandably been jittery. A cautious investment environment – with many unsure of the best strategy to pursue, has reflected this sentiment. With this in mind, now is a good time to revisit the basics of smart, long term investing.

In a socio economic environment characterised by volatility and deep-seated uncertainty, local investors are understandably spooked. Coupled with three years of poor returns from shares and listed property, many investors are (naturally) questioning why they should not cut their losses and switch to cash. This anxiety was exacerbated following the worst December for US equities since the Great Depression. Yet for savvy investors, there is always a silver lining to market dips.

Let’s take a closer look at the trends…

For local investors, December capped an incredibly challenging year. It was the first time in many years that all major global asset classes produced a negative real return. Notably, emerging markets seemed to bear the brunt of the risk-off environment throughout the year – which meant that it was another very disappointing year for investors on the JSE.  Tellingly, the FTSE JSE All Share Index closed 2018 with a negative total return of -9.08%.

Read More