Blog Continued

16
Oct
2019
0

Looking Back at (a Newsworthy) Third Quarter

On the local front, the SA Reserve bank (SARB) cut the repo rate by 25bps to 6.5% in July. It was left unchanged in September.  The domestic economy remains weak.

Average inflation was 4.3%, which was below the mid-point of the SARB target range.  

The Rand traded in a volatile range – from a low of USD/ZAR 13.97 to a weakest level of USD/ZAR 15.50 in mid-August.

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6
Sep
2019
0

The Lighter Side of Investing with Archie

While Archie tries to predict when the next-door cat will stealthily appear in his garden, investors try to predict the Rand/USD exchange rate. It is difficult to say who is having more success!

On 3 September, the rand broke through the R15/USD for the first time in almost a month, lifted by positive local news. SA’s GDP rebounded by a surprise 3.1% in the second quarter, avoiding the shadow of recession.  

However, predicting the performance of the Rand over the short term is notoriously difficult… and prone to significant forecast error.  One factor that has remained relevant in the last 10-15 years has been the role of commodity prices.  In general, if commodity prices go up, the Rand strengthens – and visa versa.  This suggests that in the absence of other guiding factors, watching the performance of industrial commodity prices is key (though this does not include energy prices and precious metals such as gold).  In short, industrial commodity prices moving up provides a good indication of impending Rand strength (and visa versa).

Good luck Archie!

Source: Analytics Consulting

5
Aug
2019
0

The Lighter Side of Investing with Archie

Archie has a new designer collar! 

As many analysts had expected, economic data has revealed that SA’s unemployment rate climbed to an all-time high of 29% in the second quarter of 2019. 

On a more positive note, however, retail sales growth beat expectations for a second straight month in May. Retail sales are likely to get a further boost from the SA Reserve Bank, which cut the repo rate by 0.25% in July.  

No wonder then, that Archie is splashing out on the high street!

19
Jul
2019
0

Quarterly Economic Review: Us/China Trade Dispute Weighs Heavily on Outlook

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
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5
Jul
2019
0

The Lighter Side of Investing with Archie

Climate Change Controversy Dominates G20

While Archie shivers miserably with cold in Johannesburg, record high temperatures in Europe are again raising concerns about climate change. 

Indeed, although trade has been the main focus of this year’s G20, the thorniest issue has been climate change – and what to do about it.

Following prolonged debates, the G20 eventually met French President Emmanuel Macron’s demand for a strong reference to the Paris Agreement on reducing greenhouse gas emissions –and also averted the threat of President Trump convincing Turkey and Brazil to join him in withdrawing from the Paris Agreement.

However, a statement of US objections was included….“The United States reiterates its decision to withdraw from the Paris Agreement because it disadvantages American workers and taxpayers”. 

27
Jun
2019
0

Interview with David Gillson: Trip to Iceland

I have always loved travel, and so I am thrilled to be adding some more travel articles to my blog. I think you will find this series of travel Q&A enjoyable, but also interesting, as we delve a little into how much things cost and how the economies in various countries are developing… or not.

This first Q&A is on Iceland… and how expensive a glass of wine is!

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13
Jun
2019
0

The Lighter Side of Investing with Archie

With all this talk about trade wars and tariffs, Archie is concerned that he will not be getting any more toys…

There is still no clear sign of a de-escalation of US-China trade tension. To the dismay of many leaders, President Trump is still defending his tariff strategy. On the bright side, Jay Powell, Chairman of the US Federal Reserve, has signaled that the Central Bank is ready to cut interest rates if trade wars do hit the world economy. Trump is claiming that the Chinese will pay for the tariffs – which remains a highly disputed and controversial assertion. In fact, companies are expected to pass the extra costs onto the consumer.  

No wonder then, that Archie is suffering from mild bouts of Trump-related anxiety.

28
May
2019
0

The Joy of Beirut

Peter Sullivan recently celebrated a milestone birthday with his daughters in Beirut.   He shares some interesting insights about his trip with us in the following article.         

Before going to Beirut to celebrate my 70th birthday with my daughters, I met Lebanon’s Ambassador to South Africa. He asked what I knew of his country. “Not a lot” I confessed.

“It is smaller than the Kruger Park. Sea and beach one side, then mountains, then a valley, then higher mountains for skiing. On small west side, Israel border. All around rest of country, Syria.   “You will feel you are in the Western Cape. Wine estates, green, lovely valley, mountains.”

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25
Feb
2019
0

Silver Lining for Distressed Investors: ‘sow the Seeds’ Now for Future Returns

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…

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25
Jan
2019
0

Looking Back: What Did the 4th Quarter of 2018 Hold for Investors?

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%.

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19
Oct
2018
0

Taking a Look Back at the Third Quarter, 2018

In South Africa, low returns continue to be off-putting for investors, but the case for staying the course remains strong. On a macro level:

  • The SARB left the repo rate unchanged at 6.5% at both the July and September meetings. Many analysts believe that the MPC will keep the rates on hold in Q4 2018, in the face of relatively benign inflation pressure and weak growth.
  • The Rand, caught in the Emerging Market currency turmoil, had a volatile Q3-18. The USD/ZAR traded in a range from USD/ZAR 13.90 in July to a peak of R15.4 in September. The Rand then pulled back to R14.14 at the end of the quarter.
  • Inflation accelerated modestly in Q3-18 compared to Q2-18, averaging 5% from 4.5% the previous quarter.

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29
Aug
2018
0

Why Time in the Market Is More Important than Trying to Time the Market

With the JSE All Share reaching 60 127 this morning (29/08/2018), it is valuable to revisit some basic principles that make for successful long-term investment strategies.

Indeed, it is easy to forget that in April this year the JSE All Share dropped to 54 602 (4/4/2018).  This fact highlights the inherent futility of trying to time the market.

I have mentioned this in previous articles “Staying Invested Vs Timing Markets”. In short, it is always better to stick to well thought out investment strategies and to avoid emotional reactions to negative market movements.

The graph below is a powerful illustration of why time in the market is more important than trying to time the market! (click on the graph to enlarge)

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4
Jun
2018
0

Why Local Investors Need to Stay the Course, Despite Low Returns

Stagnant market calls for a cool head…

Over the past three years, most SA investors have been disappointed with their returns. This is unsurprising, given the figures. For example, the average SA Multi-Asset High Equity unit trust did 3.4% per annum over the three years ended March 2018. Overall, the available asset classes have delivered poor returns, as can be seen in the table below.

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10
Apr
2018
0

Why Cash Can Be the Riskiest Asset of All

I have mentioned on this blog before that timing the market can be costly “Why Timing the Market Can Be Very Costly” and why it is better to stay invested rather than trying to time the markets “Staying Invested Vs Timing the Markets”.

In this Moneyweb article, Patrick Cairns argues that cash can be the riskiest asset of all because one needs to be exposed to higher growth assets such as equities and listed property in order to produce inflation beating returns “Why Cash Can Be the Riskiest Asset of All”.

31
Jan
2018
0

The Problem with Cryptocurrencies

Cryptocurrencies like Bitcoin and Etherium (see article “Demystifying Virtual Currencies”) have generated a great deal of interest because of their spectacular gains (and losses).   Investors are trying to determine if cryptocurrencies are an investment opportunity, a bubble or the end of money as we know it.   In his considered and detailed report Brandon Zietsman, CEO of PortfolioMetrix, argues that when investing  in cryptocurrencies one needs to be clear-headed about the risks (a view with which I concur).  Click here to read the article.

26
Sep
2017
0

Hurry up and Wait!

(An argument for sitting tight when the news is bad…)

While it is true that no one has a crystal ball for financial markets, there is some interesting research available that shows what has happened in the past during difficult times. Arguably, this research illustrates the point that often, the smartest thing to do is to wait! (click on the graph to enlarge)

Why stay invested?

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21
Sep
2017
0

Political Events Do Not Drive Long Term Returns

With the Gupta-leaks revelations sending confidence to new lows and the battle within the ANC before the December conference continuing to dominate headlines, it is easy to imagine that political events ultimately drive stock market returns, however, the graphs below show that it is not political events but ultimately earnings that drive long term returns. (click on the graph to enlarge)

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2
Dec
2016
0

Stay Calm

Now is the time to practice the art of simply staying calm…

In a time of great flux and instability, many investors are (naturally) observing markets and the wider economy with anxiety and concern. Indeed, with so much volatility and nay saying, the natural inclination is to disinvest and sit on the sidelines.

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13
May
2016
0

Market Dynamics Are Changing

It has been a topsy-turvy ride on the stock exchange, as this graph shows.  It also shows there is little point in being concerned about short-term movements.  Since the middle of 2014 movements have been in a fairly narrow band, hovering between about 47 000 and 54 000.  The moral of the story is one needs to invest for the medium to long term and not over react to short term market fluctuations.

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28
Apr
2016
1

Looking Back at the First Quarter of 2016

Is 2016 turning out to be an annus horribilis for investors and the country’s economy?  Not necessarily, but it certainly was a bumpy ride during the first quarter.  No-one promised it would be plain sailing, with the tide turning against emerging markets, interest rates joining inflation in an upward spiral, and the threat of a further credit downgrading facing the Republic.

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14
Apr
2016
1

Rugby Fever in the Land of the Rising Sun

The last time that Peter Sullivan, retired Editor-in-Chief of Independent Newspapers wrote for us, it was from Mogadishu where he was an information officer working for the African Union and the United Nations in Somalia.  He continues to enjoy his ‘retirement’ and more recently, he has been in Japan to check out what is in store for fans planning to go to the 2019 Rugby World Cup.  What he found was quite eye-opening.

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1
Apr
2016
0

ConCourt Ruling a Win for Investor Confidence

The highest court in the land asserted its independence in no uncertain terms when it ruled against President Jacob Zuma and the National Assembly on the Nkandla matter.  This will encourage foreign investors, whose confidence in the independence of South Africa’s institutions was shaken after former finance minister Nhlanhla Nene’s removal in December, writes Hanna Ziadi for Moneyweb.  Click on the link to read the article “Concourt ruling a win for investor confidence”