The best way to possibly start the year
January was an exceptional month, with the Johannesburg Stock Exchange (JSE) experiencing growth of more than 7%. Despite the challenges posed by load shedding, rising food prices, high unemployment, and struggling small businesses, the JSE still performed well, reaching record levels of over 80,000 points and showing improved bond performance and interest rates.
The reasons for the growth in the JSE can be attributed to several factors.
Firstly, markets tend to focus on the future, trying to predict earnings, rather than the current state of affairs. For instance, despite the current impact of load shedding, companies are investing in their own solutions, which is expected to drive future profits and productivity.
Secondly, negative sentiments that arose over the past decade may have contributed to the JSE being undervalued, leading to good buying opportunities in the present.
Lastly, many JSE listed companies receive a significant portion of their income from abroad, and the recent change in Covid policies in China, which is closely tied to South Africa’s economic future, has had a positive impact on the future outlook for many South African shares.
From this recent experience, there are several key lessons that can be learned when it comes to investing:
- Timing the market and jumping between asset classes is not a reliable strategy as market movements can be sudden and unexpected.
- Instead of relying on news headlines, it’s important to listen to experts who have a deeper understanding of the market to make informed investment decisions.
- Patience, faith, and trust are essential components of successful investing, as seeking significant growth may require a longer investment timeline.
- Difficult market conditions can create opportunities for value investing, and these challenges can sometimes be followed by significant gains.
What’s in store for the future?
Experts anticipate a promising period in the next 5 to 10 years. The JSE is currently presenting favorable value, with international shares following closely. In comparison, the US stock market appears to be more expensive than that of Europe and emerging markets. It’s crucial to align your expectations with the appropriate time frame when investing. Different asset managers’ perspectives are summarized below. For those with a medium to long-term investment horizon, it’s evident where the best growth potential lies. As always, it’s important to select a portfolio that aligns with your risk tolerance.
Lastly, it’s important to note that the predicted growth below is based on the conditions, expectations, and factors at the time of analysis. It’s not possible for either the analyst or myself to guarantee these predictions will come to fruition.
|
Local |
Global |
||||||
|
Local Equity |
Local Property |
Local Bond |
Inflation |
Cash |
Global Bond |
Global Equity |
|
| Assest manager 1 -10 year view |
13.00% |
12.00% |
11.50% |
5.50% |
6.50% |
8.00% |
13.00% |
|
Assest manager 2 – 5 year view |
14.00% |
10.00% |
10.00% |
5.50% |
6.50% |
3.50% |
17.00% |
|
Fund manager 3 – 10 year view |
15.50% |
14.50% |
12.00% |
5.50% |
– |
-0.90% |
13.75% |