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SA proves to be resilient… in more than one way

Contrary to what many of us would expect, the JSE has outperformed – significantly.

When it comes to making investment decisions, emotions can, unfortunately, play a big role in all of it. It needs to be a very conscious decision to step away from the ‘noise’ and to see the bigger picture once again.

Looking back at the past year and everything we have lived through so far, I feel extremely proud once again to be South African for two simple reasons: our sense of humour, and our relentless resilience in challenging times. Time and again we prove that we can rise again – and that’s a wonderful quality to have.

This has also come through clearly in many company results released since the end of May, which performed better than we had expected. Despite economic hardships and some factors like unemployment which remain a concern, others like the recovery in our GDP and increasing levels of business confidence provide some positives.

In a country with a lot of economic and political uncertainty, it’s very easy to become overly negative, focusing only on the bad news and ignoring any positive developments.

Stepping back and having a look at the numbers, SA proves to still be a positive investment space – more than what we tend to give it credit for. Although I would always advise adequate offshore exposure for multiple reasons, investing in South Africa does make sense as part of a well-diversified portfolio which also includes various asset classes.

The graph below compares the S&P500, vs the JSE since the year 2000. Contrary to what many of us would expect, the JSE has outperformed – significantly. This shows that relying only on your gutfeel when making investment decisions, and writing the country off completely, would be a mistake.

We still have excellent companies listed on the JSE, many of which are listed internationally as well. This also helps to provide additional diversification and hedging. The JSE also provides access to resources, and our financial sector – we still have one of the best banking sectors globally.

Yes, our advice would always be to maintain a well-diversified portfolio: locally and offshore exposure, not exchanging one asset class for another, and also including cash and bonds which also play a vital role in any resilient portfolio. But just like the resilience of a South African… don’t underestimate our local equities either.

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The JSE investors are by far the more negative bunch.

If the US markets drop 0.5%, then we champion the drop to 5%.
If the US markets go up by 5%, we still drop by 1%.

Then we have the crowd that preach investing offshore all the time.

The JSE looks like a lose lose Casino.

My jse stocks have performed far better than my US or Aus stocks. US for real long term and Aus for the thrill. There are so many people that think overseas is best, they are smarter, their money is stronger. SA is way ahead in terms of integrating into a new world with all its sensitivities – we have a robust mindset. The foreign investors will come in droves as the companies are undervalued bringing massive value to those who have stuck around on good investment principles

It would be interesting to see the rand dollar exchange rate since 2000 plotted on a graph below the one above.

Agreed. Graph has to be adjusted for currency.

End of comments.

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