South African investors could almost be forgiven for shaking their heads at the close of business on Monday 27 March 2017. They just can’t win at the moment.
Political risk has once again reared its head with speculation around our finance minister and markets were not quite sure how to react, especially as US markets were already pricing in a drop as they tried to price in the political fallout of a failed US healthcare bill.
Invest locally and you have the threat of a ratings downgrade hanging over you. Invest internationally and the strong rand/weak dollar combination makes a mockery of offshore diversification.
Locally, a trend that we’ve picked up within the industry is that investors are starting to compare their investment returns to a money market yield. They’re saying: “I could have made more money in the last two years by leaving my money in the bank, than to invest in the markets”. Although this is true, these thoughts are driven by emotional human behaviour. Emotional human behaviour is an investor’s worst enemy.
JRR Tolkien tells us: “If more of us valued food and cheer and song above hoarded gold, it would be a merrier world.” … so let’s take that advice.
If we had asked you in 2009 which stock would have delivered the best investment return – in 2017 – out of Facebook, Google (now Alphabet), Apple, Amazon or Domino’s Pizza, how many of you would have picked the pizza player?