Financially Speaking January 2010

What I believe about life determines how I perceive life, which determines what I receive from life.

Dear Client,

All the best for this year of great expectation!

I was wondering what to write about this month….. There were many things on my mind.

There is the issue of 10 traders at the Hilton Quarry Shopping Centre in Hilton who have recently, or are in the process of, closing their doors either voluntarily or forcefully by the Sheriff. Then by contrast, there is another Pietermaritzburg business I used over the silly season to buy the meat for our festivities, who was expecting to do R4000 per minute turnover on the 24th December and the owner told me that his turnover was 75% up on December 2008! ‘With whatever recession was supposed to be around’, he said.

Then there are a couple of tug-at-the-heart issues: a friend with small children who has got serious cancer and a young mom in Johannesburg with young children who has recently been widowed and left without a house – which was repossessed by the bank – as her late husband had no life cover for the debt or to replace his income which provided them with a fairly lavish lifestyle.

Maybe I should also just make mention that the markets have had a very good 2009 and even started 2010 off by reaching yet even higher levels. So that means many people will now rush to invest which creates a further ‘false’ up-swing of the graph. Anyway, these habits will remain like this for most investors forever. Investec made an interesting observation of the past year and going forward:

2009 was a year of mixed emotions for investors. Fear and panic at the beginning of the year was reasonably quickly replaced by hope and optimism as green shoots sprouted and then grew and grew. Bear markets morphed into bear market rallies and ultimately talk of a resurgent bull market started to emerge. But the world is not fixed and talk of a correction is everywhere, as the economic recovery stumbles along, albeit in the right direction. Dubai has taught us that the ramifications of the worst economic crisis in 80 years lurk beneath the surface.

The next couple of years are going to prove very tricky for investors as policymakers, companies, consumers and equity markets navigate their way through the risks associated with a wounded yet recovering world. In this environment, most investors are choosing to leave the asset allocation, sector allocation and general investment decision-making to the professionals.

Until next time

Please note that all the views expressed in this publication are based on my opinion and no action or advice is implied or intended.