Weekly Thoughts 20 May 2016

This past week I listened to one fund manager from Coronation here in Pietermaritzburg and spoke to three others on email, one locally from Marriott and two others who are globally involved in fund management. One being a chap whom I went to visit on the Isle of Man two years ago.

Questions and things I was looking for, was around do they think there was about to be a global (and therefore including SA) stock market ‘crash’ or correction. All four sources suggested that global market growth for the year ahead was not expected to be great. They were not really expecting a crash but did expect some choppy times ahead, with caution for South Africa depending on how a few political games play out. They were finding better value in consumer orientated companies that will continue to provide a dividend, which in the long run, will support their own share price.

All this is not really a problem for investors who are not needing to sell out of their investments because over the years things in the investment world re-balance themselves and go forward. Its also no problem for folk receiving an income from income focussed investments, because the value does not determine the income. Reduced dividends might reduce the income, but reduce capital value will not. Its also not really a problem for someone with funds to invest right now because again, in years to come values will go up. Some investors might even want wait to see if there is about to be a severe drop in market values before investing because then they buy assets that are on sale.

My contact on the Isle of Man said a good thing too: “Timing the market, on the other hand, is desperately difficult. Getting it right once is hard enough (i.e. before a market crash) but then timing the recovery well is more than doubly difficult – rather like winning the lottery twice.”