When will it be over?
Maybe next year… maybe in 60 years’ time
SO MUCH is being written and said by various experts about the global financial credit crisis that it’s a topic I certainly don’t want to touch on. Except for one question I’ve been seeking an answer for: When will it all be over? So I asked some investment professionals, all people who’ve been around a while, and got an array of answers. I don’t know if they all answer the question, but they’re an insightful collection of original views.
“We don’t know” is the response from Daniël Kriel, CEO of Sanlam Private Investments (SPI). Well, that’s a frank answer. And I’m sure it’s the most honest thing you can say to a wealthy private client who, against your reasoned advice, wants to sell his entire equity portfolio despite it having lost a third of its value.
But Kriel isn’t that gloomy about the worldwide crisis. He even chuckles as he tells how his director of investments, Alwyn van der Merwe, describes the SA market as “being priced for Doomsday”.
“We don’t share the bearish view – we’re still cautiously optimistic,” Kriel says. “You have to be careful not to be sucked in by the noise. At the worst you get back to basics.”
SPI believes the uncertainty and extreme market volatility recently seen will prevail and is managing clients’ portfolios accordingly. The bottom line is they believe there are opportunities for long-term investors.
Liston Meintjes, veteran investment manager and chief investment officer at Lion of Africa, approaches the question from an entirely different angle. “A long time – maybe 60 years,” he replies. Then he laughs: “Now you can call me Mr Sixty Years.”
But Meintjes clarifies his response as the time the “human effect” will last, not the bear market (we hope). He relates how he had relatives who went through the 1929 market crash and subsequent depression. “They lost their once-thriving business and had to move to a smaller house. I don’t think they ever quite got over it.”
But he does point out full market recovery could take some time. “Go back to the crash of 1969 in SA. It took until 1978 to get back, in real terms, probably until 1980. And when the Dow Jones collapsed in 1966 it took until 1982 to come back.”
What Meintjes can’t understand is why more people didn’t see this coming earlier.
Piet Viljoen, executive chairman of asset manager RE:CM, says his clients frequently ask: “Are we at the bottom yet?” And he has to answer that he just doesn’t know. “A key difference, though, is that we know we don’t know. In fact, we think that’s one of our very strong competitive advantages.” But what he’s done is collect experiences of what the bottom of a market is like from himself and his analysts and posted them on the firm’s website (www.recm.co.za). Viljoen identifies eight signs that the bottom might be near, but most telling as behavioural psychology is probably this one: “Listen to your friends at the braai on Saturday night – when they become disgusted with stocks, you’ll know the bottom is near.”
Unfortunately, Viljoen believes we’re still a long way from such public apathy, particularly as volumes on the JSE remain high. But it’s a good excuse to braai...
SHAUN HARRIS firstname.lastname@example.org