In the last eight months the most frequent question I have from my clients about investing is: “Are we heading for a Zimbabwe-style meltdown?” To date, this has not been a serious consideration for me but recent events are affecting my views. One needs to realise that SA is a teenage democracy. As with all teenagers, the country is prone to mood swings and sustained periods of irrationality. All teenagers go through this and many of them grow into upstanding members of society – only a limited number become criminals or politicians. There are still many factors that could help launch our country into the stratosphere. Our infrastructure, mineral resources, geographical location, and our competitive and adaptable populace are real advantages. South African business leaders at home and overseas are on par with the best in the world. Even our political leadership can change very quickly if the majority of voters decide it is time for change.
To paraphrase Piet Viljoen from RE:CM, one does not find great value as an investor when everything is rosy. While 10 or 15 shares in our market are very expensive, there are a large number of quality companies that are currently very cheap. As we have seen in the past, our stock market often performs very well despite our politicians’ antics, so avoiding shares because of politics is not rational. Personally, I am quite optimistic about our stock market for the next few years. With the enormous amount of negativity that faces us in SA, the Middle East and the developed world, I feel that savvy investors should be filling their boots with quality investments over the next few months.
Warren Ingram is a certified financial planner and executive director of Galileo Capital.