Terrifying times for anxious investors

IHAVE SEEN SOME TERRIFYING bouts on the market over the past three decades. I started in financial journalism — not by my own volition but on the strong “encouragement” of the intimidating Business Day editor Ken Owen — at the tail-end of the late-1980s listings boom.

Older readers will recall a slew of crappy small companies rushing onto the JSE, which had gone out of its way to attract “adventurous” entrepreneurial listings.

It did not take long for many of these counters to flounder — operationally and in terms of corporate governance. Not many (aside from Italtile, Mediclinic, Combined Motor Holdings, Bowler Metcalf, Spur Corp and Grindrod) survive today.

That was an exciting period, with legendary financial journalist Mervyn Harris scurrying around the newsroom with bits of information for beat reporters. I probably enjoyed witnessing collapsing companies and dastardly directors’ deeds because I

had no money to invest in the JSE. These days it’s different. The pension is getting pounded, and the personal portfolio is teetering dangerously. I must confess that prevailing conditions on the JSE are probably the scariest I have witnessed.

On several days this month I counted well over 30 stocks trading at 12-month lows. Many of these are at five, even 10year lows. Any smidgen of bad news is punished. Good news is discounted or disregarded. It’s common for share prices to shed 15% in a day. Sentiment, overall, is jaundiced … and the unrelenting social media commentary has turned caustic.

It’s not unjustified. Every day it becomes more apparent how steep the structural challenges are in SA’s economy. Government efforts to grasp the nettle appear halfhearted — which is worrying considering the rumblings around prescribed assets and the determination to press ahead with a national health insurance plan. In HCI’s latest annual report, CEO Johnny Copelyn, outlining the serious challenges of doing business in SA, concluded that SA was not for sissies. Brian Joffe’s investment company, Long4Life, said in its annual report that the SA political and economic climate is now a key risk.

I would love to argue that these tremulous times offer up great opportunities to acquire top-quality and enduring companies at deeply discounted share prices. But gut feel is that there is unlikely to be a catalyst, any time soon, to spur investor sentiment and whisk share prices up again.

Maybe I will kick myself for not filling my boots with Sun International, Shoprite, Aspen or Discovery. But I value the little sleep I get these days way too much. ●