Golfing trip takes a pounding
MY golfing friends and I this week became reluctant currency analysts, dithering over whether to buy pounds now or later for our trip to St Andrews. While it is not an earth-moving number of rands, every little swing to the ill against the British unit hurts like the devil. We leave for Scotland on September 5, giving us an agonising 10 days to figure out whether we did the right thing or not.
Early in the week, the question was: pull the trigger at R15.90/£ or hope like hell the rate pulls back to where it was two weeks ago? We didn’t do the deal at that price, and watched in consternation for the next few days as the wretched rand did its utmost to gut our beer budget. By Friday, we were still gnawing our knuckles, as baffled and dumbstruck as we’d ever been.
It is amazing, when you have some skin in the game, how much attention you pay to the so-called experts — and how much utter rot most of them talk. Going by the talking heads on Wednesday, the world might as well wave bye-bye to emerging markets since everyone was liquidating their “risky” assets and running for cover.
For old hands in the market-watching business, it was no surprise when the supposed run on “contagious” currencies hit a brick wall and rapidly reversed. When the JSE closed at the end of the week, bonds had regained the week’s losses, the All Share index was on the up again and the rand was back at R15.90/£.
The only thing contagious about the week’s action was the stupidity of the
If we run out of hard currency we’ll do what everybody does: stick the bills on tick and worry about them later
pundits. Sure, they sounded all brilliant and portentous, banging on about the dying days of the emerging-markets boom, but what a bunch of morons they looked when the “trend reversal” turned out to be just another zag in a zigzagging market.
Why was there panic to begin with? Mainly because a few dolts decided, on the basis of a vague official statement that said nothing of the sort, that the US Federal Reserve was not only about to abandon its bond-buying programme, but would sell every US Treasury it had ever bought in a crazed boot-sale frenzy, thereby jacking up interest rates overnight and in short order scuppering the whole economic recovery and bull market in assets it had spent eight careful years constructing.
Emerging-market assets, like those denominated in rands, bore the brunt of the selling because the assumption was that there would be a long-term “flight to safety”. Well, so much for that.
Back to the golfers and when to buy pounds. Really, it doesn’t matter. If we run out of hard currency we’ll do what everybody does: stick the bills on tick and worry about them later. Môre is nog ’n dag.