House news
Redvers Lee has retired as a Non-Executive member of our Board [he is Chairman of Venns Attorneys with more than enough on his plate] and Nolan Wallace has been appointed as an Executive Director following his successful completion of a Post Graduate Diploma in Financial Planning. Nolan has rebuilt our bespoke database management systems. He has taken charge of our extensive investment research capabilities within the Morningstar Direct Suite of Programs. Kerry Egner [b. Wallace] has also completed her Diploma in Financial Planning and joins us on a part-time basis to extend her knowledge of our business. She has her own highly successful filming business with international clients.
25th Birthday Year
2021 is our 25th year with our official business birthday later in October. After the stressful Covid-19 lockdowns last year – we could not resist an early “practice” celebration [under family “bubble” protocols of course].
Making sense of disrupted World Markets
The first two newsletters of 2020 dealt extensively with Covid-19’s impact on lives across the World. Much of what we wrote then was intended to cut through the gloom and add some luminosity to a dark subject. We hope to do that again – but this time we focus on two well-known indices – the S&P 500 and the South African All Share Index [ALSI] – see below over a period of 10 years ending 28 Feb 2021.
It is not the underlying numbers that tell the real story – but rather the shape within the Covid-19 “Bubble”. The initial “panic” saw the steepest decline in the stock markets [here and abroad] EVER – followed in a remarkably short period of time with some record reversals back into positive territory. Just 3 weeks of freefall – and then 3 weeks back to record highs … with the bull market running all the way to the present!
How is this possible?”
Given the extensive lock-downs across the World and massive disruption to “normal” economic activity – it is not surprising that there seems to be a credibility gap between our perceptions and the market prices. However, the answer is found in the dominance of the huge tech companies which have benefitted massively from Covid-19 lockdowns. 
They were giants in the markets before Covid and constituted an already large proportion of most global share indices. Companies like Alphabet, Microsoft, PayPal, Facebook, Amazon, Netflix, Dexcom, Spotify, Zoom, Alibaba, Tencent etc. were suddenly moving products and solutions at record volumes. Next on the up and up were companies providing health products, protective equipment and of course big pharmaceutical companies like Johnson & Johnson.
On the other side of the receiving end were companies involved in travel [airlines / passenger liners / hospitality] – but these entities tend to be regionalised at best or local at worst … so just don’t have the same global impact on share indices. The Covid “losers” have not had nearly the same impact as the Covid “winners” when it comes to indices.
The World has been given more than a “nudge” into the 4th Industrial Revolution – it has been propelled at speed into a different space to the one we occupied before Covid … and there will be no turning back. Those folk suffering from technophobia best seek out the latest “chill pills” [designed no doubt with modern technology 😉]. So … what can we expect going forward? We will see profit taking in the high priced shares with buying opportunities in the oversold shares which are well below their true values.
We are tracking with interest the activities of many of the Fund Managers that we deal with. It is noticeable how they are reducing overweight positions by taking profits while buying opportunities in reputable companies recovering from the aftermath. We believe it is best to stick with your investment strategy provided it still fits your risk appetite. It may well be time for you to bank some of the gains made in the equity component of your strategy to realign the risk. Give us a call – we can meet or Zoom chat – whatever is easiest for you. We remain Covid aware – both in our offices and in our homes – with all the requisite protocols for full compliance for anyone who visits our offices. We have all registered for vaccinations and hope that these are supplied during the course of the year so we can better protect our families and our clients. Kind regards
