House News:
Flash backs – Ten years ago – in our newsletter of Feb 2013
we mentioned that Stacey Barron [then Lancaster] had just been relieved of her Receptionist duties to focus on gaining practical experience in Financial Planning and Advisory services. She had completed her Post Graduate Diploma at the end of 2012. Five years ago – in our Feb 2015 newsletter we advised that Nolan Wallace had joined the team to commence his Post Graduate Diploma studies. Two years ago, in Feb 2021 Kerry Egner [born Wallace] joined Finlaw part-time after having completed her Post Graduate Diploma in Financial Planning. All three qualified Financial Planners play a pivotal role in our succession planning.
Fast Forward – However – if you think all that’s building up to a John Wallace exit … no such thing! Firstly, in deference to my dear wife, Gaye, who married me for just about everything – for better, for worse, for richer, for poorer, in sickness and in health etc. – but certainly not for daily lunch! Secondly because I really enjoy what we do here and the value we strive to add to the well-being of our clients. Finally – I would be lost without facing the challenges that our infamous politicians and the volatile global markets throw at us. I will continue to play a mentoring role in the “sign-off” on client strategies and tactical re-alignments needed from time to time – while being relieved of the administration and process management tasks.
Back to the Future…
A look back to our Feb 2003 Newsletter, 20 years ago, and we find a remarkably familiar headline “The winds of war?”! In that issue we were, of course, talking about the US led war against Iraq which got underway in 2002. This had led to much “geopolitical uncertainty” with increased global market volatility. Here we are two decades later pondering about Putin’s War against Ukraine started in 2022 and the increasing involvement of the US and Europe in countering Russian expansionism. That’s where the similarities end though – because interest rates back then were rapidly declining [in the US from 6.5% down to 1.25% – a 40 year record low] and inflation was so benign that President Bush announced a “reflation” package of US$674 Billion to boost the economy.
As useful as these reflections on the past may be – they are certainly not predicters of the future. Their greatest value is the constant reminder that in every period of time there will be troublesome events and that while those may present as “threats” they inevitably produce opportunities. Here are some examples:
- Along comes Covid forcing “work from home” and “learn from home” -> providing a massive boost to Information Technology companies; pharmaceuticals; online sellers etc;
- Ukraine War -> breaks Europe’s dependency on Russian oil and gas; extends Northern European markets in these crucial commodities, boosts arms companies; impacts shipping routes; gives a major boost to the clean energy drive, expanding those markets etc;
- China ends covid Shutdowns -> huge boost to China’s GDP growth as industries and services return to full scale production; RSA’s mining and resources sector receives a welcome boost etc.
The lesson for us as investors is to stay the course and trust the professionals to seize the opportunities that changing circumstances provide.
Cry the Beloved Country!
It is hard to come to terms with the massive decline in the efficacy of State institutions since the dawn of the “New” South Africa
in 1994. Perhaps no more so than in the case of our National Airline and our energy producer, Eskom. Both were world leading examples of exemplary services at modest cost in the early 1990’s. The list of broken Government Departments and State Owned Enterprises is long because none of them have escaped the ravages of corruption and incompetence.
As a result, we are once again experiencing accelerated emigration – firstly of finances, then of physical departures of skilled folk with their families. This is exactly the opposite of what our country so desperately needs – yet it is inevitable when ever more revelations of decay and collapse hit the headlines. At the close of this quarter, we were presented with the frustrations experienced by Andre de Ruyter, former CEO of Eskom. He gave clear examples of where the anti-crime security clusters failed abysmally despite clear evidence being laid before them. He spoke of raising top government level corruption concerns with a 
Minister who it seemed was already aware of the problem but chose to do nothing about it. The Government response has been typical and entirely predictable. Attack de Ruyter and accuse him of failing to inform the authorities. One wonders if those critics even listened to what he said in the interview. Despite all of the above [and in some cases because of it] – local investment opportunities still arise and are actively identified and sought after by the leading fund management companies. Our mining industry has had a boost which will continue for some time to come. They are fully focused on producing their own energy given the harmful impact load shedding has on their activities. The local solar industry is in for boom times in the clamour to get off the grid. The local motor manufacturers are planning their transitions to hybrid and/or electric vehicles. Sasol is tooling up to expand its hydrogen liquid fuel production to meet the anticipated demand from the heavy transport industry for hydrogen powered electric vehicles.
Stay with us as we navigate the troubled waters ahead with you. Don’t hesitate to call us to discuss your portfolio or any changes in your personal circumstances. Markets are off their lows – so you should be pleasantly surprised by the turn-around this quarter.
