As The Dust Settles We Find A Brave New World

On Monday 20 July 2009 an interesting article appeared in Business Day by Jeremy Gardiner, director at Investec Asset Management.

The article was entitled As The Dust Settles We Find A Brave New World. We quote from the most salient points made by Gardiner.

The second quarter of 2009 ushered in a sense of optimism: talk of green shoots prevailed and equity markets rebounded. Investors in equity felt a sense of relief as equity funds recovered some of their losses, investors in cash were disappointed. Nobody bought at the bottom since the mood was so dire. Investors stood back waiting for a better buying time which never came. Suddenly when no one was looking equities were up 25%!

Gardiner believes that it is not wise to become over-optimistic. Previous Western bull market earnings were driven by easy access to credit and a spending culture rather than a saving culture.

Gardiner believes that the Western world’s bourses along with their currencies have lost much of their appeal and he also believes that it is pretty certain that Asia is where the growth will be.

Gardiner is also pretty certain that:

• This is a recession, not a depression
• While there will still be more volatility it is unlikely that it will be anywhere near to what was experienced at the peak of the crisis
• We have seen the worst
• The Global stimulus is working
• Credit markets are loosening
• The pace of economic deterioration is slowing
• Oil is up from its lows at about $66 indicating a return of economic activity
• The economic situation is starting to look more rosy looking into 2010/2011.

Silke Financial Services believes that long term investors should look at equity or 'value' funds to take advantage of opportunities present in the market. Remember that South Africa is also an emerging market and due to demand for our raw materials, especially from Asia, our market is poised to benefit.

Silke Financial Services are skilled risk and investment strategy consultants that provide a unique service offering not available elsewhere in the marketplace.