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May 2016 be a happy, healthy and rewarding year for us all.
For many of us, this year started out with more questions than resolutions. Following the worst first five days in a year ever for the Dow Jones index and a rand that touched R17.99/Dollar in Asia in the wee small hours of the morning of 11 January, the question is being asked, "What now?"
Foord Asset Management had the following to say for 2016:
"From a macro, top-down perspective, the global economy should continue its gradual growth path, if somewhat unsteadily at times. In the US, much-improved employment numbers, nascent wage growth and the improving housing industry will drive global growth to approximately 3.0% for 2016. The European economy is expected to continue to gain traction, benefiting from the stronger US economy, weaker euro and the low oil price. In China, robust, but slowing, economic growth is adding to global volatility as that economy transitions from an infrastructure- to a service-driven economic model. As a consequence of stable US economic growth and nearly-full employment, the US Federal Reserve as expected, finally began the process of increasing interest rates, called "normalisation." Normalisation communicates the Fed’s confidence in the sustainability of US economic growth and is likely to result in US long-bond yields rising from current low levels. In South Africa, the rand weakened against the key developed market currencies by between 17% and 25% in the past 12 months. South Africa’s twin deficits, which reduce the credit quality of South African securities, have persisted for some time. However, in past years, foreign portfolio flows into the South African equity and bond markets tempered the impact of these deficits on the extent of rand depreciation. As the US normalises interest rates, bonds and equities of all emerging economies, South Africa included, become less attractive. The absence or reversal of foreign portfolio inflows, coupled with continued high deficits, will leave the rand extremely vulnerable to further weakness unless South African bond yields also rise. We therefore hold a very cautious view on investing in bonds this early in a rising interest rate cycle. Cash will almost certainly deliver a negative return after inflation. Given the risks to appreciable real returns on cash and bonds, Foord’s preferred asset class to achieve inflation-beating returns in the medium term remains equities, most notably foreign equities."
The question may probably be better couched as, "what can you do?" David Shapiro advices, "let it run its course: don’t try to be a hero." By controlling what we can and by planning for what we cannot, we help you, our client, live a better life.
"God, give me grace to accept with serenity
the things that cannot be changed,
Courage to change the things
which should be changed,
and the Wisdom to distinguish
the one from the other.
Living one day at a time,
Enjoying one moment at a time,
Accepting hardship as a pathway to peace,
Trusting that You will make all things right,
If I surrender to Your will,
So that I may be reasonably happy in this life,
And supremely happy with You forever in the next.
Amen." - Reinhold Niebuhr (1951)
What do we need to do together as investors in 2016?
Our integrated wealthcare approach is based on your personal priorities and aspirations. This process is designed to give you a clear course of action for pursuing your goals that span various time horizons and life stages to empower you to do extraordinary things with your wealth, both now and in the future.
We believe that with a disciplined, goal orientated financial planning strategy focusing on your personal, family and work related goals; financial "wealth" can be attained.
Planning is the foundation of our engagement process. "We need to stick to the plan created, Keep on protecting it, continue to save and invest for it and most importantly we need to control our own investment behaviour."
We know there is a symbiosis between your and our own interests. Our success is a direct result of your success. So as we forge ahead into the New Year, we recognise the responsibility of care we owe to our clients.
I look forward to talking with you again soon.
Regards,
Shane Thom, CFP® GTP(SA)™
Managing Partner: Integrated Wealthcare |
