We enter 2017 with the world still digesting a wave of political surprises. If there’s one lesson to be learned from 2016, it’s that we shouldn’t place too much weight on conventional wisdom. We have seen experts, including journalists and pollsters being caught by the unexpected.

Investing

Investors have been ecstatic with the growth of their portfolios since 2010. We have achieved exceptional growth during this period and I have thoroughly enjoyed the amazed look on investors faces when I have presented them with updated valuations. 2015 was a difficult year but we again achieved good returns – generated by the Rand Hedged options I favour in portfolios – thanks to Nenegate.

I manage Retirement and Discretionary portfolios and use low cost unit trust funds (as opposed to policies). I select funds that have consistent medium term (3 years plus) top quartile performance offered by well-established fund managers (yes, many hours of continuous research go into this process) Investing in Retirement Funds comes with strict, regulated and more cautious investing parameters. Discretionary investing has the full global options available. My Zim background has always favoured a good offshore exposure. Add to this good fund diversification and last years’ returns were muted whereas 2015 produced excellent returns. The unexpected strengthening of the rand in 2016 produced negative Rand returns on the offshore elements of portfolios. The past 5 years have produced excellent returns.

My recommendations:

  - View your investments as long term. We have had good years since 2010 barring 2016. We have to have a bad year at some stage.
  - Successful investing takes patience. To create wealth, we have to stay in the markets to take advantage of the next equity run. No-one knows when that will be.
I see Trumponomics as a positive for global growth.   - There is a new global order presently taking place – already happened in the UK & USA. Europe has a few elections taking place this year. Sit tight, be patient, embrace what you cannot change.
  - Do not panic, resist selling assets as you may destroy long term value. Stay diversified & stick to your strategy.
  - Continue investing for yours and your children’s future.

Going forward through 2017

is anyone’s guess. A year ago, no-one forecast Brexit, Trump or the strengthening of the Rand by such a large amount. However, reading through numerous fund managers forecasts, the following is some of the common themes:
  - Low global interest rates and inflation. (Can you believe that Switzerland and Japan have negative interest rates – you have to pay your bank to hold your cash). My advice - Reduce your debt & do not take on new debt.
  - Volatility in the Equity markets. By year end we are not sure if the markets will be up or down.
However, looking through all the noise, equity markets always perform the best over the medium to long term. That is why we usually have a “hold” policy or at most a small tweaking. Being out of the markets can be costly. We focus on the bigger picture & take a longer-term view. Phasing into the markets with cash that is lying around is not a bad idea at present.   - The SA economy is in trouble with lack of Government direction & commitment, overspending and corruption. Unemployment is out of control, no growth in the economy, labour unrest and low service delivery. Skilled people are leaving. A very challenging environment. More reason to Rand Hedge.
  - Investors need to downgrade their expectations for investment returns going forward. The world economy has settled in a slower long-term growth pattern. - No matter how you feel – Get up, dress up and Show up.

Regards Earl Don, Forexpert cc (Registered FSP: 22462).
“Don’t Save what is left after spending – Spend what is left after Saving” – Warren Buffet

Please keep in touch Remember to contact me if your circumstances or needs have changed and your financial plan needs to be updated.

Name: Earl Don - earl@globalforexpert.com