The first quarter of the year has felt a little like a marathon, with the first “taxing” stretch being exactly that, tax season to the end of February, which yearly feels more complex but hopefully we all survived. With South African politics, the budget speech and US Executive Orders, the headlines just keep coming.
We wanted to share some of the headline news within GDA before we touch on our topic, so the below are the newsworthy items:
- We have a new addition to the team. Allow us to introduce Dr Sally Huni, who will be assisting on the administrative side of our business. It might be a few months until you actually have an interaction with her, seeing as she has just had her second baby and is now on well-deserved maternity leave. We are determined to grow our team, one way or another 😊.
- Secondly, we have created a new GDA payments WhatsApp line. This is the preferred channel of communication to be used for Investec and Nedbank Call Account payment instructions, in order to ensure there is one repository for transaction instructions. The WhatsApp number is +27 78 758 4199.
- Investec recently presented a fraud awareness training programme and it can be a scary world out there. From phone hacking and email phishing, one needs to take fraud prevention measures extremely seriously. South Africa ranks as high as fourth in the world when it comes to financial scamming attempts, partly due to our world class sophisticated financial systems, but our main takeaway from the presentation is around the need to try and avoid panic. Often, when a scammer is attempting to get information from you, they create a sense of urgency where you feel you need to act immediately to prevent a potential fraud. NEVER give away your password or username, and perhaps the most practical advice of all is to not even trust a phone call from the “bank” purporting to be the fraud division. Rather, hang up and call the fraud division of your bank yourself, so that you know the person you are speaking to really is from the bank.
Moving to headlines from around the world…
There has been significant volatility in markets in the last few weeks with the tariff news touching us all. Now more than ever, our job is to help our clients navigate these choppy waters as best we can. Below is an excellent thought piece describing the human experience of seeing your investments lose value and the best course of action.
Watching your portfolio decline is never fun. And when it happens day after day… the pain is palpable. Unfortunately, that’s when many investors’ emotions can get the best of them, and they want to take action. We understand where you’re coming from. We’re investors too. But we’re also here to say, “Don’t push the panic sell button.” Here’s why.
When you try to time the market by selling when it’s falling with the notion that you’ll get back it when it rises again, you’ll likely miss the best days of the market. Because the market turns quickly. In fact, over the last 20 years, from January 1, 2004 to December 29, 2023, six of the seven best days occurred after the worst days and seven of the best 10 days fell within two weeks of the 10 worst days within that two-decade period.
So what happens if you sell and miss those best days? Your potential return can fall dramatically. For example, over the last 20 years, if you stayed fully invested in an S&P 500 Index fund, your money should have grown by 9.8%. But what if you sold during a market downturn and then missed those 10 best days, your portfolio would be less than half of that—just 5.6%. And missing the best 20 days would cut your return by more than 70%
None of us knows when the market will hit the top or the bottom. That’s why staying fully invested— yes, even through downturns—can be the best way to achieve the highest growth for your wealth.
The Takeaway: Remember your wealth goals and objectives. Don’t let short-term blips derail your long-term plan.
Moving closer to home, we take our cue from JP Landman, an independent political analyst whose commentary we find really insightful. His latest article can be accessed here:
40 days that changed the world – JP Landman
Adding to this insight, we were encouraged to recently listen to Malcolm Charles, a local portfolio manager at Ninety One, as he gave us some excellent insight into some of the good things happening in South Africa.
Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery. Their core focus has been on establishing a reliable electricity supply, which, by and large, they have managed to do, mainly through the establishment of private and independent power producers. The belief is that load shedding is on the main, a thing of the past.
The second focus area has been on Transnet, the ports and the road and rail logistics. With the lack of delivery and infrastructure investment over the Zuma administration, our rail logistics has suffered, meaning that transportation of goods by road volumes increased significantly. More trucks on the road results in more congestion and wear on the roads, coupled with insufficient investment and maintenance, has resulted in incredibly inefficient and expensive logistics for our local environment. Operation Vulindlela has been instrumental in starting a turnaround in our logistics networks and within Transnet. There has been private and public partnership investment in our rails, particularly the Sishen-Saldana and Coega lines which are primarily used for iron ore and manganese. Discussions with some private construction companies have been positive with Grindrod wanting to invest over R25 billion into these projects. Already, we have started to see decreases in road freight volumes, with similar increases in rail volumes. It is early days, but an encouraging sign that we are on the right track.
The third focus area has been on the efficient running of municipalities. One of the reforms that municipalities need to implement is to set up separate bank accounts for the receipt of money from rates, water and electricity. Any salaries are only to be paid from the rates account, and money in the water and electricity accounts are to be used exclusively for payments to Eskom and Water suppliers. If municipalities do this, Eskom will write off 1/3 of their debt. There is a carrot and a stick to ensure better run municipalities.
All in all, some positive progress being made in our country. There are clearly some teething problems around conflict resolution within the GNU (as seen with the Budget chaos), which hopefully will be resolved soon. Until we touch base again, lets hope for some more positive progress in this beautiful country we call home.
May you have wonderful Easter Weekend and a well deserved rest away from the noise.