KERRIE MOSTERT ON 2018-Q1

KERRIE MOSTERT ON 2018-Q1
27 February 2018

Dear X20 Clients and friends

And…..!! There we go. A newly elected president in South-Africa. As I am not in politics, I must mention that it is helpful if you can understand what the president says or that you can hear what he is saying. At last, you can feel a proudness and respect for a president of a country.  My sincere hope is that the positive mood swing in people, politics, financial stuff, etc. can hold for many years. Can Cyril Ramaphosa (CR) transfer his energy to his government? It is good to see that at last, the different watchdogs have teeth as well and that they started to bite. Will the destroyers of the economy be held responsible for their doings and corruption?

The last few years, especially the last three years, massive potential growth was destroyed. It was a period where asset managers struggled to get some positive real return on investments. The increase in portfolios was due to bad politics, and almost every mandate was making use of the exchange rate and dual-listed stocks to get some performance. In the next quarter or two, a lot of asset allocation changes will happen. And still, we must keep our eyes on the politics. Should CR put together an acceptable and efficient cabinet, the rand can strength even more. That is not good for investments in the short term, but for the medium to long-term view of investments, that will be excellent.

The past is over and done with, young and old learned a lot. Even the Namibian government was taught a lesson. Spending habits came under a magnifying glass. They discovered that the main reason for government spending is to stimulate the economy over time like to run a marathon. It is not a 100-meter race. Government cashflow problems orbit down to the most mediocre of the poorer people of our country. Businesses, big and tiny, were forced to restructure, retrench and go back to the drawing board. They introduced new short and medium-term plans, and EXCO-meetings spend hours on pros and cons in steering companies in a new direction.

After all these happenings people were forced to look at their own budgets as well. A lot of restructuring in personal finances happened. We are not stupid, and therefore people reconsider financial decisions and cutting down on expenses. That is why I always say, in goods times, pay off debts quickly, get rid of bad debts get a well-diversified investment portfolio and retirement plan. It is very important to look well after yourself and your family should bad news occurs.

One or two last comments. For the younger people, if you are willing to pay off your house bond over 20 years, instead consider renting for half of the price. Otherwise, you are about to pay that property two and a half times. Not so good. It is possible to pay off your house in less than ten years!!!!

For the older people or pensioners. In a low-interest environment and low inflation scenario such as the last three years, you already learned a lot about how to manage your money. As I said, the rand can strengthen more because of some positives going around. It can have a further effect on your investment portfolio, but there is no need to run for cover. Stay in your well diversified portfolio. It is not about timing the market, but time in the market that counts.