Current times, calls for investors to not panic but to be very shrewd.
We have seen quite a lot of phenomenal events and changes from 2020 to 2022. From a new pandemic that forced economies to close around the world, to war declared on Ukraine by Russia, which of late has created massive uncertainty.
The oil price was unbelievably at minus $25 a barrel – they paid you to take it off their hands! It is now sitting at a whopping $100 plus for a barrel in little more than 2 years.
Although the possibility of an invasion was always hanging in the air, the West was taken aback by Putin’s actions, as they never thought Putin would invade. On the other hand, Ukraine’s fierce resistance has been a shock to Putin, as he did not expect the cost in casualties and the time it (invasion) would take. The ‘waving of the white flag’ and open armed welcome from Ukraine, that he expected, did not happen.
You might experience a bit of déjà vu if you think back to 2016 which was also eventful and brought about significant changes. In April that year, we had Brexit and later in November, Trump won the U.S. Presidency. These events happened against all expectations.
With Brexit, everybody thought that the UK would vote to stay with the EU. The UK voted out, much to the shock of both the Europeans and the British themselves.
Poor old Trump himself was caught by surprise by his own success and hadn’t prepared for the presidential address, nor had Hillary prepared a concessionary address for defeat…
With the UK leaving the EU, everybody thought that the UK would sink economically but it didn’t. With Trump getting in, everybody thought that the markets would spiral downwards but quite to the contrary, they rallied.
Coming back to present times, we are hopeful that the war will be over soon, and peace can be negotiated, peace that is acceptable to both sides, to stop the loss of innocent lives. As with previous events, we do expect markets to recover somewhat, not too far in the future.
In the meantime, our portfolios are quite well positioned to the prevailing market conditions and should weather the storm. For those clients in our PR Number 1 Strategy, we may make use of the buying opportunity, by using the cash reserves to buy into the higher beta unit trusts, that have been depressed by the markets. When markets come down, the good quality shares are the first to recover from a bear market. These subtle changes may get a silver lining out of these cloudy markets!
Going forward we do see a rise in:
- Commodity prices,- good for RSA, Brazil, Peru and Indonesia
- Inflation
- Gold price
- Interest rates, which is good for well positioned
We are also mindful of:
- Economies coming out of lockdown – which is
- Inflation being mitigated by recovering supply chains and pent up demand from
Here are two interesting questions to ask at your next dinner party. How many hours did, the then Prime Minister, Tony Blair allow in the House of Commons for a debate on whether fox hunting ought to be banned?
Now, how many hours do you think he allotted the Commons for the debate about whether the UK should go to war with Iraq?
According to Roger Scruton, a well-known contemporary English philosopher, Tony Blair allowed 278 hours of debate to discuss the merits of banning fox hunting, and only 18 hours to settle the question of declaring war on Iraq! Going to war cost British lives – 179 of them to be exact. Here, may not be the place to argue for or against either of these motions, nevertheless it is noteworthy that Blaire’s Commons spent over fifteen times more hours debating a domestic issue concerning no human deaths, instead of a gravely serious foreign policy issue, which any person knew was going to result in British lives being lost.
I wonder how much time Putin debated the decision of War with Ukraine in the Duma?