Just when you thought things couldn’t get worse, they do.
I have learnt that life is an hourglass, sooner or later, everything hits rock bottom, all you have to do is be patient and wait for someone to turn everything back around —Anonymous.
This quote is very apt for how South African fund managers must be feeling, the continued flow of bad news, corporate governance issues, EFF, Black First Land First, potential constitutional changes, a consumer that is being squeezed on all sides and foreign funds that seem to have an endless amount of emerging market shares to sell have meant that more than patience has been needed to survive unscathed.
The All Share 40 is down 15% for the year and 18% from the highs made in mid-January. January feels a million miles away and down 15% actually sounds reasonable/acceptable. The algorithms have made the market illiquid and unreadable; one day a share can be down 5% and the next up 5% with no material news. Normally I would say volatility brings with it opportunity however in the current environment the movements away from the mean are so big that every move takes the form of a mini crash or bull market.
Attached below shows that of the top 40, 13 are positive for the year 27 negative but what is striking is the % losses.
How have we at CC survived through all this
- We made a conscientious decision to trade smaller; the same profits can be made on smaller positions given the larger moves.
- When instinct and research says buy, give it time because bear markets are vicious, not having a position is having a position and lastly adhere to the 100% rule, when you are unsure don’t trade as whatever trade you do when unsure, will be wrong 100% of the time.
As the festive season draws near and people start reflecting on life and the prospect of holidays we hope the rest of 2018 will treat you well and that we have a good run into the end of 2018. (PS, fingers crossed that no Steinhoff-type announcement jumps up and surprises everyone like last year).
The Courtney Capital Team