Taking stock halfway through 2023

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BUSINESS NEWS - There has been a lot of speculation about a possible recession in the USA following the continuous interest rate increases and a high inflation environment over the last 18 months. However, if we look at certain indicators, a strong case can be made for better market conditions in the second half of 2023.

This view is supported by the following points:

The Fed rate hiking cycle may be close to reaching its end. This is usually good news for equities.
China seems to be on the verge of picking up economic growth momentum.
Inflation is declining.
The looming banking crisis in the USA seems to have been averted.

Following a difficult 2022 calendar year for market returns, 2023 has already seen global equities increase by more than 12%. The technology sector has been the front runner with the Nasdaq-100 surging by more than 35% year to date.

One of the main reasons for investing offshore is diversification, which reduces risk. Investing globally provides diversification across currencies, sectors, and geographies and gives much greater opportunities for real growth in your portfolio.

“In the short run, the market is a voting machine. In the long run, it is a weighing machine.” Benjamin Graham

Recently the market environment may feel like the definition of unpredictability and volatility. The human reaction to such an environment includes making rash decisions in response to the latest news cycle. A much better approach would always be to stick to the fundamentals, like diversification, rebalancing and staying focused on your goals.

On a local front in South Africa, we have experienced a blow out in our currency to more than R19 to the US dollar this year. The current economic growth forecasts have been revised to 0.4%, and ongoing load shedding in addition to the already record power cuts experienced in the first half of the year, do not paint a positive picture for our listed local companies. However, this is already priced into our listed local companies’ share prices, and we must remember there is little or no correlation between GDP growth and stock market performance. In essence, a strong case can also be made for good growth prospects in the local market for the remainder of the year.

Some good investment principles to take into consideration are the following:

Establish a financial plan based on your goals. Be realistic about your goals.

Start saving and investing today.

Build a diversified portfolio.

Build in protection against significant permanent capital losses.

Rebalance your portfolio when needed.

Ignore the noise.

“A 10% decline in the market is fairly common—it happens about once a year. Investors who realise this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealth building power of stocks.” Christopher Davis

Kindly contact Adriaan de Waal at +27 (72) 591 4557 or Janko Sieberhagen at +27 (79) 731 1388 or email us for further information at adriaan.dewaal@psg.co.za or janko.sieberhagen@psg.co.za

OUR FOCUS AT PSG WEALTH IS ON STRUCTURING, GROWING AND PROTECTING OUR CLIENTS’ WEALTH

Whether you are in the process of accumulating capital for retirement or already retired, suitable structuring of your investment planning always plays a critical role in achieving the required goal.