Perspectives

No one could have thought that global financial markets would deliver such returns over the previous 12 months. Time and again economists and pundits claimed severe uncertainty coupled with more speculation. This injected fear with the layman investor. What are our conclusions?  We don’t know what is going to happen; we can only manage uncertainty to some degree.  Plus, we don’t need to worry too much about the daily news flow.  It is for the most part utter noise.  

From time to time I follow commentary by Carl Richards of The Behavior Gap.  He regularly questions conventional wisdom and has some insightful and very practical comments to the layman investor.  

This month I thought to explore some notions around the relationship with money and what defines our contentment.  Remarks by someone reminded me of what the Internet connected society might experience; and perhaps we are oblivious to it all.

The amount of information we have access to via the Internet is truly astounding.  With numerous investment opinions, newspapers, magazine articles and lots of other analyst reports; does all this information equal knowledge?  Do you believe that in order to generate handsome returns, you need to know more than everybody else?

Simon Sinek studied exceptional businesses and leadership which lead him to develop "The Golden Circle of Truth".

Our search for simplicity is not easy.  We are reminded of our physician’s recommendation to a particular symptom… stop smoking, eat healthy, or get ample rest and exercise – so basic and simple, but often so difficult to implement. People expect something complex or grandiose. Maybe a new type of medication, treatment or surgery; ie a quick fix to my problem.  Is it our human nature to complicate matters?  Or are we impressed by jargon (we know so little and they so much)?  Why this contradiction?

South Africans generally tend to be negative – and for good reason. Our perception might be that circumstances are much better abroad. So what is the reality? We have major unrest in Europe; especially Greece could destabilize the region. Greece has a defunct government with no proper tax collection. With unemployment figures of roughly 27% in both Greece and Spain, what are the prospects for these Mediterranean governments? The US stock market returned roughly 2.1% per annum in dollar terms over the last 12 years (measured by the “Dow”; the 30 largest companies in the US).

I recently reviewed surveys that researched the average time budget; essentially, what do we do with our time?  We sleep roughly 7 to 8 hours a day – that is a 1/3 of 24 hours.  The other 1/3 or more we spend at work, which leaves us with very little time for family and leisure activities during the week.  Consequently over a weekend we indulge in our hobbies, family and friends, entertainment, sport, shopping etc. (all those activities that will make us “happy”).  It seems as if our consumer lifestyle has robbed us of personal time and our budget.

Our world is made up of many tiny parts that are useful only when we combine them.  Mankind’s achievements – from your computer to countless financial transactions, property developments, medical procedures to flight navigation systems – all result from joining people and things to each other.  With knowledge, western capitalism explored different economic combinations in order to create our wealth.  As a modern society we have been able to organise knowledge… essentially “ownership memory systems” of capital such as who owns what and where with other attributes associated to

Much has been written about SRI which is commonly referred to ‘ethical investing’ with related concepts such as ‘green investing’, ‘values-based investing’, or ‘sustainability investing’.  With the introduction of the Code for Responsible Investing in South Africa (CRISA), South Africa became only the second country after the United Kingdom to formally encourage institutional investors to integrate environmental, social and governance (ESG) issues into an investment process.