Perspectives

How often do we ask ourselves where we are in terms of our personal milestones and financial goals? It is akin to prepare for a journey or road trip. At some point along the way you want to know if you have enough fuel and covered a distance in the right direction. What if you are on your way to Beaufort West in the Karoo, but end up 2½ hours later in Clanwilliam? How do we proverbially read our financial map and track progress?

I have been thinking about habits and routines for a while, its impact on our lives and potential progress as individuals mature. From childhood we are exposed to habits that ultimately shape our routines e.g. brushing our teeth, a breakfast routine and sleep time.

Might we see the demise of the United States Dollar (USD), or merely the end of another cycle in USDstrength? Since World War 2 (WW2) history has been littered with headline grabbing announcements calling the end of the mighty USD. Such calls are often accompanied by predictions of a total collapse of the stock markets and perhaps a return to a gold standard. Gold bullion sellers salivate at this topic.

Bill Gates said: “Most people overestimate what they can achieve in a year and underestimate what they can achieve in five, or ten years”. It hints at a potential behavioural error, thus ignoring the steady compound effect over several years. Often, during financial market uncertainty, we might believe we can do better by postponing a critical decision. The investment world is definitely more nuanced…

The idea has never been to write these letters with the intention to share news per se. We are constantly being bombarded with events and daily news updates. Per definition, we don’t want to share old news. Instead, we would like to share insights, or questions that may provoke thought or perspective on relevant financial matters. The material and opinions out there are vast. I’d like to think that we search for those timeless truths (if there is such a thing) that might help us craft our financial milestones and goals. In the words of Charlie Munger: “If it is trite, it is right”.

Some time ago I read an interesting article about how the US Navy Seals, akin to our South African “Recces” and perhaps other special forces, prepare and train. The Seals have a saying: "Get comfortable being uncomfortable". The theory is that if you can be comfortable being uncomfortable, you'll be prepared to handle whatever situation comes along in your own life. The mantra applies not only to the extreme physical conditions they endure, but also the situations.

TINA is an acronym currently doing its rounds in financial media: THERE IS NO ALTERNATIVE. With global interest rates at all-time lows and inflation ticking upwards, investors exposed to specific interest-bearing instruments run the risk of losing purchasing power – the cost of living increases at a faster pace than the returns on these types of investments. TINA implies that investors are essentially forced to take more exposure to asset classes traditionally considered more “risky”.

Most of us have probably heard of the blockchain, the technology that underpins crypto currencies. It has the potential to transform the way we live and do business in future. The topic can be an intimidating. Here is an introduction

We are in the second half of 2021 and thought to cover a few financial basics and remind ourselves that superior results are rooted in ordinary principles. The formula for how to do well with money is simple. However, the behaviours we battle (while implementing a simple formula) are hard. As straight-forward as they might seem, they remain universal investment and planning truths. As Charlie Munger loves to say: “If it is trite, it is right!”.