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Ive been thinking about how in the long term the EWC will play out and how I must think about how I must change my thinking on investemt into this country.
I dont want to have a knee jerk reaction and liquidate everything today and pile into USD equity for example. But I do want to hedge my bets long term and now seems like a good opportunity to do so.
My question to the readers here who probably also have investments is what is your thinking? Have you already taken investments out of SA...in part or everything? Im interested to see to what extent people are reacting to EWC in relation to their investments.
Im also wondering what the "smart money" is doing, im not that smart or clever I just want to protect what I have.
I will be interested to see what others are doing and thinking.
Magnus Heystek has a (few) view on this, and has been an advocate of getting assets (cash) offshore, and wrote an article on Moneyweb, called "Only the paranoid survive" - which speaks to this topic.
Mr Heystek is know for these views. I would hate to be lumped in with the paranoid and the reason is that people who are paranoid do not behave rationally. I would like to think that the majority
of people on this site are trying to be rational in their decisions. The reasons anyone anywhere in the WORLD invests outside their country of residence -ie where their liablities exist - is to access opportunities and to diversify. Clearly RSA is a midget economy in World terms - so it answers the question - diversify. Once you go down these Heystekian roads you
are likely to make decisions based on ...yes - the unknown! So my advice to myself is to recognise that uncertainty is par for the course. And a cursory glance at the SA market today tells you there are
some good value positions emerging. And that reflects in the holdings of leading SA fund managers. If you look at general investor behaviour when driven by fear- eg the early 2000's -ZAR and emerging market currency
collapses - what did people do? They hocked their mother in law to buy dollars - made lump sum transfers- and ended up looking like idiots. So if you diversify don't do a Woolies -buy good quality stocks with a margin of safety and good prices.
I have been slowly building a long-term investment share portfolio for some time now. While I read as much as I can about investment strategies, I have simply adopted an incremental 'learning from doing' approach to investing. It has become increasingly evident to me that I cannot pre-empt - with any degree of confidence - the effects of these continuous global, regional and national upheavals on my share portfolio, simply because in most instances there seems to be no clear logic to, or consistency in, the market response to these changes. I have traded in many of the blue chip 'darlings', and taken punts on 'dogs' with potential - they sometimes go spectacularly up, sometimes precipitously down, but most just seem to bumble along oblivious to the 'market forces' that economists keep shouting about (including EWC). Over time I have got rid of all my individual company shares (too stressful to see the 'bouncing effects'), and have now moved all my money into ETFs (STX40, SYGUS, STX500, SYGWD, SATRIXIND), along with one or two large companies with regional/global footprints (such as ANH). I have found that while this rebalanced portfolio does not give me spectacular returns, it does remove the constant stress of the big market moves asociated with individual shares whenever one or other market is hit with the effects of 'dumb politics' (whether its SA, UK, US or other). Now, even where there is a big impact on one ETF (e.g. STX40), the others typically offset and soften the collective blow. I would say that, over the last 2 years now, my share portfolio has constantly grown, albeit modestly (but far more that CPI), and I stop caring about all the political machinations because they are just short-term 'noise'. All I have to do now is just focus on growing my portfolio with spare cash (increasingly scarce by the day). I have no idea if this helps, or is even sensible, but it (at least for now) works for me.