posted on March 29, 2021 11:27
I have just returned from a short break in Capetown so please excuse the slight lateness of this month’s letter. Also, not to cop out but there really isn’t anything new to report. That doesn’t mean nothing has been happening. On the contrary, volatility has been high almost everywhere, including in RSA.
There is uncertainty about many issues which I won’t bore you with here, save to say that the risk-on/risk-off game continues based on the market’s perception of whether the world’s economy will in fact flourish over the foreseeable future and whether or not that will entail rising inflation. A state that seems to change almost daily.
This is understandable given mixed signals, particularly the stuttering vaccination rollout around the world. However, on the whole things seem to be unfolding favourably compared with the past year. We shall therefore err on the side of cautious optimism under the circumstances.
As long as company earnings continue to come through, there is every reason to believe that the reasonably valued ones will produce decent returns over the next year or three. If inflation does pick up, specifically in the US, it will be a welcome return to some form of long term normality even if there is some short term pain in digesting the adjustment.
So far, so good. We shall continue to monitor progress and keep you informed of how we are seeing portfolio management.
More next time