Proper Planning and Patience leads to Success.
In a crisis like the one we are all in, there will be winners and there will be losers. There will be those who are spurred into action by their emotions and those who are guided by rational planning. Unfortunately, without good counsel and guidance, we all eventually give in to our emotions.
A good financial planner acts as a coach of sorts during these times of crisis. An independent third party can provide invaluable assistance both to your psychological well being as well as your financial wellness.
If you have a 5-year goal to grow capital you are likely invested in some volatile local or offshore equities. These would have taken a massive knock as we have seen some markets reach lows that are being compared to the great depression.
Your investment plan should take into account your investment timeline which along with several other factors will determine the appropriate level of risk. In simple terms, if invested correctly you should be able to stick to your plan.
Are we through the worst?
There is no telling what the long-term impact of this virus will be on economies globally. Without too much economic theory and knowledge one thing is clear, once the epidemic passes, we will have a rebuilding phase worldwide. Rebuilding phases have a tendency to create enormous possibilities for growth.
However uncertain things are we know from history that the world will keep turning and businesses will once again thrive. The ability to adapt will determine which businesses are able to bounce back, picking one winner is not going to be easy. Diversification is now more important than ever.
During the panic, there is often a huge opportunity. Capitec share price went from R1400 at the beginning of the year and plummeted to R628 over 50% loss. In less than a month it has climbed back to just over R1000 per share. I feel sorry for the poor guys that sold their shares for a little over R600.
In order to sell shares, someone has to be willing to buy them and the buyers got a really good deal. The long-term investors are licking their lips.
“The Stock market is a device for transferring money from the impatient to the patient.”
Another example arguably not as good as the above as there is a lot of smoke surrounding their situation is Sasol. There is a lot that can be said about Sasol, the strength of the company and its debt levels. I am not saying buy Sasol shares but the numbers make for a good example again.
Sasol share price dropped to a little over R20 from a high in December of R300. In less than a month we are back to over R70 per share. If you are invested in Sasol you have still experienced a massive loss but when thinking long-term you need to consider what has actually changed. As mentioned, there are concerns about Sasol outside of Corona so the decision is not easy as to stay or go.
Sasol supply 40% of South Africa’s fuel according to groundwork.co.za. They are also the largest producer of synthetic fuel. They are a globally listed company and have operations in over 35 countries.
Does this make them invincible? Definitely not but it does make them very resilient over the long term.
Should we all become stock traders or not? I think not.
Trading high volatile assets in the short term is extremely dangerous. Even over the medium to long term a tremendous amount research, expertise and time are required to be successful. We use a combination of asset managers with proven track records, solid investment principles and complimenting investment styles.
Our number one job as a financial planner is to listen to you, understand your goals and provide the best objective advice. The correct investment plan will provide peace of mind. Here at Growmatter, we want the best for our clients and we are committed to working together.
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The information provided is not intended to address the specific circumstances of an individual and is for information purposes. Should you require financial advice please contact us info@growmatter.co.za
