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Why diversification matters
Nobel Prize winner Harry Markowitz famously said that diversification is the only free lunch in investing. In simple terms, this means that you can quite easily keep your expected level of return constant, or even increase your expected return, without taking on additional risk. Diversification is one of the most important principles in investing: It involves spreading your money across a variety of assets or even across asset classes.
Main Street vs. Wall Street: The strange relationship between stock markets and economies
American stockbroker, Peter Schiff, delivered a timeless reminder: “The stock market is not the economy, and the economy is not the stock market”. What Schiff was trying to say is that the stock market, often referred to as Wall Street, is not always an accurate reflection of what occurs on Main Street, that is, the real economy. Schiff’s statement has never rung truer than in the ever-fluctuating landscape of today’s financial world.
Financial crises and emerging markets
Shortly after the turn of the century, following the Asian financial crisis in 1997-1998 and the dot-com bubble burst in 2000-2002, investor sentiment swung increasingly in favour of emerging markets. China was the main driving force, growing at an average rate of about 10% annually between 1990 and 2000, and almost reaching an 11% annual growth rate between 2001 and 2007-2008.
Balance and restraint: Let the game flow
Like most passionate South Africans, we thoroughly enjoy watching the Rugby World Cup. Setting aside the tragic events that have unfolded in Ukraine and Israel, this sporting event often resembles strategic warfare between nations. Just as governments play crucial roles in ensuring success within their respective domains, referees are vital to maintaining order on the rugby field.
Why adding hedge funds to your portfolio makes sense
Over the last 15 years amidst market volatility, the average local balanced fund has achieved the commonly used CPI+5% benchmark only 42% of the time over a three-year investment horizon. Consequently, investors have increasingly turned their attention to alternative investments and return sources, especially in the wake of recent bond market volatility and the uncertain outlook for equities.
What to do when things get a lot worse in South Africa
In the immediate term (three to five years), things can get much worse in South Africa (SA). Each South African must, therefore, decide if they will sit back and blame others or if they will act and make the most of it. In the end, there is one of two decisions: Blaming or changing, which stems from being passive or active, which, ultimately, stems from your worldview (whether you are, generally, pessimistic or optimistic).
How short-sightedness hurts your investments in the long term
Taking a hiatus from checking your investment portfolio for a month can be akin to stepping back from the canvas of daily market fluctuations. It is a deliberate act of patience, allowing the market’s ebb and flow to paint its own picture before returning to assess the masterpiece.
The answer to South Africa’s predicament is complete state reform
In his address to the public last week, Lesetja Kganyago, the Governor of the South African Reserve Bank (SARB), announced that the Monetary Policy Committee will keep the repurchase rate unchanged at 8.25%. This came shortly after Statistics South Africa showed that consumer prices were contained well within the SARB’s target range of 3% to 6%. After a decrease to 4.7% in July, prices only marginally increased to 4.8% in August, driven mostly by higher food, household, and utility prices. Interestingly, the cost of transport, which includes fuel prices, was lower compared with a year ago.
Your Partner in Financial Services
Efficient Wealth provides a host of personal/business related financial services and value added benefits via its own internal resources and in partnership with a number of specialist financial services providers. Our objective is the provision of an array of “best-of-breed” products and services to meet the diverse and ever changing needs of our individual clients as well as their families.
Efficient Financial Services (Pty) Ltd, trading as Efficient Wealth, is an authorised financial services provider, FSP 655
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