I am no spring chicken, but this must be, no I know this is the first year where I have entered any January with the heads of central banks warning of financial turbulence to come!
So what must we make of it all? Well, I believe it is simply a challenge we must all raise our game to meet. The biggest single issue will be managing client expectations.Â Our clients have gone from expecting to receive 30% p.a. returns to thinking that perhaps 2008 will look to take back much of what they made in 2006 and 2007, that we must put straight and quickly.
Another interest rate rise (hike I think refers more to mountain climbing, and always exaggerates the point) will no doubt continue to change the asset class environment, but it does not destroy the potential that any stock market offers. There will still be good above inflation returns to be had in 2008 on the JSE, but it will take more than a dart at 5 metres, as your investment strategy, to find them!
This one issue in 2008 will be property and the year will hopefully see many again refer to where they live as their home and not as some sort of latest property development. It is not that long ago that we bought a house to live in and as we would, on average, live there for 7 – 10 years, we did not get too hung up on its Live Time value. Well those days changed and some will, I am afraid, get a little squeezed in 2008.
There is no doubt that property is sliding in value, but it will do so as much out of emotional pressure as by economic reality. The whole market is being talked down and that is often more powerful than any rising interest rate pressure. Many estate agents I know do not believe that they will sell, so quite simply they don’t!
Personally, I think that 2008 can be a great year for South Africa. There will be normal returns to be made for the investor receiving the correct advice. We will continue to invest in our infrastructure and many world class projects, such as our new airports and Gautrain, will continue. The political landscape will adapt and change in a way that shows the world that we are not stagnant, but rather a nation that desires change in a positive manner.
But the fact will remain, that just as in 1988 and 1998, 2008 will be what You make it, and for me that means making it a great year!