Its been quite a storm in financial markets since I last wrote. The S&P500 has fallen 6.5% over the last week. And many other markets have fallen much more – China’s CSI fell over 10%. My big picture view espoused back in January 2017 was that this market might last until about April-May of 2018. Are we already there?
This is the US VIX, which highlights volatility in the US market dramatically picking up.
It is thought by many that rising unit costs in the US labour data triggered concerns about inflation and this spooked risk assets like equities.
At another level, we warned last time that the US market had not seen a correction for a long time. So this made them a little risky. This is the chart I added:
So net net, we were getting very close to the broad pattern we had imagined, that is a peak in assets by April-June 2018. But markets most certainly were in need of losing some steam here and thats all this might be. Personally I wouldn’t be chasing assets that have been rising for so long as there is always something that is more clearly mispriced. Perhaps something in Africa? Or a way to invest in the potential Korea reunification? Or perhaps a private equity/venture capital investment where you have specialist knowledge/access?
There is much more I would like to add about my travels across South Africa. I really enjoyed investor Jim Rogers books, where he travelled across parts of the world and used his experiences and encounters to make predictions about financial markets. I find I get profound insights from my travels, much more than when might just fly from capital city to capital city and only live in the insular world of ‘high finance’.
Intuitively Africa has been alluring to me. And the timing of my visit was fortuitous with the corrupt President Zuma seeming to be on his way out. There was talk that he would be removed just before the State of the Nation Address but they have postponed this talk as I guess the necessary arrangements haven’t been made yet. I think that just like Hong Kong was an important gateway for the opening of China the same will be true of South Africa vis-a-vis the continent of Africa. With the bigger prospects for Africa looming, and the immediate change in circumstances of South Africa changing I think that this is why the value of the Rand has just started to rise.
The has been a big brain drain recently with the fears of corruption and also the crime. Many whites are concerned about stability, especially as they have heard about the murders on farms which are happening once per day at the moment. However, it feels that this might be the darkest before the dawn moment…possibly. I met a number of people who are wealthy enough to be able to chose where to live and whilst they are preparing plans ‘b’ and ‘c’ so are now holding on to see what happens. I continue to think that after India, Africa might be one of the next great lands to modernise and see high growth.
Many people are asking me about crypto currencies. Up until now my stance has been to not recommend buying into strength, but to wait for an inevitable 30-50% decline. I believed in some of the underlying rationale but was also cognisant of the power of momentum, We are here again , after a sizeable correction, but given the ferocity of the authorities’ anti-bitcoin response around the world, I am just reconsidering the level of my conviction. An army of insiders have been out in the last week or so pointing out the many flaws of cryptocurrencies, many of which I agree. I will be writing more very soon.
USA and Space X
Recently I wrote about my belief in American ingenuity. The recent Space X launch was a case in point. It was so inspiring to see, especially the roadster with the mannequin flying around the Earth! To me this highlighted Elon Musk’s belief that humankind had a central place in the future. Too many futurists are talking about the post human age and seem to be predicting our demise. I found this quite refreshing and uplifting.
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