We certainly had a bumpy ride over the past month. The JSE ended the month 2% down on last month but it could have been so much worse had things not picked up in the last week of the month.
Despite the negative month, we are still 10% up so far this year and 20% up since this time last year.
This underscores the importance of spending time in the market rather than timing the market. There will be short and sometimes medium-term ups and downs but over the long term the movement is generally up. This is why I advocate the 3-pot approach to short, medium, and long terms investments. Be conservative over the short term and increasingly aggressive as your investment time horizon increases.
The performance of the world economy over the past month highlights why I recommend diversifying your risk geographically. While the SA stock exchange declined, the USA stock exchange (as measured by the S&P 500) grew by 2% last month and is up 16% so far this year.
The Rand has moved from R13.72 to the dollar to R14.32 to the dollar which has further improved the value of your offshore investments.
The third wave has hit us a lot harder than we expected. We started June with an average of 4 000 new cases and we are now on 17 000 new cases a day. The number of deaths from Covid has tripled over the past month.
The numbers are heading in the wrong direction with 26 000 new cases being reported yesterday. At this rate, we are unlikely to see the current restrictions being lifted for a while.
Some good news
Something which bodes well for our economy is our trade figures. The figures for May are out and we have had the third consecutive month where we had a trade surplus of more than R50 billion. Our exports are up by 53% with precious metals being up by 101% over the past year.
Now if we can get Covid under control, we can get some decent economic growth this year.
Till next month, please be careful.