When volatility rears its head in the market and investors become nervous, one cannot help but wonder if it might be better to exit the market and wait for things to settle down before participating again.
This month, we investigated whether there is any benefit to selling out and sitting on the side-lines when markets take a turn for the worse.
Taking over all headlines at the beginning of 2022, the Russia Ukraine tension seems to have taken a back seat as the world encounters the politics of billionaires, the fear of EU instability and temperamental weather. The war however is far from over, with conflict exacerbating the rise of inflation and supply challenges. Hot on the press for the month of April was Elon Musk’s hostile takeover of Twitter, as well as the French election and devastation in KwaZulu Natal.
Capital markets have been exceptionally volatile during the first quarter of 2022. Benjamin van Wyk, CFA takes a look at the benefit of staying invested over the long-term, as well as the importance of determining a suitable asset allocation based on an investors’ objectives, risk profile and unique circumstances.
We saw an increase in Eastern tension as Russia invaded Ukraine on 24 February. Tension, which has been rife since the early 2000s, has intensified. Since then, we have seen the Russian rouble fall more than 20% to the United States Dollar as sanctions are imposed on the country. A notable sanction is the restriction on the Russian central bank’s access to their funds held by other central banks, limiting their access to their own financial reserves. Ukrainian President Zelensky announced on 28 February that he had signed a request to join the EU, a possibility which the bloc leaders will potentially consider this month at their informal meeting on the 10th and 11th of March.
At Pyxis Investment Management we continuously scrutinise our strategies and work at incorporating new information into our investment views, where the situation has changed or new information has become available. Although we are not active traders, but rather long-term investment managers, we are active thinkers and attempt to pre-empt scenarios – no matter how far fetched they may appear.
Tensions between Ukraine and Russia are at their highest in years. As talks between the nations involved continue, it is important to stay abreast of developments and monitor these, as well as any additional implications which may affect global economies.
A review of recent international developments, with added commentary on our Best Investment View portfolio.
In our view, the advent of ESG (Environmental, Social and Governance) Investing has created an opportunity. ESG Investing promotes investing for the greater good and postulates that companies following ESG principles will deliver superior long-term financial performance. This creates an opportunity within companies who have been aggressively discounted for not exhibiting these principles.
As we slowly inch towards year end and quietly amongst ourselves hope for a relaxed festive season, economic and market developments are certainly cause for much excitement. November was all but a quiet month: rate hikes, a renomination at the Fed, Black Friday and a new variant of the Coronavirus; much to keep us focused. Read our last newsletter for 2021 by Ashley Knight, CFA, below.
While inflation and interest rates are on the increase, it appears as if global economic activity is slowing. Benjamin van Wyk, CFA, explains why we continue to believe that a more conservative stance is justified and prudent.
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