Gamma i completely disagree with you!! How can you be optimistic about our future business prospects?
We are last in the pecking line for everything... America went through it first and now they are more or less out of it..Europe is going through it now and will in another 12 month get out of this mess.. We my friend are still going to go through it...See what the next 24 months holds for us....Its going to be doom and gloom believe me...Any astute investor should be looking to capital preservation now and not going away on holiday or sitting back and saying we will get through this mess soon and all will be ok!!! Even if it means cashing in all your investments now, i say do it because you will be able to buy them much cheaper in 12 months time!!! I have already started cashing in from 3 months ago when that big fall in Kumba happened!!! Ive been through 3 major crashes and know from experience how its starts!Not going to get burnt again!! Each man for his own though.....
Sorry if im being blunt but thats the facts!!!
Yup, well time will tell and perhaps you will be proved right but I don't see a major crash, a correction sure, but not a crash (although maybe this is a matter of definition). Here's why:
I'm not disputing SA's economy is a laggard or not suffering due to poor leadership, but there are a couple factors that are different to the big downturns in the US and Europe.
1. The emerging middle class in SA is a driver, a big one, that doesn't exist in the aforementioned economies.
2. North of our border, many if not most, of the African economies are growing very well and that growth is only at the beginning of a long term cycle (and by long I mean 15-30 year cycle). SA companies that are exploiting that growth will benefit despite what happens in SA.
3. The weak rand will drive exports which will add some impetus to GDP growth. (Yes I know imports and inflation is a watch-out on the flip side of this coin) - but already recent data showed a surprise to the upside for precisely these reasons.
Do you really think an acceleration in US GDP, a turnaround in the Europe (our biggest trading partner) and a ticking along of BRIC countries is a recipe for a crash?
Given the above...the MTNs, SABs, BATs and their ilk...a collapse? really? Can you see demand disappearing for any length of time?
Yes sure, some stocks could take a big hit short term, including our pet CML but IMO there is enough quality/defensives that should benefit from the macro factors I point out above to more than cover underperformance elsewhere.
Of course something unexpected could always hit us in the face but I'm not hearing a clear argument from anyone for exactly what's so new that is driving it. Unsecured lending? maybe..though this hardly seems a big enough factor. Probably the biggest risk, albeit low, is a Chinese slow down/collapse. That will take us..and pretty much everyone else down with it.
So lets see..