Investing 2011

Better than expected!

That sums up 2010. The 10 shares I chose in April 2009 and discussed in my June 2009 Blog returned 64% over the last 20 months and you can add 6% for dividends paid by them. At the beginning of 2010 I thought the JSE All Share Index would give us 9% for the year, it gave us 16% to which you can add 3% dividends. This year my crystal ball tells me that we should end the year 7.42% up at 34 503 points on the JSE. You can add another 3% for dividends so the return on an investment in the SA share market should give you 10.42% after tax. The market always over react so add a 10% to the 34 503 and the JSE ends on 37 953 points, that is a return of 18% excl dividends.


Cash will probably give you the same as 2010 which was a taxable 6.9% which is just pathetic.


So, you can clearly see that 2011 should be another good year for equities. As I mentioned in my November 2010 Blog, the companies which I think will perform well are American Multi Nationals and SA companies with a well established footprint in Africa.

"What about the Rand!"......you shout. Well, what about it? Who cares. It is overvalued and will get back to parity sometime. Don't delay making international investments just because you think the Rand will go to R6 against the US$. This is a long term game and the investment in the company you buy will always outperform the short term value of a currency!

When do I invest? I think the markets will come down about 7% before end of Feb 2011 which will give us a better buying opportunity. I have to mention that I thought the markets would come down at the end of September 2010 as well and lost some good money when I bought a Put option on the JSE Top 40 index to hedge my long term portfolio!

So, if you have cash you want to invest for the longer term (5 years plus), perhaps invest one third every month for the next 3 months.

If you do not have any investable cash but you have a job, fab! Earning an income not only provide us with pride in our abilities but also the most powerful financial tool. Just remember not to spend any money on buying a new car if you have one that does what it needs to do just because some dog tells you to!

I will cover a new product from Momentum Wealth in my next blog which gives you protection on the downside of the JSE Top 40 index but also participation in the growth over the next 3 years.

I will also use this Blog in future to share with you some stock tips (shares I believe offer value) and would appreciate the same from you.