Confusion

There is an inherent need in people to know what is going to happen. We love the suspense but struggle to get on with life until we know the ending. And then, when we know, we exhale and start breathing again.

So, in 2016 we have many such uncertainties. Think about the Brexit vote, Trump or Hillary, Inflation or deflation in Europe, Zuma or Pravin in South Africa, Downgrade or Downgrade in South Africa :-), rate hike in USA (when)?

And what do we do when we have these uncertainties? We pull back into our safe zone and protect what we have got. I see more people doing alterations to their homes than going out and buying a new one, I see more banks refusing to lend to consumers and more investors refusing to lend to the State Owned Enterprises (SOE's).

The good news is that we will get certainty about most of these worries soon. But what will happen then? I can only speculate but consider this:

Trump/Hillary: I can still not comprehend that the best this mighty, innovative USA can do is come up with these two people to lead them. To think that one of them will be such a powerful person in a few months. Anyway, if Trump becomes president it will cause an upset in international relations and infighting in the US. I think everything in the world will take a step back like when the Brexit got the vote.

Inflation/Deflation: This will have a stronger and longer impact on world markets. If we see deflation in the USA and Europe, shares will drop and central banks will have no more ammunition to stimulate the economies. It might be a long downwards spiral.

Zuma/Pravin: We all know that if Pravin goes, so will the Rand, our credit rating and lots of international and local investors.

SA downgrade: I think this is unavoidable but miracles do happen.

USA rate hike: The USA is recovering nicely and a normalization of the interest rate is expected. This will support the strong Dollar and it will become more difficult for the Rand to strengthen.

For a South African investor it will be difficult to see the Rand strengthen much more, it will be important to invest in shares selectively and remained focused on the longer term. There are some shares I like at current levels because they are international income earners with fantastic management teams like Brait and Steinhoff. Although the property sector in SA is very crowded and consumers are under pressure, I still see Attacq as undervalued in the longer term. The only difficulty with Attacq is that they do not pay a dividend so you get nothing while you wait for them to re-rate.

To be transparent, I own all the shares mentioned above.

Investing in international, multinational shares is paramount. If you are an investor and do not own Apple, Google (Alphabet), Facebook or Amazon shares, it is like not investing in Leonardo da Vinci in the early 1500's. Unfortunately they are rather expensive now but if something should happen and they become cheaper, I would recommend you buy some.