Good morning ladies and gentlemen.
Today the JSE top 40 index is down 14% from February.
Fuel prices are up 56% from 2019, inflation is going rampant across the world and people
are saying there will be a recession not just in South Africa, but everywhere.
BUT, in this weeks episode we’re going to show you not just how to make it through,
but to actually make great profits on the other side and at the end of the video show
you all the trades ive made during this time.
Welcome back, to casual cash.
I’m glad you’re here on this video today.
They say it takes a village to raise a child, and I think it takes a community of investors
to share information and experiences to invest successfully.
Many times when the world seems to be falling apart, is exactly when everyone needs to come
together, support each other and work together to navigate through it.
And this year, like the last and the one before is no different.
If you are a new investor, or have been investing a short while, it can probably be scary to
see the markets the way they are, and fear can often lead to bad decisions that can cost
you money.
What we do at Casual Cash is give you my thoughts and views, and of course some market data
and graphs and you can use that information how you want, to make the best investing decision
for yourself.
That’s why today im going to break down what’s happening right now, and also why
it is probably the best time since 2020 to actually invest, AND, what I think is a good
way to invest during these times.
Alright so if you’ve been on the channel a while you are probably familiar with why
the markets are so bad.
You can watch our last video for a more detailed version, But for now let’s do a quick recap.
Simply put, economic conditions were actually way too good at the end of covid and this
is a sharp correction.
Low interest rates, high demand and low supply caused a buying frenzy and prices to skyrocket
in 2021.
Now.. we have an economic hangover where prices went up too high, and along with the war in
Ukraine we have been sobered by higher energy prices, soaring inflation, rising interest
rates and lower consumer spending, ultimately meaning less profits for the businesses we
are wanting to invest in.
All of that is the reason you are probably seeing red in your portfolio, and why markets
around the world including South Africa have been going down and maybe moving towards a
recession.
Ok, so it sounds like pretty scary stuff, but in my personal opinion I feel the opposite.
In some ways its actually quite exciting because of all the opportunities we are now seeing.
Let me show you what I mean.
This right here is a graph of the JSE’s top 40 index.
The combined share price of the biggest 40 shares on the JSE for the last 25 years.
Now tell me if you see something…
If you saw that the graph has continued to go up over the 25 years, then you and I saw
the same thing.
Lets look a bit closer here at the last crashes and recessions we went through.
First we’re going to look at the 2002 dot com bubble, where the index went from R107
to R69, a drop of 35%.
One year later from the bottom it reached the R107 mark again, and two years from the
bottom the market had doubled to R140.
Then at about R300…
5 years after the dot com bubble we had the 2008 mortgage financial crisis where huge
huge amounts of money and assets were wiped out globally.
The market dropped to R165, a 45% drop, but even now it was still 140% higher than the
bottom price just 5 years earlier.
At any rate, just 2 years after the bottom of this hugely deep seated financial crisis,
the market was up 80% from the bottom.
After that we saw a huge bull rush, or market growth for another 9 years until 2020.
Every R1000 you invested in 2009 would nearly triple to R2800 by 2014.
Then of course we had the 2020 covid crash, where the market dropped 20% in a couple months.
Then 18 months later the market had risen by 73% from its bottom.
And that is where we find ourselves now.
Where in 2022 from its high the market has dropped 14%.
So when we look at this data, at these real world pieces of history, we can tell from
a track record that these cycles are normal, that they happen, and in many ways they have
to happen to keep things in order, but that over time the underlying issues are corrected
and the market returns and continues to prosper.
Most countries show the exact same thing for each of their big indexes.
There is a very well known quote that says “riches are made in recession”.
And the reason for that is often there are opportunities during these times that just
frankly don’t present themselves in normal trading times.
And history has shown that if you are able to invest in the market during these times,
you can make high above average gains.
And our current problems of inflation and high energy prices are mostly corrected by
raising interest rates and stabilizing energy supply.
But of course the next question is, when is the right time to buy then?
When is this magical bottom point that everyone is talking about?
When do we invest?
So let’s be real, there are few if any people who can predict the markets.
Even top economists who studied at oxford and yale often and frequently get it wrong.
And the news will tell you different stories each time.
So theres no way to tell for sure, but here on casual cash, im going to tell you my plan,
and show you all of the trades ive made recently in rands and cents.
My plan is a simple one, I have been and am going to periodically and consistently buy
into the market in either specific stocks or ETF’s and continue to do so if it continues
to go down, and when it goes back up.
Let’s quickly look at that graph again, basically without knowing where the bottom
will be, im going to pretty much look to invest here, and here, and here, and here, and here,
and basically all along this dip, so that when we start coming up, each of those investments
will show different levels of profit, but overall it should be a very good profit as
time goes on.
So in my portfolio I get dividends and income, but my basic idea is to invest a bit at the
end of each month, or whenever dividends come in.
Ok now lets look at what ive bought recently, and what im looking at.
First of all, im looking at banks.
Because when interest rates go up, so does the profits at the banks.
So I have bought these amounts into the countries banks.
Capitec, FNB, Nedbank and Standard bank.
I don’t like ABSA much.
But this also gives me sort of a banking ETF by buying multiple companies and reducing
my risk.
I also bought extra shares in Sanlam, an insurance company I really like.
Then sticking with the ETF type route I have bought into the Satrix Property ETF and the
dividends are really nice at around 8%.
Then I also topped up my S&P500 growth fund, which is the top American index fund similar
to our JSE40.
And lastly, I have been doing a really cool experiment this year where every month I buy
R100 into each of the JSEtop40, the FTSE100 which is the UK, and the S&P500 which is the
US, since January, no matter the market and Im going to see what the results are at the
end of the year.
Basically that means each month the market goes down, im able to buy in cheaper.
So if you want to see how that ends up, feel free to subscribe to the channel.
At the end of this month ill also be making some more purchases, which ill share here
in a video as well.
So if you want to see that too, youre welcome to subscribe.
And that’s it for todays video, I hope you guys enjoyed it.
If you find this helpful, a like on the video would be great and if you want to share this
with a friend I think its cool when we all help each other to do well together.
But until then, ill see you guys next time, as always, on Casual Cash.
Cheers