Now is the winter of our discontent

The opening lines of William Shakespeare’s Richard III express the idea that we have reached the depths of our unhappiness and that better times are ahead.

Amongst the many news-making stories of June, from the record-numbers of third wave Covid infections, to a slower-than-required vaccine rollout, and the politics that grab headlines every day, there were a number of positive stories and trends that could be pointing to better times ahead.

The well-known phrase that ‘the wheels of justice turn slowly, but grind exceedingly fine’ was top of mind towards the end of June as the Constitutional Court laid bare the majority ruling over former president Jacob Zuma’s blatant snubbing of the law. Much like Al Capone who was never incarcerated for his alleged misdeeds but rather for tax-evasion, Jacob Zuma was sentenced for his crime of being in contempt of court and not for the multitude of allegations dating back almost two decades. Naturally, Zuma is making every attempt at appealing his sentence, so we sadly have to wait a little longer until clarity emerges, but the judgement from the highest Court in our land was unequivocal and unbending that the law is not to be toyed with.

The extension of vaccinations to those 50 years and older further points to the prospect of our economy being opened-up a little more each day, with the hope that we can avoid a dreaded ‘fourth wave’ later this year. The total number of people having received at least one dose of a vaccine surpassed 3,000,000 last week, and with total available vaccine stock of over 2,500,000 doses and daily vaccines administered (on weekdays only, sadly!) now above 140,000 per day, the program is gathering momentum.

Economically, markets have been buoyed by global optimism as developed countries have been able to soften mask-wearing laws to a degree, and allow a return to some form of ‘normal’ ­– the British F1 Grand Pix at Silverstone will even be hosting a capacity crowd of 140,000 spectators later this month.

Back home along with a slow, but steady, improvement in the number of people receiving vaccines, South Africa has seen record positives on our trade (current) account. As I have previously written about, these surpluses have provided a tailwind to Rand-strength, and even after the movements of late June, still offers a discounted avenue into global assets – consider that our beloved ZAR was trading around R19 to the USD this time last year.

Possibly the most valuable decisions an investor ever makes are the points in time when he or she chooses their entry point – the ‘value’ or relative level at which you buy in will determine your growth prospects for years to come. Warren Buffett famously said that “Price is what you pay, but value is what you get”.

With the globe finally appearing to gain the upper-hand over COVID as more and more of our 7 billion global citizens receive their dose of protection, broader resumption of economic activity coupled with pent-up demand should provide the framework for sustained growth into the coming years.

And then maybe, just maybe, June 2021 really typified the winter of our discontent!

Wishing you and your families well over the coming weeks – stay safe!

Steve Crouse
Chief Investment Officer and Senior Advisor
Octagon Financial