Vladimir Lenin once said, “There are decades where nothing happens; and there are weeks where decades happen.”

June 2023 will go down in the annals as a month that certainly had some of those weeks!

The break-neck pace of this year, propelled by the ongoing dualisms of high inflation and rising interest rates, along with the attempted mutiny by the Wagner grouping and the enduring conflict in Ukraine, to the spill-over effects of this war impacting far-flung economies like our own, we can be forgiven for failing to believe that 2023 is already half-done!

Menachem and I were fortunate to attend two investment-themed conferences in London last month, and the ‘hang-on for dear life’ pace of this world was plain to see. While the dominant themes discussed at both conferences were those of the strides in the development of and investment opportunities within AI (Artificial Intelligence) and Machine Learning, the general rate at which things are happening around us is astounding.

AI is undoubtedly the buzz-word on the street, along with super-computing GPUs (Graphics Processing Units), the technology is capable of far more than some innocent prompts typed into ChatGPT asking it to write a thousand-word essay for a teenager! AI is comfortably capable of generating texts, images, sounds, and videos from scratch that the average human could never distinguish from those captured or recorded on a device, and the companies and countries who fail to embrace these new technologies are destined for the scrap-heap.

And the rate of advancement is only quickening!

No doubt all of us will have heard of or read through the list of jobs that are likely to be replaced by AI in the next five years – consider ourselves fairly warned!

Earlier in the month saw the release of South Africa’s GDP stats from the 1^st quarter of the year, showing a (surprisingly!) resilient economy that managed to grow and expand by an ever-so-slight margin. This, coupled with similar growth numbers from the rest of the world, implies both good and bad for the global economy going forward:

• Good, because it shows that the effects of the sharpest rising interest rates on record have not entirely broken the system, and avoiding a recession is possible.

and

• Bad, because it may point to a few more interest rates hikes still to come.

Either way, much has already been done over the past year and a half to slow inflation from its historic highs. Unfortunately, Central Banks the world over may yet have to hit consumers with one or two more ‘sucker punches’ to proverbially ‘seal the deal’.

It is crucial to remember that rampant inflation is a far worse phenomenon than high interest rates… and a dreaded inflation spiral (remember the 1980’s??) can take upwards of 5 to 7 years to rein back in – interest rate cycles are significantly shorter!

As we continue to fight the numerous fights on multiple fronts, the evidence that we are closer to the top of this interest-rate cycle than the bottom is clear. And while the pressures of a strong Dollar/weak Rand, volatile equity markets, and a barrage of negative news face us each day, the investment themes we watch out for continue to build and support the fundamentals.

The last year and a half have not been easy for investors – each one of us has undoubtedly aged (some of us more than you know!). But always remember that bull markets (when they come; and they will) on average tend to outweigh bear markets in both duration and magnitude by a factor of over 5:1 – that translates to gains of more than 5 times one’s losses and continuing for upwards of 5 times as long!

The trick is to keep a clear perspective.