The world continues to become a smaller place. Events on a national scale ripple though global markets and it becomes increasingly difficult to sort through the complexities that drive equity markets. At this point, the onset of Fed tapering has traders in a quandary – good economic news out of the US drives stocks down when in fact they should rise.
My SA focused, Rand hedge portfolio for 2013 returned 24% compared to the JSE Top 40’s 14.3%, which sounds great, but if you’ve bought dollars on 1 January at R8.45 and sold them today, you’d have made 22%. At least I kept up in dollar terms.
Nonetheless, my 12 month hold positions for next year are underpinned by the following:
- The global economy will grow, for the first time in a few years, without any stimulus programme
- Tapering in Feb/March will create a bottoming of shares – an opportunity to buy in at a discount
- The Rand will lose another R2.00 to the dollar over 2014, so any SA stocks I own will need to have rand costs and dollar revenue
- I’ll maintain a bias towards digital – the scope for global penetration, lack of competition and a move in advertising budgets to the online space will outstrip most other sectors
- Africa offers high growth with limited avenues for equity participation
I’ve got a mix of 70% directly in stock, 30% in exchange traded funds which track the market. I’m roughly 50% US focused, 15% Africa and 35% South Africa. My direct holdings are shown below.
Some eventualities that I’m backing that will drive returns in this portfolio:
- The ubiquitous search engine only has 6M Adwords accounts serving 1Bn people. The number of advertisers could quite feasibly double
- Technology companies start offering financial services
- Chinese and African middle class move from buying airtime instead of Coca Cola, to being able to spend discretionary income on games, apps and digital content
- Netflix opens its doors to new markets
- The world prospers a little – people continue to drink and smoke
As a few short term trades, I’ll buy platinum when the Fed announces tapering, I’ll hold a few Bitcoins, and keep Sterling and Euro in my wallet instead of Rands.
What’s your thinking?