Next month will mark the beginning of the three-year sideways move in our market. Yip, the levels we are trading at today are the same as April 2014; we have gone nowhere.
Markets either correct in time or price. In other words, for a market to become cheaper it either needs to go sideways for a while, as earnings increase, or the prices need to crash lower. Either makes for cheaper valuations and while the crash is the scarier option it is generally the quicker way to cheaper valuations.
Locally, we’ve had the long drawn out ‘going nowhere slowly approach’ instead. That means your broad market Exchange Traded Funds (ETFs) have done little or nothing. Even the offshore general ETFs have done little due to recent rand strength taking the shine off the stronger offshore markets.
Sure, three years feels like forever but it’s not. For a long-term investor who invests for decades, three years will be just a blip on their investment journey when we get to the end of the road. While this is frustrating as we watch nothing happening to our investments, the best thing to do is nothing. The move higher will start again one day - we just don’t know which day.
Most importantly is that every time we buy now, we’re getting three-year-old prices. How cool is that? There’s not much we can buy today at the same price it was in 2014. So, carry on buying and enjoy yesteryear's prices.
SOURCE: JustOneLap http://us12.campaign-archive1.com/?u=92acd379b61510644f0aeb969&id=87255e2958