Quarterly Comment – December 2009

We wish you and your family a wonderful 2010! It’s going to be an exciting year, filled with great expectations, especially around June when the world’s eyes will be focussed on South Africa and the Soccer World Cup.

However, as exciting and attention-grabbing as the Soccer World Cup is for South Africa, it will be interesting to see what happens in South Africa post Soccer World Cup. The focus on infrastructural development, safety and security, job creation and tourism has been incredibly positive and hopefully it will continue for years to come.

Our views for markets in 2010 are more pessimistic than what they were for 2009. We are concerned at the speed and momentum with which the markets have recovered, or rather over-recovered. There are very few equities on the Johannesburg Stock Exchange (JSE) that realistically offer high expected future returns.  The potential for sustainable inflation-beating returns from current levels on the JSE over the short term is diminishing. Strong gains over the short to medium term will require a surge in corporate profits. Global inflation is threatening to become a huge problem in the medium term. All in all, 2010 is going to be a very tricky year to navigate through.

Given the above, our current strategy for your portfolio is not to increase the equity exposure, but rather to hold at existing levels for the short term. We’ll continue to monitor your portfolio carefully, and will advise you should we believe that a change to your current strategy is necessary.

Keystone Wealth has moved to new offices. Our new physical address is 5 Killoran Place, Bedfordview. All other contact details remain the same.