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Bull Market or Bear Trap
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We have seen growth in stock markets worldwide over the past few months, but the question is whether that growth is fundamentality sustainable. Most renowned economists believe not. The so called quantitative easing by the central banks of the major first world countries is a stimulus for growth in share prices, but not for the productivity and profitability of the underlying companies. It is very difficult to become profitable if you have too much debt.

 

 

This makes it difficult for us to outperform the JSE as we had been doing since August 1995 (see attached Kanaan Balanced Wrap Fund factsheet, which is the predecessor of Met Balanced Fof). According to the shorter term performances of Met Balanced Fof the JSE is outperforming the fund, but Met Balanced is still outperforming inflation after tax hands down and is much less volatile than the market with a CAR (Compound Annualised Return) of 9.4% per annum, according to Par 7 of the attached fund factsheet. We are happy with the 8.89% YTD up to the end of September (Par 8), with very little risk, if there is a meltdown because of the huge built up of debt in the first world countries.

  

Met Balanced and Flexible are ideally suitable for Pension money. Unfortunately the law, as it stands now, does not yet allow us to switch some of the Met Balanced fund into selected Hedge funds.

 

Last opportunity for small amounts in

Hedge Funds

 

Because Hedge Funds are allowed to use short selling, the successful ones can go against the trend of a share market crash, as was the case with most SA Hedge funds during the 2008 credit crunch crash. Clients who intend to invest in Hedge funds should do it quickly, as regulations that should come into effect by February 2013 will change the minimum investment in Hedge funds to R1m, while at this stage it is still R100 000.

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