A Happy New year to you
Well, now that the pleasantries are over, lets cut to the chase
The year has started with similar nervousness to that experienced back in 2008 and we know what happened later that year!
Lets hope this time round things settle down rather than worsen.
Apart from other obvious causes for concern amongst investors, such as our misguided president, high and increasing unemployment, rising inflation, over-valued sectors on our stock market and social unrest, there is new threat that needs to be considered in our planning: The Drought
South Africa hasn’t experienced a drought like the one we are now dealing with, for some years. The effects of this drought are not yet fully understood, but some economists predict that it could push food inflation as high as 20 or even 30%. This is because the worst hit farmers are having to shoot their weaker livestock before getting them to the abattoir due to their extreme weakness and their inability to therefore get onto trucks.
Farmers then earn less when this clearly low quality meat reaches the abattoirs. This also means that there is a glut of red meat reaching the market currently, although more and more of it is of low quality.
Importantly, many farmers will have no livestock left to bring to the market in a few months’ time which will lead to a shortage of red meat and this could lead to red meat needing to be imported later in the year.
We need to prepare for even more difficult times ahead, very soon, in fact. Our already poor savings culture is under threat and now is the time to start refusing to buy those items which we really don’t need.
If we prepare for the worst, we shouldn’t be disappointed by the reality that we are dished up later in the year.
Let’s hope that these predictions are incorrect. If not, then we need to be positioned to deal with them.
Regards from the team at Groom Investment Consulting cc