Taking the razor to complexity in investment
How the insights of a Franciscan monk can help us make better decisions about our investments
A colleague did an exercise recently in which he compared the performance of the rand with that of commodities. He found a strong correlation between the two, especially over longer periods of up to 15 years. The conclusion is that, despite all the political worries that have beset South Africa over the past few years, including Nene- and Gordhangate and the threat of a downgrade to our sovereign rating, ultimately the performance of commodities has been the most important factor in determining the direction of the rand. (Of course events like Nenegate had a terrible effect on the rand at the time, but it has since then pretty much followed commodities, as it does generally.) The implication is that a good trader or hedge fund manager taking a position in the currency should not be distracted by the political upheavals or noise that characterises so much of the discourse on the rand’s fortunes, but should stick to what guides the commodity markets. Cutting away what’s not necessary...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.