A reflection on the 2014 investment climate


“Locally, if you [had invested in] resources you would’ve had a terrible year and a very much deflationary environment and globally you’re looking at a world where interest rates just haven’t started to tick up. At one point this year you had US bond yields trading at under 2 per cent on the 10 year bond,” he said.

Flavell says that volatility is definitely back in the market and the days of buying your index trackers and watching the market rows are over.

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Looking ahead to 2015 there is much to look forward to. The big trade that many are waiting for is the switch out of the US treasury and letting the yields get higher.

“US treasury has been an absolute bull market. We’ll see towards the end of the next year that starting to reverse.”

“The second is we see the volatility index really starting to move upwards towards the mid-20s, it can’t stay below 15 for too long. The third thing is switching from your passive investment to your more active non-correlated asset classes.”

As for those wanting to take the easy way out and not get stock specific and just place their money in any index.

“This would be good if you’re trading at a multiple of 12 times allowing the whole capital market to re-rate to the level it is today globally, lets working on 19 times, and you’ve had a great ride and it been inflated through stimulus. Now stimulus is off the table you’re trading at a premium to fair value it’s no longer the time to be sitting passive and for that reason we see non-correlated asset classes.”

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In terms of offshore investments, Mark Shuttleworth’s exchange control case win against the South African Reserve Bank has set a new president for investors looking to take money offshore.

“The 250 million rand that Mark Shuttleworth was actually awarded from the South African Reserve bank is now being put into good use to help people who are looking to take money offshore they’re able to utilize that for legal and professional opinions and advice,” said Flavell.