Real Estate Investor Magazine South Africa February 2016 | Page 52

INVESTMENT

The
Rand,
the News and the
Hidden Enemy
Bad news and Fresh Views
BY JAMES PAYNTER

2

015 has been a disastrous year for the Rand,
having devalued over 28% against the Dollar
since the low in February. And worse, is that it
has now more than halved in value since 2011.
This is scary news, and for the SA investor and
businessman, begs the following questions:
Is there any end in sight? Was there any way of
knowing?
Well, to answer the former, if you have been looking
at the news, it would not seem that there is any end in
sight. We have had one wave of bad news after another,
with the Rand’s recent spike to new highs against the
Dollar and Pound being attributed to more bad news
on multiple fronts:
• economically (negative GDP, twin deficits, credit
rating downgrade threats),
• politically (The revolving position of Finance
Minister)
• socially (students #FeesMustFall protests)
• global jitters, with China and Europe and US
interest rate hike fears
This news is, of course, all very concerning, but does
it help us in making our exchange decisions? It is all
very well to be given reasons as to why the Rand has
moved – once it has already done so. But that doesn’t
assist anyone after the fact.

50

FEBRUARY 016 SA Real Estate Investor

That’s the problem with news – it doesn’t tell us the
future, it only gives us a report on the past. And that is
one of the reasons why looking at the news in order to
get a feel for where the market’s going in future doesn’t
work. But there is something here that is far more
insidious and dangerous than that –

News not only doesn’t work in
determining direction, it will almost
always result in your making exactly
the wrong decision.
Why is that? Because what news does is fuel our
emotions – our hopes or our fears. And it puts a
damper on our rational thinking. And when we make
financial decisions based on our emotions (which by
default we will all tend to do – 90% of the time), they
are almost always wrong.
That’s why you find yourself failing to exchange because
you are confident and hopeful the Rand will go further
in your favour.
...Only for it to reverse sharply against you!
And then you wait, hoping it will come back again.
But it doesn’t, and fearfully, you watch it go further
www.reimag.co.za