Real Estate Investor Magazine South Africa Real Estate Investor Magazine - May 2017 | Page 66

saying, let us amend the Constitution,” he told the National House of Traditional Leaders. In a nutshell: ”What we want to do is illegal. So, let us legalize it by amending the Constitution, and then it will no longer be illegal.” Danger was lurking but, despite this, the Rand strengthen through the day, as expected. Until the announcement that Mr Zuma had called an “urgent meeting” between the Top Six of the ANC. The #CabinetReshuffle was clearly underway behind the closed doors. In just a couple of hours, the Rand had lost another few percent of its value. And finally, just before midnight, the news hit. Zuma had put away the guillotine, and had rather gone for a weapon of mass destruction instead of individual elimination. No less than 10 ministers and 10 deputies were axed or shuffled, resulting in Gordhan and his deputy being removed, with Malusi Gigaba (a Zuma loyalist, and member of the SACP) being placed in Gordhan’s place. 1 Firstly, news may be a trigger, but it has no effect whatsoever on the direction the market will take. This is because it is peoples’ reactions to events ‒ and the actions they take ‒ that determine the direction the market will go. And this is based on how they are feeling at the time. If they are positive, they will discount negative news and if they are negative, they will discount positive news. Things quickly turned from bad to ugly And perhaps, lastly, don’t vote for a corrupt, incompetent and economically illiterate individual as President and then expect anything less than what we see happening. Some valuable lessons indeed. The Rand did not take the news well and, in no time, had pushed right into the target area. Once again, news was the trigger for the forecast to be validated ‒ amazing how it happens, time and time again! But the ride was not over yet, as S&P downgraded our credit rating to “Junk Status” on Monday, followed by Moody’s a few days later. What a month! What a rollercoaster! 2 Secondly, once sentiment has reached an extreme, there is no one left to turn from being Rand- negative to Rand-positive (or vice versa) and the market is primed for a reversal ‒ all it needs is a trigger, which Jacob Zuma kindly provided, and on more than one occasion. (Not the kind of trigger that we would have liked to see, mind you!) 3 Thirdly, don’t be caught up in the sentiment; you need an objective picture as to where the market is likely to head and when it is primed for a reversal, so you can take action before it is too late to do so. For more info on the Rand and the way forward from here, visit this site: www.forexforecasts.co.za/ go/weeklyreview We learned a few lessons So, while we are reeling from #GordhanGate and #CabinetReshuffle and #Junk Status I believe this past month given us some valuable lessons: 62 MAY 2017 SA Real Estate Investor RESOURCES Dynamic Outcomes www.reimag.co.za