Giant stock swings kick off 2022 – with insight from The Wall Street Journal
Am indebted, once again, to Kevin Lings for today's idea. Among the weekly raft of graphs shared by Stanlib's chief economist is a bar chart of the Rand's annual performance against the US Dollar since 1960 – during which it weakened roughly two thirds of the time. Lings put each year's performance into a 5% block. The graph above shows the zero to 5% depreciation category was most popular, occurring 15 times, or almost half of those years when the Rand lost ground to the Greenback. The "over 25% fall" category – i.e. years when the Rand Crashed – raises a flag for us today. This last occurred in 2015, which is seven years ago. That came seven years after the previous crash, in 2008. And, you guessed it, the crash before that was in 2001 – after another seven year interval. Cycle followers will caution that this law of "seven" telegraphs another Rand crash in 2022. Something that would not be out of turn, anyway, after the Rand's comparatively low volatility during the past three years – minus 5% to 10% last year; 0 to minus 5% in 2020; and 0 to plus 5% in 2019. When a currency's long-term record is two years of depreciation to every winning 12 months, there's really no bad time to diversify offshore. Especially in the wake of a significant correction on Wall Street (see below). – Alec Hogg
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