Sell after May and go away? – Daily Newsletter

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Hi there,

Among my privileges is serving Scouts SA, introduced to the board by "Mr Scouting", the late Garnet de la Hunt. Yesterday afternoon was spent with trustees of the Foundation, the movement's endowment portfolio. The portfolio has been fully invested in JSE shares for some years. As a result, the portfolio has grown handsomely – with a spectacular 69% growth posted in the past year.

As the portfolio's managers debated around switching from this share to that, I got thinking about the rational approach. In the past century, share prices have risen on average by 7% a year after inflation. Which means in the last 12 months, this portfolio racked up as much real growth you'd expect over five years. The Scouts Foundation is no isolated example. Its done the same for thousands of other South Africans share owners.

What matters now is perspective.

Will the JSE deliver another 69% this year, I asked? Of course not, the managers chuckled. We'll be lucky to break even, they added. If so, surely the smart call then is to secure those extraordinary gains, to preserve the capital base. Once we'd talked it through, everyone came onto the same page. But you have to wonder how many other South Africans are avoiding those uncomfortable questions, holding on in the hope of another great year? It could happen. But more sensible would be to see the market's recent run for what it is. Extraordinary.

Best,
Alec

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