How to invest in world ‘gone mad’

By Brian Butchart*

I spent a few days in London recently at Ninety One's global investment conference, in a room with some of the world's most seasoned fund managers and market commentators. I came away with one uncomfortable thought that I think matters to you, no matter how experienced or inexperienced you are as an investor.

For about 30 years, we’ve been able to treat global politics as background noise. Markets rose over time, trade flowed, and a diversified portfolio held patiently did its job. That world is quietly ending, and I don't think it's coming back.

And it's not just me thinking this. Two speakers made the case sharply: Mark Malloch-Brown, a former deputy secretary-general of the United Nations, and Alec Russell, foreign editor of the Financial Times.

Their message was sobering, but useful. 

We are moving from a rules-based world to something closer to every man for himself. A world in which each country's own national interest, rather than any shared global standard, decides where money can go safely and earn a decent return.

What actually struck me

Three things stayed with me on the flight home.

The first was a story about China. Russell described a Shanghai manufacturer who in 2019 made 20,000 specialist sensors for electric vehicles and sold them at $15 each, competing against Swiss and German firms charging $30.

By this year that same manufacturer was making a million of them annually and selling them for $2. 

The European competitors no longer exist. This isn't cheap goods flooding the market. It's sophisticated, high-end manufacturing moving decisively east, backed by three to four million engineers graduating in China every year. 

If you hold concentrated exposure to old European industry, that should give you pause.

The second was what this means for so-called middle powers, and here I'm thinking directly about us. Countries like South Africa had hoped a multipolar world would let us pick and mix, keeping good relations with both Washington and Beijing. 

The more honest view now is that the comforts we took for granted, from predictable trade rules to freedom of navigation, are eroding. Where your money sits, and how exposed it is to a single country's politics, matters more than it used to.

The third was the most practical: the difference between noise and signal. 

A great deal of what dominates the headlines, tariffs announced one day and reversed the next, is designed to be noise. The danger for investors is losing sight of the long-term signals, like the steady rise of China’s prowess.

How this impacts you

None of this is a reason to panic, and it certainly isn't a reason to sit frozen. It's a reason to be deliberate. Here's what I'd take from it.

Don't react to the noise. The whole system is now built to generate it. Selling good assets in a moment of manufactured panic, or chasing whatever benefited from yesterday's headline, is exactly the behaviour this environment punishes.

Think about geography, not just returns. In a fragmenting world, where a company earns its money and which government it answers to is part of the risk. Spreading your savings across regions and currencies is no longer optional caution, it's basic sense.

And this is why our long-held view on offshore diversification matters more than ever, not less. Getting a meaningful portion of your wealth out of a single economy and a single currency is one of the clearest ways to reduce your exposure to any one country's politics.

The real value of a steady hand

If there's a single takeaway, it's this: a more complicated world raises the cost of getting things wrong, and it raises the value of good counsel.

The job of a good adviser was never to predict the future, because no one can do that. It's to build a portfolio robust enough to survive surprises, to keep you invested through the frightening moments when staying the course is what actually builds wealth, and to help you make sense of the signal beneath all the noise.

The world is more complex than it has been since the end of the Cold War. That is not a reason for paralysis. It's a reason to have someone in your corner who is paying attention.

*Brian Butchart, CFP®, is the managing director of Brenthurst Wealth. brian@brenthurstwealth.co.za