The Tea Break - David Te Brake

Main Feature – Where to for SA in 2012!

South Africa has been fortunate enough to not have been as severely subjected to the hammering that Europe has had to endure. We can give credit to 3 major factors that have contributed to this outcome:

• A decade of relentless increases of commodity prices
• Excellent capital inflows from foreigners
• Good banking and stringent monetary domestic systems

However, these fine runaway trains may have run out of steam. Consistent high levels of unemployment, aggravated by a mass influx of foreign “immigrants”; the severe inefficiency of our age old deep-level mines, coupled by potential political meddling and increasing costs of labour and electricity; and most importantly the diminishing productivity of South Africa’s work-force in general; all threaten the long-term outlook for SA as a whole. If the SA government does not start reinvesting or re-subsidising in the world’s supposedly “next BIG commodity” i.e. food, and start seriously addressing unemployment and non-productivity, then South Africans may have a short road left to travel on.  In my opinion, it is therefore significantly important for South Africans to be doing one thing over the short/medium term: Investing and STOP spending! Grow some wealth while the going is still good. Things for 2012 look above average on the equity front with a good proportion of your returns to be expected from US stocks. Stay away from commodity stocks. Commodity levels are situated way above their fair values, which make commodity stocks even more overpriced.

Updates – Discovery Health

Many people were left upset this year as Discovery Health seemingly drew back on some benefits on their top end plan by imposing limits. Such limits generally only come about when there is severe abuse and misuse of benefits, generally from a minority of users. Members forget that they are just that, “members”. This implies that you are a member of “group” or “club.” Your Medical Aid is not as such a policy as you think it may be. It is a pooling of all members funds, to which Discovery health is then paid an administration fee to administer and pay out benefits to those most in need of the funds. Discovery Health does in no way become “more profitable” by not paying out on a benefit. I for one, as a member of Discovery Health, have no tolerance for other members abusing the “system” and for effectively prejudicing me and therefore personally embrace the actions taken by the board of Discovery health.

Statement of the Month

“The optimist claims that we live in the best of all possible worlds, and the pessimist fears that this is true” – James Cabell


Thanks to David Te Brake - SA's leading financial broker for financial planning.