The exterior of the JSE in Sandton, Johannesburg. (Photo: EPA-EFE / Kim Ludbrook) 
Some people are easily bored by money. They believe it’s a lot like homework. You know you have to talk about it, and if you don’t you’re going to be in serious trouble.
Discussions about money are also all about reality. And one of the reasons these discussions can be so difficult is that they force you to really assess what you think the future is going to be.
This is why people who invest pension fund money, which is other people’s money, often have to be so rational.
They might be British, and think that Brexit is a great idea, but have to advise clients to take their money out of the UK because they know in advance that a vote for Brexit will be financially disastrous.
Or, they could be South African, and think that, if you look at the fracturing of our politics, the fact that no one really has a clue WWHWCG (What Will Happen When Cyril Goes), well then, it’s best to get your money out of here.
And considering how the US has been the one part of the world where the economy has grown so strongly over the past 12 years, then it would be obvious where it should go. Add to that the idea that AI is going to literally change the world, and the best place to invest in that is also in the US.
It’s a simple argument, really: the future of the world is being decided in the US. It’s a huge economy with a long, long, long track record of growth. Surely its future is so bright that your money gotta wear shades.
Except it’s all completely wrong.
As Old Mutual’s chief investment officer, Siboniso Nxumalo, explained on
style="font-weight: 400;">The Money Show on Monday night, if you had put your money into US stock markets at the start of the year, you’d be up by 5% in dollar terms now.
That’s not bad, you might be very happy with that. But if you’d put the same money into the JSE in January, you’d be up by 27.5% in dollars by now!!
The difference is huge.
And it’s actually, to an extent, because of the US.
The main reason the JSE has been flying is because of gold and platinum prices. Gold has hit record after record and seems on track to hit ~R69,000 ($4,000).
While the longer-term reason for this is that central banks have been buying gold, the shorter-term reason is about geopolitical uncertainty. Or, as Nxumalo puts it, “wars are going on in the world in which nuclear powers are involved”.
The reason gold is doing so well this week is because investors are concerned about a shutdown of the federal government in the US.
Read more: Gold remains a sure bet in uncertain times, scaling new heights in Q2
But Donald Trump, as US president, has just added to the uncertainty. His decisions are impossible to predict, which makes investing for everyone just more dangerous.
With platinum, mining companies have not invested in more capacity, while carmakers are expecting to make more hybrid vehicles (which require catalytic converters) than they expected. The move to electric cars has been delayed.
As a result, platinum prices have shot up too, taking platinum shares on the JSE with them.
Now, if someone had told you at the start of the year that this was how things would be at the end of September, I don’t think you’d have believed them.
But it is also a really interesting example of how complicated the question of “where you should put your money” can be.
Someone asked me seriously where he should move some of his dollars, because he believes the dollar’s slide (it’s down 10% on the year) will continue. If you consider how quickly the US has started to slide, I can understand his concern – even if it goes against years of previously accepted investment wisdom.
Read more: Trump tariffs test South African investors’ nerves — the key is to stay calm and diversify
I know that, if you have a financial adviser, as you are reading this you are hearing the word “diversification” in your head. Which means you are using an actual person, not AI gibberish, to advise you.
But, of course, the problem is that just because the JSE is up 30% on the year now, it doesn’t mean it will end here.
You have to ask yourself more difficult questions.
Whenever I ask someone in public where they think gold will end, they refuse to answer. I don’t blame them. One person admitted on air to saying at the start of the year that gold would not go past ~R60,000 ($3,500). And this is someone who is paid to know these things.
So, I have no idea how well gold is going to do, I don’t know if someone in a lab is working on a tiny device that will mean cars never need to use platinum again, and I can’t tell you what will happen in the US.
And this is why money is so interesting. You can think you know what you know and what you know is what you know. But all you can really know is that the future, and the value of your money, is just unknowable.
And that’s why money, and your future, is so endlessly fascinating. DM