Not repeating mistakes & hard thinking
F&A Monthly Update | July 2021
An interesting part of unpacking client strategies is exploring the foundations off which we make decisions. Yes, we manage money, but money is managed by humans and so we spend most of our time here. Most of our work involves helping our clients think and see clearer - helping them understand why they make and have made certain decisions, even subconsciously, and how those decisions are helping or hurting them.
Each of our human journeys is a unique one, filled with our own suite of experiences and challenges. Marry this to our strengths and weaknesses and we have our cocktail of moments that go well for us or not, not to mention the wealth of variables outside of our control that impact us. Somehow, between the alleyways we get dragged down and beaten up in, and those moments we stand tall with the sun shining on our face and warming us, we develop a foundation of sorts - we make commitments to our self.
Odds are that this conversation is unsettling for most of us, because that’s exactly what hard foundational thinking is! Should we want to truly understand ourselves (which we should) we must enter the uncertain dance of truly unpacking ourselves. Challenging our thinking can help us to become more aware of ourselves, our biases, and our beliefs.
TEMET NOSCE - Know thyself.
Do you recognise any of these beliefs or commitments?
CAREER COMMITMENT
”I am going to have an incredible career! No one will outwork me. I will achieve positions of prestige with remuneration to suit.”LIFESTYLE COMMITMENT
"I am going to live in an incredible house while driving a car that will turn heads. I will only eat at the best restaurants while travelling to scenic destinations each year."FAMILY COMMITMENT
"I am going to be married by this age, and then have a boy and a girl. I’ll also live in the above lifestyle."HEALTH COMMITMENT
"I am going to have an incredible body, while eating only the healthiest of foods. I commit to ethical eating only."
None of these are wrong in and of themselves, but the honest reaction to the above beliefs are likely a stirring of irritation and vulnerability. You probably don’t want to unpack these commitments. Life is going well enough, and your setup has enough order to make your chaos bearable.
Hard thinking
Consider what commitment you have whispered to yourself and possibly even your loved ones. It shouldn’t be too hard to find the general area your commitment lies in as you spend most of your time and energy fulfilling it. If you are invested enough in it, it may be all you give your time and energy to. Look at the Olympians for example, and what they have spent their time and energy focussing on over the past years / decades.
Now consider how this commitment is serving you. This requires hard thinking! Easy thinking is easily recognised as it tells you what you want to hear. We humans are very good at finding reasons to affirm the decision we have already made. Rather, challenge your decision; try to break it. It is not you, so you don’t need to attack yourself personally on it, but out of love and respect for your current and future self, you ought to truly critique it. What’s good? What’s bad? What are the costs? What are the benefits? An example of a well-known stereotype would be someone who works themselves to the bone for 30 years, only to find out they actually can’t sit on that beautiful beach sipping mojitos 7 days a week. Wild.
Now, I am not telling you what is right or wrong - that is not my place. What I am trying to encourage is honesty and clarity. With those ingredients, you should be better placed to not repeat mistakes. Don’t sit with a commitment you made when you were barely an adult, and needlessly repeat it for the next few decades. Be gentle, be honest, grow.
As an interesting aside, the lifestyle commitment listed above is a consistent and key contributor to strained personal wealth management performance over the long-term. Referring specifically to money - performance cannot fix discipline errors, but discipline can fix performance. Our beliefs and commitments guide what little discipline most of us have... Best we make sure they are resilient!
July 2021 Update
This month's piece is compiled by Brendan de Jongh, SA Head of Research - PortfolioMetrix.
Local Update
South African (SA) equity was the best performing local asset class with the Resources sector masking the fall in Naspers and Prosus due to Chinese regulatory risks. However, global asset classes trumped local asset classes as the rand came under pressure and developed markets continued to grind higher. Global Property was by far the strongest performing asset class for the month. Unfortunately, this could not be replicated in the local property market as it took a breather from what has been a spectacular recovery year-to-date.
Global Update
July saw a big divergence emerge between western developed markets, and Asian and emerging markets. Despite some nervousness around delta variant flare-ups, western markets advanced on the back of ongoing successful vaccine roll-outs and generally positive economic data. Japan, China and other emerging markets suffered, however, as lower total vaccination rates fuelled uncertainty in the face of renewed delta outbreaks. Regulatory crack-downs by China on US listed tech and education companies then exacerbated the emerging market falls. At the same time, global bond yields continued their march downwards, benefitting the price of longer-duration bonds and quality-growth stocks in general.