Sunél’s Blog | How we decide

Have you ever paid attention to how you decide? What is your process when you make an important life decision and what information do you consider? Do you process data, or do you just go with your gut? What happens when you must decide as a team or a family or a couple?

This year our family made the enormous decision to move to Cape Town. It was a difficult and drawn out decision. How do you decide to leave a place – where you’ve lived happily for 26 years – for the uncertain promise of a better life and expanding opportunities? It put the spotlight on how we make decisions as a couple and as a family. It confirmed for me that so much of how we decide happens without awareness.  Our brain makes countless decisions every day, without us even realising it. It decides for example, in a split second, whether we trust someone we meet for the first time.  

Daniel Kahneman, a Nobel laureate for his work on human decisions, has honed in on that process.  He stresses that human decision-making is mostly flawed and extremely complex He stresses that there are valuable lessons to learn from looking at failure stories, and not just success stories.  The most important learning is to be aware of the flaws in our decision-making. Common flaws, as identified by the work of scientists like Kahneman, include, deciding based on facts from the recent past or the universal aversion to making losses. Then there is also the impact of your personality. Some people will not decide until they have all the facts on a spreadsheet. Others are driven by how they feel about the matter. Others trust their gut or intuition.

All these methods have flaws. You can look at the wrong data or make the wrong conclusions when making your decision, tomorrow you may feel differently, or the data may disprove your gut feeling. A common error is to manipulate or filter the data until it fits our intuition or feelings. In fact, it’s extremely difficult to avoid that mistake because it goes against the wiring of the brain.

So how do we make better decisions then? By employing all these energy centres when we’re deciding. We make better decisions if we appreciate that in teams and couples, the opinions of others may be informed by their personalities and is therefore valuable to the process. Kahneman says that as individuals we can seldom see the mistakes we make in our decision-making, but in groups or as couples, we have the chance of a better outcome if we value the differences.

Decisions, like moving cities, can seldom be made based purely on numbers. We must involve all our intelligence centres including our emotions and intuition. It’s not just about surviving on the other side but thriving.

How did you make your last big decision? Think about it.

Ps. I’d love to know.

Kind regards,

//25 October 2019.

Topline Quarterly Review: Q3 of 2019

The third quarter of 2019 saw markets give up some of the gains made in the first half of the year.  Oil jumped and retreated after an attack on a Saudi Arabian oil plant. Global markets are not sure what to make of the tit-for-tat trade war between the US and China. Locally, we have Mboweni vs the ANC attempting to fix our broken economy.

Trade Wars: A war with no winner

There is an ongoing battle for justice as Trump puts it. Starting with tariffs, the $50 billion worth of goods early in 2018 has now escalated to tariffs on more than $200 billion worth of goods from China. The net effect of these tariffs put a damper on global growth. Chinese imports from all countries fell by 8.5% compared to a year ago.  This has put pressure on export-driven countries with emerging markets feeling the brunt of the pain. The US was not spared as imports by China from the US declined by more than 25% over the same period. The chart below shows the extent of the damage.

All eyes are on talks between the two countries, labelled as the ‘phase one deal’. Any form of agreement would bring relief to the markets. There is a possibility that talks between Trump’s team and China breaks down. The knock-on effect from this could be further tariffs, as Trump has highlighted before that the tariffs could be imposed on all Chinese goods, estimated at roughly $550 billion. Guessing the outcome would be a fool’s game. With the risk of recession a distinct possibility for the US and presidential elections coming up in 2020, Trump might be eager to get a victory from an economic standpoint. A deal between these two powerhouses could lead to improved global trade and subsequent growth.

Brexit: We are tired of the story

The only exciting part of the Brexit debacle is that it might be over soon. A dragged out process that started in 2016 with a looming deadline of 31 October has the UK scrambling to get a last-minute deal approved by parliament. Newly elected prime minister, Boris Johnson went rogue by trying to suspend parliament but subsequently failed. Johnson does not want to extend the deadline but is obliged by law to do so if parliament rejects his deal. We will follow this closely over the next couple of weeks as the deadline approaches.

How to fix South Africa

Tito Mboweni, Reserve Bank governor in the 2000’s when growth was rife within the SA economy, has the unenviable task of saving South Africa’s finances. During August he released a detailed plan to kick-start the South African economy. Comments from the National Executive Committee meeting indicate that the plan was met with some resistance. Could this be the catalyst for  the economy or will it just be another policy paper with no intended action? The resistance to implementing the necessary but politically unpalatable steps is increasingly concerning.

Our eyes will be fixed on the Medium Term Budget Speech (MTBS) delivered by finance minister Mboweni on 29 October. Some are labelling this the most important MTBS yet. Mboweni will update South Africa on the pace of tax collection, government spending, economic growth targets and plans to boost growth. Moody’s is set to review South Africa’s credit rating on 1 November. The MTBS is clearly critical for that decision. Moody’s lead analyst, Lucie Villa, recently mentioned that there is a low likelihood of a downgrade in 2019.  However it seems likely that they will downgrade the outlook to negative, which will increase the likelihood of a downgrade in 2020. South Africa will fall out of the World Government Bond Index which means that it will become more difficult for the government to fund government debt. It is also likely to lead to increased interest rates and a decline in the currency.

Business confidence is dwindling, hovering around the lows of the late ‘90s. The graph above compares business confidence in South Africa to GDP growth. The correlation indicates one thing: if we can get business confidence up we can fix our growth problem.

After a strong start to the year global markets, not surprisingly, had a poor third quarter. Fears of a recession in the US and Brexit uncertainty remain key drivers in the equity markets. Locally, markets retreated and the Rand weakened.

The JSE All Share Index is up 7% in 2019, despite a decline of nearly 5% this quarter. Resources are still leading the way with strong growth up by 13%. Interestingly, of the 160 counters on the JSE, 53% of them are in negative territory this year. Sasol has been the biggest detractor from the All Share Index, down 40% year to date. Sadly the project responsible for Sasol’s demise is not even in South Africa. If we stripped Naspers out of the data the JSE only yielded 1.8% this year.

Key events taking place in the final stages of 2019 are critical to the outcome of the year.  It is not a time for irrational bets or investing based on event outcomes. We remain confident that a globally diversified, liquid portfolio based on your circumstances and risk appetite is the best approach in these uncertain times. Drastic changes may feel right, but can also be detrimental and even destructive.

If the Springboks win in Japan it could just be the catalyst we need to unite our country. Who knows what the ripple effect might be… Go Bokke!!

<Foundation Family Wealth is an Authorised Financial Services Provider>

Sunél’s Blog | Leave…or make a positive contribution

This year an already depressed sentiment about the prospects of our country plunged to new depths. For some, anything from a potential IMF bailout to the NHI or the credit downgrade have been rational reasons for negativity. They are indeed reasons for concern, but it doesn’t necessitate that every real and social media conversation dive into the depths of despair.

In fact, if this is you and you continuously complain about the government, our country or the lack of a future for your children, you have one of two rational choices: leave or change your attitude and make a positive contribution.

Before you stop reading, know that I am not saying you should stop having occasional debates about our politics, or that you should make this conscious choice for the benefit of those who love the African soil. You should choose to leave or choose to make a positive contribution for yourself.

If you stay in South Africa and contribute to the negativity, you’re not only contributing to the downfall of the very country in which you hope to survive and prosper, you’re probably also slowly killing yourself.

Negative thoughts kill.  Research undertaken by the University of Minnesota shows that: ‘Negative attitudes and feelings of helplessness and hopelessness can create chronic stress, which upsets the body’s hormone balance, depletes the brain chemicals required for happiness, and damages the immune system. Chronic stress can actually decrease our lifespan.’

Does it sound familiar? Helpless and hopeless?  Odds are, it sounds like most conversations today around the boardroom table or the braai. It needs to stop.

If you are staying in this country, by choice or not, or if you want it to change, you need to change. Stop the repetitious, negative thinking. Get involved somewhere. Even if the contribution is minute. People who are involved in mentoring young people, improving education or helping the homeless, testify to the upliftment they have received in their efforts to help others. It won’t just help the country, it will help you to feel less helpless and hopeless.

If you don’t make a conscious choice toward a positive contribution, you should leave. For your own good.

Kind regards,

//18 October 2019.

Sunél’s Blog | Lessons from the Camino

The Camino de Santiago was not on my bucket list. It never occurred to me that I might want to do it until earlier this year when I mentioned to a friend that I wanted to take some time out and she said, “You should do the Camino.”

The Camino de Santiago is a network of pilgrims’ ways leading to the cathedral of Santiago de Compostela in Galicia in north-western Spain where tradition has it that the remains of the saint James are buried. Many undertake this pilgrimage as a religious part of the Catholic tradition, others as a retreat or spiritual ritual and others as a physical challenge. For me, it was a combination of the last two. We walked 170km over eight days from Portugal to Santiago and spent two days in Santiago participating in the post-Camino rituals, like the Pilgrim Mass and receiving our Pilgrim Certificates.

The time before my departure was frenetic and less than ideal for the preparation of a pilgrimage. I did not have high expectations other than rest for my mind.

But the Camino did so much more.

The simplicity of the days. Walking. One foot in front of the other. Good honest food. Sleeping. And tomorrow the same. Then there was the breathtaking beauty of nature or the simple scenes of daily life in rural Portugal and Spain. And the digging deep to cover the distance, sometimes through ugly industrial areas or busy roads.  It all contributes to an inner stripping so that day by day, the layers of yourself disappear until you are once again faced with your essence. 

As someone who has done extensive personal growth work over the years, I was taken by surprise. I was taken aback by the revelation of spaciousness and aliveness inside me. I felt like someone had pushed the ‘reset to factory settings button’ on my real self.

Our chaotic world robs us of deep intimacy with ourselves and our lives.

The forward in one Camino guidebook comments on this loss, saying “We have allowed ourselves to be thrown onto the surface of our lives – mistaking busy-ness for aliveness, but this superficial existence is inherently unsatisfying. “

You cannot help but ask the age-old question, “Who am I?” In some way, the Camino reveals this to you with no conscious thought about it on your side.

As the kilometres ticked by (sometimes very slowly) and I discarded items to lighten my load, I became aware of the burden of toxic emotions and thoughts, of resentments, judgements and beliefs I needed to shed. I became more aware than ever of the violent impact our the world has on our inner space. As we rested in the dark and sacred spaces of the many churches along the route, I was reminded that our inner space should be treated with the same reverence, and as I shed some of this stuff, I felt a spacious and treasured space opening inside of me.

I couldn’t help but be swept up by the energy of fellow pilgrims along the route to Santiago: their stories, their grief, their physical pain and the collective search for something. Many pilgrims leave items along the way, photos, stones or mementoes of loved ones they had lost or pain they wanted to deal with.

When we reached our destination, I was deeply affected by the collective emotion of relief, astonishment at having completed the journeys and overwhelmed by the collective pain the pilgrims brought to Santiago – a greater reminder of the pain of our world.

We were reluctant to leave Santiago for fear of losing this newfound connection between ourselves and the community of travellers, and within ourselves.

I will work to maintain this relationship with myself, the spaciousness and aliveness within me. We all need to switch off from the world to allow space for ourselves to show up. We do not necessarily have to go to Santiago. A glimpse of this is available to us every day. We can ask ourselves, “Is my life, my career, my effort and my wealth worth it if I sacrifice myself in the process?”

Kind regards,

//12 October 2019.