The recent inflation spike coupled with volatility on the parallel market, low interest rates and a hazy economic outlook are just a few ingredients of what seems to be a rather distasteful beverage being served to investors in Zimbabwe.
Media coverage has raised toxicity, fueling anxiety levels through providing endless, sometimes contradictory, commentary on what actions individuals should take, the prize enigma being whether “this time is the same or similar to the previous woes of 2008”.
For one, the character of Mr Market (the Zimbabwe Stock Exchange) has been rather different. Volatility has been fueled by strong perceptive emotions by investors on the course. Being wise to the corrosive nature of currency depreciation has resulted in significant speculative behavior on the stock market, thereby elevating inherent risk levels.
The question now for some is whether to cut losses and get out or perhaps hold onto stocks, maintaining an investment as a buffer or hedge.
With the stock market having risen more than 50 percent this year, just how affordable are these stocks for a local investor whose salary has not increased by this much?
It has become increasingly important, therefore, to ensure that, if one is investing on the stock market, the right stocks are being held in a portfolio.
It is not enough to secure your hard-earned savings by buying “good and strong” stocks. A sure way to lose value is by purchasing great stocks at excessive prices. Without realizing it investors can be stuck in a pattern of panic buying over-priced stocks for fear of losing more value. How does one understand value in this opaque economic climate?
Gains for seasoned investors are not won on daily market oscillations but rather from growth experienced over many years. The economy will eventually settle. So, what’s the right move in this tumultuous environment?
“All intelligent investing is value investing acquiring more than you are paying for. You must value the business in order to value the stock,” advises American investor and businessman Charlie Munger.
Staying the course involves investing in quality stocks at good prices. It negates the need for stock market gambling. Invest in profitable companies with good corporate governance, value addition and potential for growth. Stock prices will eventually reflect the true value of the underlying companies. It is best to own shares in a few select companies that will help to build wealth over time.
This, though, is only one part of the investing equation, since it focuses on just one investment class. We have all heard of the idiom ‘don’t put all your eggs in one basket’. Balancing one’s investment, however, can be quite daunting, especially where you cannot see the price of the investment every day or where a property investment is not visible or listed on a stock exchange.
Fortunately, Zimnat Asset Management is equipped with the right people, skills and tools to safely navigate investment of your hard-earned savings or retirement funds. Accurate interpretation of information by experienced professionals provides a clear advantage in the investment world.
ZAM’s investment services go beyond stock market investments. They include bonds, money market and alternative investments as well. The research team keeps up with market trends and financial news to ensure that clients’ strategies remain on track to achieve long-term growth. This is all part of Zimnat’s endeavor to make life better.
By Rishay Lalla