Staying invested in a diversified set of South African equities for a period of five years, based on historical data, guarantees you a positive return on your investment.
This record of South African equities delivering positive returns over a five- and ten-year period is among the best in the world, with it even outperforming the US market on this metric.
Symmetry chief investment strategist Izak Odendaal used this data point to show how staying invested is often the best decision for investors despite increased volatility or a market downturn.
Odendaal explained that investors have been exposed to immense volatility in 2025, due to US policy shifts and geopolitical tension.
This often results in investors making poor financial decisions, such as selling out of their investments or trying to time the market.
Timing the market is nearly impossible to do on a regular basis, particularly during periods of heightened volatility when wild swings can occur.
At one point, it was fashionable to say that the 2020s would be a rerun of the Roaring 1920s, despite the inauspicious start to the decade due to Covid.
In fact, the pandemic probably shook the global economy out of the post-financial crisis stupor and low-interest rate environment of the 2010s.
Other commentators are worried that the decade will end the same way the Jazz Age did, with an economic calamity and, ultimately, a war between the global superpowers.
The reality is that we don’t know. If the first half of the 2020s has taught us anything, it is to expect the unexpected.
But it also showed that, under the right conditions, and with the appropriate positioning, the unexpected need not derail your portfolio.
Odendaal explained that the advice in 2025 is not so different to what it would have been in 1925 – diversify, invest for the long term, keep an eye on valuations and stick to the plan.
Diversification and time in the market
Diversification is about risk and return. For South African investors, for instance, diversifying offshore is a hedge against domestic political and economic uncertainties and a currency that depreciates over time.
But it is also being able to tap into a much larger opportunity set. There are thousands of listed companies internationally, compared to a hundred or so shares of a decent size locally.
But it also runs the other way. The past few years have seen many investors join a headlong rush abroad, driven not so much by diversification as by chasing the most recent winner.
International equities outperformed the local market over most of the past 15 years due to a weak rand, low commodity prices, sluggish domestic growth and the US tech boom.
However, returns are cyclical, and it appears that the cycle has turned. Ultimately, the best argument for diversification is simply that the future is always and has always been uncertain and unpredictable.
It’s not just about not putting all your eggs in one basket, but also that we never quite know which basket will be the best one.
For both professional and retail investors, information is no longer scarce – attention is. Today, you can track your portfolio in real time on your phone.
This has arguably not made us better investors, since the more we see the ups and downs of the market, the greater the urge to do something.
For instance, investors who look at the stock market daily or weekly will think it is extremely risky since it is basically a coin toss whether it will be positive, Odendaal explained.
However, look at the market once a year, and the probability of a positive return increases to 80%. For longer periods, the probability rises further.
It comes back to that old adage that it’s time in the markets and not timing the markets, Odendaal said.
With the dramatic global changes of the past few years – Covid, Ukraine, Gaza, AI, Trump 2.0 (and at home, the 2021 riots, the 2024 election) – the temptation to switch investments or get out of the market until the uncertainty fades have been tremendous.
Those investors who’ve waited for the proverbial dust to settle are probably still waiting. They have missed out on a period of strong returns.
So, yes, the world is very uncertain. But it is also true that markets can do well even in messy environments.
Ultimately, investors cannot control what happens in the world out there. They can only control how they react. A disciplined, balanced, patient and valuation-sensitive response has stood the test of time.
