What's in an economic turnaround?

By Staff Writer

The economy is a complex beast that sometimes changes into a bear, sometimes into a bull. The bear is a shy creature that prefers to hibernate the winter away and swipe anyone who comes close, the bull is more likely to bellow, stamp and charge. These two animals describe a significant part of what moves the market. Fear and Greed. The underlying economic fundamentals may define where the market is on a more macro scale but the day to day movements will fluctuate between bear and bull, fear and greed. 

 

  • Are the green shoots for real?
  • Is the economy turning around?
  • Is this just a bear rally?

 

There has been much talk about the economy starting to shows signs of green shoots or that it is starting to turn, heading us towards the economic turnaround. However talk is cheap and has an expensive effect. For every voice crying green shoots there is another counselling caution. The market is duly affected by these pronouncements. A bear rally is when a little bit of greed is reintroduced into a fearful market trend to get a quick return with no real underlying turnaround present. The green shoots talk may be just that, a bear rally. The market is affected by psychology and this spins its fluctuations around real value.

The markets are notoriously hard to predict and many of the socionomic effects are not costed in. The figures tell us that we are in a recession but that inflation is looking better, that the World Cup will bring big bucks. The truth is somewhere out there and no-one can be totally sure what will happen next, but planning a budget and putting more aside into a savings account are the realities of now compared to the spend, spend, spend on credit from before the financial crisis. We don't save enough in South Africa and while the National Credit Act has certainly helped us we still need to be more austere and only spend what we really can, rather than what we think we can.

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