According to Barry Schwartz, American psychologist, “the secret to happiness is low expectations”. Expanding on the idea of happiness it seems like our happiness is more of a relative story than anything else.

We are very happy with our new sedan car up until our neighbour pulls up in a SUV, which towers over our flat car. Unfortunately, society’s narrative trap that money and success will make you happy perpetuates the evil cycle of comparison. Sacrificing happiness today in pursuit of the unattainable. “Don’t read beauty magazines, it will only make you feel ugly”!

When it comes to investing the theory of low expectations feeds directly into the price and therefore the prospects for future returns. When the news is bad expectations are low as are prices, which counterintuitively results in higher future returns and conversely good news means high prices, which often results in poor future returns.  But what of the relative happiness theory……

Reading the Sundays Times is enough to make anyone want to look for greener pastures, but on a relative basis are those far off destinations as green as one would think and on a relative basis are, we as bad as we may be feeling. Let’s take a quick tour of the globe starting with our peer emerging market nations.

Since Turkey’s failed coup d’état and skirmish with Trump their economy has been in freefall with the Turkish Lira down -50% to the Rand over the last 5 yrs. Inflation and interest rates in the mid-twenties with Erdogan’s son-in-law in charge of the Treasury. My personal favourite for comparing corruption is Brazil with three of their recent past presidents either in prison, having served time in prison or facing prison. Their current incumbent is a populist far right-wing man who styles himself on Trump and is yet to show his true colours, although is son has recently been implicated in corrupt business dealings.   Moving south Argentina all but defaulted on their debt for a second time with the IMF coming to the rescue. When I last checked their interest-rate was 60% plus. Just imagine servicing a bond with 60% interest charged.  Let’s not even talk about Venezuela, which is a complete basket case. But what about Russia would you prefer Putin to Cyril.

What about the developed world? The UK Brexit debacle has seen the FTSE return only 0.1% in dollars over the last 5 years, which incidentally was worse than the JSE and who would have guessed after 2 years of endless debate there still appears to be a risk of a hard Brexit with dire consequences forecasted. Germany the bright star of Europe is on the brink of recession as China’s slow down eats into their car industry. Italy’s populist right-wing government has no clue of how to balance their books and are intent on borrowing and spending their way out of debt, while everyone has forgotten about their poor cousin Greece, who continues to limp along at the mercy of the EU.

Who have I forgotten, Africa, the US? Let’s not go there.  Hopefully my point is made and this without even mentioning all the good things about SA.  We not that bad, relatively speaking that is!


Mark Williams
Mcomm, CFP®, HdipTax
T. 021-851 3746