Uncertainty is not a strategy

Feel free to reach out to Dawie Klopper PSG Wealth Manager directly.

At the same time, the extraordinary pace of artificial intelligence development is reshaping economies and industries, raising legitimate concerns about the future of work and income stability.

Then, almost overnight, war erupted in the Middle East — sudden, violent, and immediately felt through a sharp surge in oil prices.

The military actions by the US and Israel against Iran have once again brought geopolitical risk to the forefront. Financial markets, which dislike uncertainty more than anything else, reacted swiftly. Oil prices spiked, inflation expectations moved higher, and investors were left asking the familiar question: what now?

The first point is both simple and important: markets tend to overreact in the short term. History shows that even severe geopolitical shocks are eventually absorbed. Wars always end — sometimes sooner, sometimes later — and over time, the global economy adjusts while capital finds new opportunities.

What makes this episode different is its timing. Only a few months ago, the prevailing view was that central banks — particularly in the US — would begin cutting interest rates later this year. Not necessarily because conditions demanded it, but because lower rates would help ease pressure on consumers.

Now that outlook is far less certain. Rising oil prices and potential supply disruptions threaten to reignite inflation, complicating the task facing central banks. Should they support growth through lower rates, or maintain tighter policy to contain inflation?

Bond yields have already begun to rise, drawing capital back to the US and strengthening the dollar — an outcome that runs counter to Trump’s preferences. For South Africa, this typically translates into a weaker rand. Even gold, which often benefits during periods of conflict, has not responded as strongly as expected.

For investors, this environment inevitably brings heightened volatility. But volatility should not be mistaken for permanent loss. It is simply the price paid for long-term returns — the cost of participating in equity markets and benefiting from compounding over time.

Locally, global shocks are filtered through a uniquely South African lens. Higher commodity prices, still well above levels of a year ago, provide support to exporters and government revenues. At the same time, elevated oil prices place upward pressure on inflation, making the South African Reserve Bank more cautious about cutting interest rates.

The rand, as always, acts as a shock absorber — but that role comes with increased short-term volatility. For investors, this again underscores the importance of global diversification.

Which brings us to the key question: what should investors do now?

First, stick to your plan. Investment success is rarely determined by the ability to predict geopolitical events. Rather, it is built on discipline, patience, and the ability to endure uncomfortable periods without making impulsive decisions.

Second, diversification remains your best defence. No one can predict how this conflict will unfold or how long it will last. A well-diversified portfolio across asset classes and geographies reduces the risk of any single event derailing long-term outcomes.

Third, do not confuse short-term noise with long-term reality. Inflation may rise again, and interest rate cuts may be delayed, but these are cyclical shifts — not structural breaks. The global economy has weathered far greater shocks.

Finally, maintain perspective. Every crisis feels unique in the moment. Each time, it seems as though “this time is different.” Yet history consistently shows that markets recover, economies adapt, and patient investors are ultimately rewarded.

Uncertainty is inevitable. Panic is optional.

Stick to your plan — it is likely already well diversified.

And remember: all wars do end.