13 big, painful lessons from 2014

Even the biggest optimists among us have had our resolve tested this year. Odds are many of us are finishing 2014 on a more pessimistic note than we were when it started. Things may even deteriorate further before they get better.

Growth has dwindled, jobs are scarce, ratings agencies lurk in the wings armed with clipboards and red pens. Global economies are uncertain and domestically, state spending is ballooning faster than revenue collection is growing. Pressure to spend grows with cash-starved parastatals demanding capital and there is mounting uncertainty over the civil service's bloated wage demands against a backdrop of economically destructive blackouts.

Before you run yourself a nice hot bath and dust off granddad's old cutthroat razor, remind yourself that a little adversity is useful from time to time.

This year may have been rough, but it's also provided us with some good lessons.

Markets

Index investors on the JSE have not done particularly well. The market is up just 5% since January. Measured in dollars, investors are 3% poorer.

The JSE was expensive in January and 2014 has been a year of consolidation. Even so, it is still trading at elevated levels around 17 times historical earnings against a long-term average of 13 times. Big industrial companies, which have increasingly grown offshore revenue streams, have continued to perform and many trade on terrifying multiples. Momentum remains in investors' favour, though, with the smart money sticking to multiyear winners such as Naspers and Mr Price, up 27% and 32% respectively.

Winners

Just because you don't like a company does not mean you can't make money out of it.

Telkom is the best performing share on the JSE this year - its value has rocketed by 143%, courtesy of renewed confidence by the investment community that the behemoth is finally coming to life after decades of corporate inaction with its business-oriented board, a leadership proving to be the most independent of government since Sizwe Nxasana.

Fund Managers

Even superhero fund managers are fallible. Top-performing, award-winning investment house Coronation continued to perform strongly but had an embarrassing blowout over African Bank. The fund manager, headed by Anton Pillay, was by far the biggest shareholder in the company and held about a quarter of its issued stock. It dumped shares in the dying moments of the listing to preserve investors' capital. Some even argue it precipitated the collapse.

Coronation shares grew by 40% this year. The performance of the company, which is 20% owned by its staff through a trust, has seen its share price substantially outperform the funds its customers invest in. The value of the business has increased more than tenfold in the past decade.

Dividends

As investors in Anglo American learnt to their horror in the aftermath of the financial crisis, there is no such thing as a dividend guarantee. Dividend-seeking investors buying into a falling African Bank share price this year lost their shirts. The same goes for Kumba Iron Ore - a solid dividend payer that has seen its share price collapse 46.5% along with the global price of iron ore.

Never marry a share

Legendary investor Warren Buffett may argue that the best holding period for a share is forever, but that does not mean you have to be silly about it.

There was a point where Pinnacle Technology, like Naspers and Mr Price today, could do no wrong. It was a regular top performer.

That went awry earlier this year when one of its executive directors was accused of offering a senior police officer R5-million in return for a contract. Nothing was proved and the matter has been dropped, but the share price is still half of what it was 12 months ago.

SIPHIWE SIBEKO 

Straight lines

Nothing goes up or down in a straight line. Not markets, or oil, or the currency. Currency strategist John Cairns at RMB maintains 2014 was the least volatile year in the past decade for the rand.

It might not have felt like it, but there were fewer wild vacillations in the currency this year than in any other since the 2003 emerging markets crisis. The rand has depreciated against a resurgent dollar, but the ride has been less bumpy than you might think.

Inflation

Inflation has been bizarrely benign and a last-quarter softening in the oil price can only help push the consumer price index closer to 5% in the next three months. Oil prices have fallen dramatically from levels stubbornly above $100 per barrel to closer to $60. You might not see massive reductions in plane tickets and taxi fares any time soon, but the lower petrol price is money in your pocket.

Value

You can get stuck in a value trap - platinum and gold shares are prime examples of this.

Shares in the producers of precious metals have fallen sharply, yet value investors have remained resolute in the belief that they are due for a recovery.

Perhaps 2015 will see a resurgence, but they all face cost and regulatory pressures and unless there is a substantial rerating in the prices of precious metals or a precipitous fall in the rand, the value trap will remain firmly in place.

Robert Tshabalala 

SAA

If acting CEO Nico Bezuidenhout can pull off even some of what Telkom has managed to do this year, the national carrier has a fighting chance of surviving without too much more government support.

Being brought under the auspices of the National Treasury to get its finances in order is the first positive development in decades. The state, however, is obsessed with the apparent strategic imperative of owning a national airline and has been operating it as a support mechanism for the developmental state.

We've not seen any solid numbers to justify the tourism and trade benefits of running loss-making routes and Bezuidenhout, who has no idea whether he will be in the job next week or next year, is moving fast to get the airline on an even keel.

People

Everyone is replaceable: from 11 KFC shift workers whose dismissal was okayed by the Commission for Conciliation, Mediation and Arbitration this week after none of them would assist an investigation into persistent pilferage at a KwaZulu-Natal outlet to Ketso Gordhan, who discovered to his cost that the PPC board found him expendable after his second falling out with it, to Marcel Golding, whose strong personal relationship with HCI co-founder Johnny Copelyn became the biggest public split since Joost and Amor's.

Parliament

For years the ANC has used its majority to run roughshod over minorities in parliament. Westminster-style decorum has prevailed and honourable members have by and large treated one another in a way the rules suggested they should.

You may not like the new era of confrontation, but the Economic Freedom Fighters have got South Africans interested in politics again. That is reflected in recent statistics from YouTube, which show that although the South Korean pop song Gangnam Style remains the most watched single clip in history, in South Africa, most views focus on EFF antics.

The EFF's belligerent stance over the spending at Nkandla means that South Africans are paying attention to what MPs on million-rand-plus packages a year get up to. That has to be healthy for democracy.

Power cuts

Nobody wants wide-scale power cuts, least of all Eskom, which, like a corner drug dealer, wants to keep us dependent on its supply. With just 18 months to the local government elections and opposition parties emboldened, the ANC cannot afford an economic rout because of power shortages.

The recent Eskom warnings that without R2-billion a month in additional state funding we face a serious first-quarter energy calamity, are being taken seriously in the Treasury. It will need to weigh the consequences of inaction against an effective bailout for a parastatal that has failed to deliver on its promises of new bulk power supply by Christmas.

The determination of ex-CEO Brian Dames to keep the lights on during his watch while betting on the timeous completion of the Medupi and Kusile plants means the grid is perilously close to disaster.

AMCU President Mathunjwa arrives in RustenburgSTRINGER 

Strikes

The emergence of the Association of Mineworkers and Construction Union and the five-month platinum sector strike from January to May showed the resolve of workers seeking a better deal in one of the most unequal societies on earth. Relatively well-off civil servants are also preparing to go on strike, threatening municipal delivery, hospitals and other essential services. Cutting a deal swiftly is in everyone's best interests.

This year was brash, honest and engaging. Don't expect next year to be much different.

Bruce Whitfield is an award-winning financial journalist