The performance of the local market following the recent political and economic events, might not have a long-term effect on investments in South Africa. According to Graham Tucker, Old Mutual Balanced Fund manager, we could face a significantly volatile time in the short term, with potentially divergent outcomes, however, volatility may create opportunity within a mispriced market. So if you want to invest in businesses in South Africa, here is the long and the short of it:

When it comes to investments, bad news – like the downgrade of our economy – can become good news, and South Africans should be investing in businesses, even under these economic circumstances. According to Graham Tucker, you should invest in exactly the opposite of your initial gut reaction.

While doing the opposite of what your gut tells you may not be your forte, recent political events have taught us the validity of Tucker’s claim.

South Africa’s recent downgrade highlights the crossroads that our country now finds itself at. “At this point, it is hard to predict the direction we will end up taking. The resultant market volatility is going to exist for some time to come, and in such times of uncertainty it is crucial to take a long-term view and be well diversified,” Tucker said.

President Jacob Zuma fired the former finance minister, Nhlanhla Nene, in December 2015. This resulted in the Rand depreciating by 9%, bonds fell by 10%, listed property by 14% and within equities, banks fell by 19%. However, investors remained firm with their investments in these assets, and have since retraced and recouped their losses, and more.

Short-term investments, on the other hand, are driven by sentiment rather than fundamentals, making it extremely difficult to predict. However, the global economic environment is improving, allowing the market to gain more value.

When you decide to invest your money, keep in mind that financial freedom isn’t achieved overnight. It is the time in the market, not timing the market that counts.