Some clients only want to talk about the shares that are down in their accounts. The general thinking is that they should be sold because they are in the red, and there must be something wrong with them. This is not the right mindset. Each share represents a small piece of a real business that has numerous moving parts. Naturally, their share prices are going to move higher and lower at different times.

For example, take a look at the magnificent 7 stocks so far this year. Nvidia and Meta are up over 23%, Microsoft is up 20%, Amazon is up 2.6%, Google is down 4.6%, Apple is down 15.5% and Tesla is down 22.4%. Each of these companies has very different stories to tell over the last 7 months. They also have different futures ahead of them.

The same concept applies to our model portfolio. There will be short to medium-term challenges that all the companies will need to face. On rare occasions, these challenges may prompt us to sell and move on, but for the most part, we have faith in the businesses we own to overcome the obstacles and continue growing.

Short-term share price weakness is not an indication that a business is a bad long-term investment.

I've written a few times about South African Reserve Bank potentially dropping our inflation target to 3%. I noted that the hardest thing about lowering inflation is that we have been so used to prices going up by 5 - 15% a year, we will need a mental reset, particularly when it comes to salary negotiations.

With that in mind, the current wage negotiation between NUMSA and the Gautrain has been interesting to follow. NUMSA is demanding a 7% increase, but the Gautrain is only offering 4.2%, which is still higher than inflation at 2.8%. The union argues that employees need a living wage, and that CPI isn't an accurate reflection of how worker costs have changed. You can read their stance here - CPI increases are not enough.

NUMSA's first objection to using CPI as a negotiating base is that Eskom increased electricity costs by 12.7%, nearly 5 times higher than current inflation levels. I think that is the first place where a mental reset is needed. Government entities need to rebase their price increases to be more in line with inflation, including things like electricity, water and property taxes. It's unlikely though, because these organisations are all cash-strapped and billions behind on maintenance.

Let's see where the two parties finally end up. Given that they are already talking increases in single figures, shows that we are well on our way to a 3% inflation target.