Much ado about nothing


The end of the world

One week on from the end of the world it’s hard to see what has changed by just looking at the FTSE 100.

  • Earth has continued to spin on its axis for 7 further complete revolutions
  • The future remains no more certain today than it was in the past
  • It’s clear that all politicians are in it for themselves and cannot be trusted to do what is best for the electorate.
  • Judging from the initial stock market reaction, Europe is in a huge mess. The chart above shows that over 1 month the Italian stock exchange is down 9%, German shares are down 5% whilst Old-Blightly’s FTSE 100 is actually up 5% It will obviously look as different tomorrow as it has looked every day this week.
  • Our portfolios were positioned to be largely unchanged by either Remain or Brexit. Today they look largely unchanged. The chart below shows how our moderate portfolio has moved
  • However neither Remain or Brexit has happened yet. Article 50 has not yet been invoked.

Screen Shot 2016-07-02 at 16.24.44

More people – 17,410,742 – voted Leave last Thursday than have ever voted for anything in British history. The result, with its very high turnout, is decisive: our decision must be enacted. If it isn’t, then we no longer live in a democracy.

All change

The UK however has changed hugely since the referendum. Mainly for the worse and society is looking ugly. I thought class divisions had been driven out of the UK.

  • Not since the miner’s strike has the UK population been more divided and full of hate.
  • I have come to the conclusion that the Beeb is a biased political organisation. All arguments as to why our licence fee should ensure it remains independent have been destroyed. It has been as pro-Remain as it has been against the junior doctors’ dispute. We want news events reporting, not influencing.
  • Unfortunately the victim culture continues to thrive in the UK. Since when does a political result that goes against some personal views mean that there will be no future opportunities for a generation of young people?
  • Three quarters of the 18-24 year olds who are now currently shouting the loudest didn’t exercise their democratic vote.
  • Apparently…..although UKIP only captured 4 million votes in the 2015 general election, there must now be over 17 million un-educated, old, white, van-driving, bigots who live North of Watford.
  • Meanwhile….. apparently in London, everyone is young, well-educated, metropolitan, euro-loving, tree-hugging, diversity-embracing, friendly socialists, who know better than the rest of the lower class working nation.
When the going gets tough, the tough get going

As you can see there has been a lot of un-helpful stereotyping from both sides. We need to all come together as a nation now; Stiff upper lipped, lined up to take on the world. If all those individuals who now feel they have to leave the UK were to form a queue at Dover, I believe the queue at Calais for those who still want to come to the UK would be much, much longer. Unemployment is currently running at such high levels across the whole of Southern Europe. Currently youth unemployment in Spain stands at a devastating 45%. Many young Europeans have made the decision to come to the UK already.

We will shortly have the right to trade with who we want to, to set levels of taxation that will show the world the UK is open for business. We can ditch the red tape that binds us and holds UK businesses back. In 2009 we weakened Sterling and acquired the first mover advantage, our economy recovered significantly faster because we were not in the Euro. It led to us economically out-performing all of Europe by a huge margin. We have just achieved that advantage once again. UK interest rates are likely to fall now, or at the very worst stay lower for longer, thus providing a further boost to those with mortgages. The price of oil in dollars dropped, simultaneously as Sterling did, which cushions the Dollar exchange blow and will mean we shouldn’t suffer rampant inflation going forward. And finally, the whole of the population of the US is now booking their holidays over here for next year. Scotland should be thrilled as tourism booms!

Could I personally have done better for us?

Absolutely. With investment I know it’s easy to be wise after the event. I could have performed a u-turn and introduced some Gold into the portfolio. I could have denominated more of the portfolio in Dollars. I was ready to buy a commodity based fund, but it looks too expensive for now. I could have sold our smaller UK shares and bought large ones in their place. But many of those changes would have relied upon me guessing the outcome to the referendum like I owned a crystal ball. I would have been wrong footed like the rest. William Hill shares fell 9% because they got the result wrong.

Action Taken

This week for those clients in the Aggressive Portfolio I used all of their spare cash to buy the heavily discounted FTSE 250 index. For those in the Moderate Portfolio I used half of their spare cash to buy the FTSE 250 index. For those Cautious Individuals I have decided not to increase their exposure for now. If we can make 7-10% or so on these purchases I will probably sell again and bank the profits for the remainder of this volatile period.

I have learned a lot from this political drama. I understand I will never stop learning and will continue to build my investment experience as we continue to build our investments. The final outcome of our split from Europe is far from over yet. I will remain vigilant, this Summer will be a busy time for Lucas and myself. Then we will lurch towards the next media hyped drama. It’s business as usual really.

8 Replies to “Much ado about nothing”

  1. informative blog as usual. I happened to catch Mark Carney’s speech yesterday, what I could understand of it, but it looks like they have a plan.
    But I loved the reference to the weathervane…
    ‘Above the central arch of this Court Room is a weather vane. Originally installed in 1805, it played a central role in the Bank’s management of a different type of uncertainty – meteorological. When the wind blew from the east, ships would be able to travel up the Thames, meaning London’s merchants would need credit to purchase the cargo. When it blew from the west, credit would need to be withdrawn. This Regency forecasting model helped the Bank of England to provide an anchor of stability.’

    ‘Today, while the economy is more complex and our models less reliable, the Bank has identified the clouds on the horizon and can see that the wind has now changed direction.’

  2. As a Remain voter, I do appreciate this level-headed and well-reasoned report. It invites trust in Howard’s integrity and professionalism in taking charge of my financial well-being.

    Thank you, Howard,

  3. Great insight into the problems that are influencing the economy at present. I like it that some of the Remain camp are now “well really we can now see the benefits of leaving” and the some of the leavers “not sure about this now….”. it goes to show that at the end of the day there was never a right or wrong answer. We have made our beds and it is up to the British government to make it happen.

  4. Hi Howard – great blog as usual – informative and balanced – oh – and some facts; no media hype and political scaremongering here. Unlike the politicians and the BBC…

  5. Howard, incisive, accurate and reflective as ever. The broader view of how we have declined into a blame, name, shame country needs to be addressed. I shared an LBC interview with Lord Digby Jones today, a man I knew reasonably well … it sums up my feelings and thoughts precisely and I think is very similar to your views on peoples attitudes, look it up on ….. ‘that there bookface’ … Tony

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