Wednesday 8 June 2016

Brexit, Seriously?





I love it when the press get in a lather. It is a most amusing spectacle. Even on the old fashioned TV thingy's, seeing the pundits justify what they said yesterday was only a dream is most entertaining.


Of course, a funny thing is actually happening this week. With the referendum coming closer some people are starting to make up their minds. In polls, it seems there is a small break to the Leave side so far and this has meant "PANIC! DISASTER" for London liberals/Civil Service/Government etc.


However, the same thing happened in the Scottish referendum. The first load of don't knows decided to break for Independence and the polls narrowed a lot. It was in the balance on the day but ended up with a decent Remain win. Perhaps the nationalist waverer's are more determined than the "Remainers" resigned to their fate?


Nothing happening now strikes me as different, except that a sinking of  boat load of immigrants off the Kent coast the day before might push Leave over the line - events, dear boy, events.


As for myself, after long period of shame, I am about to post a bet. A few days ago I bought a few quid of USP3 (I manage to miss the big leg up of course!). This is an ETF long-short bet on the $/£. My reasoning is the Pound will struggle for the next 2 weeks as Brexit is now looking close and won't be settled until the day. Plan is to sell out of the position come what may on June 23rd. Thus far a pointless 1.5% up - but still good to have some money on the result. Of course if Brexit looks like it is coming home then it is a good one to leave on as I guesstimate there will be an 8-10% spike devaluation over the next week or so after the result.

16 comments:

Blue Eyes said...

On the subject of the Pound, lots of pundits are scariily predicting parity with the Euro by 2035 or some nonsense. They never seem to be asked whether that was a good or bad thing when parity was close back in 2009/10...

Sound Money said...

They never seem to be asked whether that was a good or bad thing when parity was close back in 2009/10..

If you are like HMG, wedded to spending all the cash you can hover up, it's good to import as much domestic inflation as you can. Keeps house prices afloat and allows you to get even more cash in via fiscal drift. And you can trash pensions, savings and your own debt.

Brextit/Remain? A plague on both your houses.

andrew said...


Civil Service????
Thinking about it, surely the civil service will be pro-brexit as all things being equal the civil service jobs in Brussels will be moved back to the UK, thus expanding their empires.

I can see self-aware Pols of all stripes being terrified as they will not be able to blame Europe when they have a constituent complain about House prices/ immigration / recycling tea bags - at that point it will be clear most of the issues were always within their control and they were just using the EU as an excuse.

On betting,
I closed my 'stay' position for a £3.50 loss :( about a month ago.
At the same time I bought some large US based stocks (MMM/JNJ) on the basis that I was going to anyway, there isn't too much downside and like you note, there will be upside on brexit.

In other betting news I did open a position on Theresa May as the next con leader. IMO she may be the only person who can hold the cons together.

dearieme said...

Gold, Jim lad, gold. Jimmy O'Goblins or ETFs. Buy gold. Even a nice shiny ingot stored for you by those obliging folks at the Royal Mint. Gold.

Steven_L said...

Not much downside on big consumer non-cyclical stocks? I bet that's what Warren Buffett thought when he loaded up on Tesco. These companies are all trading at twice the price Tesco was - on 4% - 5% gross earnings multiples and valued at 4 or 5 times turnover. Hell, I remember people saying not so long ago there was no downside to oil at $100 a barrel!

Now I'm not surprised folk are turning their nose up at bonds yielding 1.5% to buy stocks that pay 2.5% divis and will hopefully adjust for inflation. And I see Neil Woodford and Terry Smith are making lots of juicy fees loading up on the same 'boring compounders'. I bet all their little old lady investors think there is 'no downside' too.

Like bonds, these stocks are now valued on the basis that either interest rates are not going up, or everyone can get out in time when they do. The other obvious downside for UK investors is sterling returning to the other end of its trading range - i.e. 1.65-170. In fact, these stocks are the new bonds if you ask me. Maybe they'll go to the moon, as they consolidate their dominant positions and investors bid them up to 1% yields. Then again, maybe they won't.

I had a tenner on England to vote to leave at 2/1 a few months back and a score on turnout being over 60.5% at 6/5 (I think).




andrew said...

SL

so, what would you store money in?

Jim said...

To be honest it doesn't matter who wins this referendum, just as long as the vote is close. That way they Usual Suspects will know that roughly 50% of the electorate will hang them from lamp posts if they even consider some sort of further integration within the EU. And given there will have to be further integration, or the whole thing collapses, that means at some point the rest of Europe are going to sail off into the wide blue yonder leaving little old Britain behind, and we'll be out by accident, or at least half out.

Its all about slowly slowly catchee monkey. We're not (however much we might like to be) going be free in one bound. Its going to take time. Its like extracting yourself from a complicated relationship, you've got to prepare the ground and move in stages before pushing the final 'We're Off!' button.

The referendum is just the first stage in a long process. But at least we're going in the right direction, or rather we've halted, and everyone else is marching on...............

Blue Eyes said...

Thanks Jim, I agree....

Blue Eyes said...

I invest with Woodford..! But I am a little old lady when it comes to investments...

Electro-Kevin said...

There will be no Brexit.

Anonymous said...

EK,
that may well turn out to be the case but for those of us who wish to leave we should ensure we vote and drag along every like-minded person we know to do likewise.

andrew said...


BE

East london is an excellent place to invest.

Steven_L said...

so, what would you store money in? (Andrew)

I'm fortunate enough to be in the local government pension scheme. But I've recently started a small second pension in a SIPP that is 40% cash waiting for ideas/opportunities, but so far holds:

BP, Standard Life, Aldermore Group, Paragon Group of Companies, Daimler, BMW, Telecom Plus, IP Group and Sports Direct.

I'm not looking to trade or diversify much. I'm after good buy and hold companies I reckon can earn me 5% above inflation for the next 20 - 25 years and stuff that I can hold until the top of the next credit/land price cycle (mid 2020's).

What would your recommends be then?

dearieme said...

I'd recommend US or Canadian shares in a SIPP: your provider could claim back withholding tax for you. Hold UK shares in an ISA.

andrew said...


SL
Companies that do real things that are largely tied into the growth of the world (not uk) economy
MMM, JNJ, Unilever, Daimler, Nestle
Companies that do clever things (not with technology or medicine)
Lockheed martin, BAE
Companies that do things with natural resources (not just extraction)
Shell, Corticera amorim, Sea farming (I think I missed the boat on this though)

in large much the same as you but more overseas

UK small caps for the isa

of course DYOR and YMMV

Steven_L said...

I can't help looking at the charts for the big boring compounders, then looking at the paltry USD/GBP exchange rate, and thinking I might not be timing that one quite right.

Then again, I've been saying similar about Tobacco stocks for years now and they keep proving me wrong. I was tipping Lockheed Martin in 2010, and had a brief profitable spread bet on it before it really got going, so I feel I've missed the boat there. Maybe a rally in sterling after a remain vote might be a good time to buy US stocks?

I nearly bought some Johnson Matthey the other day. And I keep flirting with the idea of buying some eBay too. But I'm not in any hurry to get 100% invested.

As for UK growth, I think 300k official immigrants a year will mean GDP growth (if not GDP per capita growth). I think population growth in general will be good for my portfolio. I like automobiles, insurance and financial services because I reckon people will still buy these things in 20 - 25 years time.

I'm also looking for value and good quality out of favour companies (BP, buy to let mortgage providers, standard life, sports direct). Value is where the boring compounders lose my interest - 4% gross earnings yield and 4 times turnover is only good value for a megacap in a 0% interest rate world.