I’m speaking with a friend on Sunday. A recent migrant from the UK to New Zealand.
‘The UK should just leave without a deal,’ he says. ‘The EU are enjoying the process of humiliating us and stringing us along. We will be much better off as a sovereign country.’
I reflect on my time sitting at a trading desk in 2016. When the Brexit vote went to Leave. That was unexpected. Though with the benefit of hindsight and deeper exposure to daily life in Britain — it should not have been.
On the surface, the value investing I do is a simple business. Buy things when they are temporarily cheap. In actual fact, it is far more difficult, since you’re balancing fear with risk assessment.
In 2016, when the shock Leave vote came through, sterling and much of the FTSE was temporarily cheap. That was a good time to buy.
We saw this again in March, during the worst of the coronavirus fear. Some of our positions are up 40%-100% since!
Well, it’s about the deal now. An EU-Britain trade deal. No deal will panic the chickens again. And provide a time to scoop up potential bargains. Which we’ll review soon across our portfolio.
Such deal at one stage had an estimated probability of only around 20%.
Now some analysts are touting it at 50% or more.
The pound has strengthened somewhat. Though many domestic stocks still seem on tenterhooks.
It will be several days until we get a clearer picture on the outcome.
Whatever happens, there is another opportunity I want to add to our monitoring today.
We have recently added some tech and speculative positions. Both in monitoring and on the Watch List.
It’s now time to try and secure some more regular income. And Brexit volatility could present a great opportunity to do so with this defensive behemoth…
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