01/06/16Close the door on the way out…
30No prizes as to what I’m eluding to in my blog this week. All of us would have woken up last Friday with a myriad of thoughts running through our head. From “yippee” to “Armageddon out of here.”
Irrespective of mine or anyone else’s viewpoint, life goes on and indeed, 6 days later, one could argue, what was all the fuss about?
Financial Markets have weathered the initial storm, some companies that threatened to leave the UK if we voted out are rethinking things-some have even come out and said they’re staying, The USA has changed it stance slightly on trade deals from “get to the back of the queue” to “of course we will consider trade deals with the UK” and we have countries like New Zealand, Australia and South Korea at the front of the queue, waving order forms at us.
Even the EU-yes, the EU say that so long as we agree to the four core principles of Freedom of movement-workers, capital, goods and services-we can access the single EU market (amazingly, those that we had, while we were a member state!)
My own view, is that this vote was a political one and not a financial one. Financially, the UK is fundamentally sound. We have cash stocks, we have a thriving and growing economy. We have financial stability. Politically I think we are all over the place, as demonstrated by the lack of trust the public have with all political parties-52% of voters decided to ignore the request by the three main leaders in the UK and voted against them. We most certainly didn’t appreciate The President of the United States saying what he did either. So now we face uncertainty with no Prime Minister as such, a Labour Party that is so divided, one wonders when it will return as a credible opposition and a Lib Dem party that is rebuilding itself. So what next?
Well a vote ‘Out’ was a vote for uncertainty,that’s for sure. We will see a new Prime Minister and possibly a new leader for the opposition, will this lead to a General Election? who will trigger Article 50 (the document that dictates how we exit the EU)? what will happen when we do trigger it?
Europe also have some up and coming issues: Greece has yet to be resolved. Jean Marine Le Pen, leader of the National Front in France, is calling for a ‘Frexit’, Geert Wilders, head of the PVV-a right wing party in Holland,is looking for a ‘Nexit’ and Austria was very close to be led by an Ultra Right political party. Oh, and lets not forget the US elections as well.
Clearly, over the next few months, any of the issues I’ve outlined-or indeed a collaboration of, will have an effect on world trade, economies and investment markets. As I write this, Boris Johnson has decided not to stand for leader of the Conservative party. I’d imagine so as not to run against Michael Gove.
So, with uncertainty, comes a time to look at your investment strategy. Whether your ultimate risk levels are none, or off the scale, in an ideal world, we should ‘be prepared’ and look at spreading things around. I’ve said this before, but if we look at the British Summer, would you invest in Sun cream and Ice Cream, or Sun cream and Umbrellas?
Just in case you’re wondering-the picture? the door to my office and its always open!
Have a great week,
Victor
