BREXIT – What Now?
With the UK Referendum result now known, the negotiations for Britain to leave the European Union will begin. It may take up to 2 years to negotiate the UK’s exit but many predict it may be even longer.
As stated in our recent Newsletter, Brexit and the Investment Markets published on 3rd June, there has been a lot of noise about interest rates rising in the US and fears about the Brexit vote growing. Both of these opinions had recently softened. The US Payroll data announced on 3rd June has cast a shroud of doubt over the Fed’s ability to hike interest rates during the summer and a remain vote was starting to nudge ahead of the leave vote!
Following the confirmation of the out vote and the Prime Minister’s Resignation we are currently experiencing market volatility which was inevitable given the uncertainty moving forward that the out vote brings. This may continue for a while before markets settle down and should be viewed as a buying opportunity for those with surplus cash and/or income.
Selling during a major downturn often means you are likely to miss some of the market’s best days, as any “relief rallies” will be missed.
We have been advising clients that rely on income from their investments to hold two years income requirements in cash as a minimum. This should be sufficient to cover a market shock as a certain way to reduce the overall value of a portfolio is to continue drawing from assets that are temporarily depressed or affected by short-term volatility.
It is business as usual at Stein with the strong belief that it is the amount of time committed to investing in the markets rather than trying to second guess where markets will go next which produces long term results in excess of inflation and bank interest rates, which is our minimum objective.
We take very seriously our responsibility to give our very best endeavours to exceed your expectations and are of the same thinking as the worlds greatest investor, a certain Mr Warren Buffet, who believes that the Stock Market is a device for transferring money from the impatient to the patient.
The factors that we have no control over such as Brexit and the rise and fall of markets create opportunities and our fund selection process ensure that we only choose highly rated, world class funds that are “Fit for Purpose”.
Other than very modest growth in USA all the major stock markets are showing negative performance over the past year.
However we are pleased to advise you that the vast majority of active funds selected from The Stein Preferred List have matched or exceeded their respective investment sectors during this volatile period.
Ron’s assessment of World Markets over the last 12 months
- DOW Jones USA +01.65%
- S&P 500 USA +01.59%
- FTSE UK -11.78%
- DAX Germany -14.61%
- CAC France -13.63%
- MIB Italy -27.07%
- IBEX Spain -24.76%
- Shanghai Comp´ China -36.16%
- Nikkei 225 Japan -22.36%
- Sensex India -05.48%
The primary consideration for long-term investors is never to panic when we experience market shocks. The winning strategy is to remain fully invested, keep adding to your portfolio if you have the resources to do so and do not retain cash that is not required for spending.
We are “on the case” looking at what the threats and opportunities all this change brings and will keep in touch. However, should you have any questions or concerns about your portfolio, or other related issues please do not hesitate to contact us.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
- Brexit and the Investment Markets
- How to Become a Successful Investor
- Brexit Investment Strategy
- The UK Referendum on Europe
- April 2017 Investment Returns
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