With brexit only a week away and looking increasingly like we may leave without securing any deal. What are peoples thought on the market reaction and does anyone have any thoughts on how to manage their portfolios. I welcome others ideas on how they are thinking.
I hold
BOO, GAN, KAPE, SLP, ENQ, CDM
Will the market as a whole move in unison?
Are certain companies more at risk?
Should we go 50% cash?
Could the country be liberated and the market will fly to New highs?
All thoughts appreciated
I do think that it is too early to tell. Maybe Javid's hard line position is just a negotiating tactic, maybe not. Time will tell.
The concept of "a" deal makes little sense any more.
There's a potential deal, or deals, with the EU, and another with the US. Plus a variety of other deals.
For the moment, transition will end this year with a decision about extension to be made by June. I suspect that both dates are less fixed than that suggests if both sides want to change them - but the market will view them as deadlines.
Virtually by definition, the EU deal will cause some short-medium term losses. Other deals are potential gains, but there is no timetable for those.
The market is dominated by remainers, so fear will move its reactions more than hope or optimism. The question is how much fear is already baked into expectations. Judging from the way all their comments after the election assumed that Boris would switch to high alignment with the EU because he now had a large majority, I suspect that any move away from high alignment will produce a fall.
The problem is knowing whether you are looking most at the currency markets or the shares. Most of the hit until now has been to the currency side. I assume that will be true in the future too.
I'm afraid that individual industries are details; hairs on the tail of the dog. I doubt that you can safely predict much at that level until negotiations are well under way.
PS My guess is that a politically calculating government cannot afford to extend transition or uncertainty by much. It cannot afford to have the whole of its time in government (let's assume 4-5 years) dominated by Brexit: getting Brexit done was the last election, and it needs to move the focus on to other areas for the next one. Also true for the EU. And Trump.
I think you're right that currency will probably take a bigger hit if the market doesn't like a no deal brexit outcome. I suppose I'm really trying to decide if I need to protect myself from a total market meltdown or looking more at my individual stocks and I'm thinking BOO is probably at the highest risk of falling in the short term. I hope as you say, it is mostly already factored to the market but who knows. It would be nice to get the thoughts of someone involved in a large business to get an angle of whether it's seen as a positive or negative to businesses
Sorry - added comment to wrong thread so have removed and hopefully placed correctly elsewhere.
Impossible to predict.
I've been predominately in cash for the last few years, that cash position growing steadily, not a deliberate tactic, but more that my confidence in the markets was eroding due to the perpetual stalemate of parliament.
Although it was clear that if Boris won, the markets would react favorably, as they did, it did not signal a buy for me. Great that we have at long last got the opportunity to move on, but this provides no clarity on our eventual outcome. I suspect the initial exuberance (the Boris Bounce) will fade as we progress into 2020.
Many, many years ago I only traded derivatives, I got burnt badly, not for the same reasons as Paul Scott, but more about my naivety in selecting the right stocks. Since then I've been mainly long on equities, no leverage apart from the odd CFD / Spread Bet to achieve short positions.
However, I am not prepared to stay on the sidelines any longer. I am going to tackle 2020 very differently. My approach will be to play both the long and short side, and try to achieve a natural hedge on general market movements.
Time will tell whether this will play out in my favour, however in times such as these, with the macro headwinds that exist, I'm hopeful my stock picking skills will outperform the market and the hedge will smooth the potential lurches of the wider market.
