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Navigating the #BrexitShambles

This is a comic Brexit

[Trigger warning: Off the cuff Brexit thoughts ahead. Reading is optional! My blog, my thoughts, and I’ve started so I’ll finish. Just click away and you needn’t be troubled by it! Nor will you feel forced to be rude about me in the comments.]

A few days after the Referendum in 2016, I wrote a short satire chronicling the happy state of Barry Blimp, a middle England  Leave supporter:

And Brexit is going so well! Better than even Barry might have expected.

True, the markets initially dipped 2-3% percent when the result was announced, as lily-livered Remainers sold their holdings and made enquiries about moving to Australia.

But equities soon bounced back as brave Brits like Barry stepped in to staunch the bleeding.

Article 50 was triggered immediately, and the terrified Europeans quickly caved in to all the bold Brexiteers’ demands.

Now international capital is flocking to the UK, as it sees how the nation has freed itself from the yoke of EU membership that had held it down and kept it only the fifth largest economy in the world.

At this rate we’ll be challenging China for the number two spot by Christmas!

Two and a half years on, and as fantasy has given way to fact an apology is required.

I apologize to anyone named Barry.

Back in the (sur)real world, Brexiteer MPs – including two former Brexit secretaries – are looking to thwart Theresa May’s best attempt at solving British politics’ version of Gödel’s incompleteness theorem.

They aim to derail May’s deal by employing the same meaningful Parliamentary vote won by those they once branded “The Enemies of the People”.

Just another day in Brexiteer-land.

After that Referendum

As predicted, Brexit has been an all-consuming waste of time for nearly three years1.

And it’s done this blog no more favours than the country.

I lost many readers in the Referendum’s divisive aftermath. I became less enthusiastic about writing here, too.

At least Remainers and Leavers are now united in agreeing Brexit has been a shambles.

My more constructive critics suggested I focus on the investing implications.

I see their point, but the perverse contradictions of Brexit makes this easier said than done.

Macro-economic forecasting is always fiendishly hard, and with Brexit the range of outcomes is very wide and the appropriate actions you might take at odds with each other. Assigning probabilities to the various exit scenarios feels like betting on raindrops sliding down a window pane.

The only certain advice is to be diversified. But that is always the best advice.

Even leaving aside the fickle markets, let’s consider the British economy.

The story so far

Everything that has happened so far is before any Brexit, remember. Today we still enjoy exactly the trading arrangements as we did before the Referendum.

Still, I thought uncertainty alone could take us into recession after the Referendum. I wrote a post saying so, and suggested ways to think more defensively.

But as things turned out, there was no recession. Some criticism from Leavers on those warnings is understandable.

So why did the economy keep growing, against expectations?

Perhaps I and others were wrong to be so gloomy, but there were other factors – the unexpected delay in triggering Article 50, the interest rate cut (opposed by many Brexiteers), and most of all a sudden recovery in the Eurozone, ironically enough. It’s hard to have a recession when your largest trading partner is expanding, retooling, and restocking, even as interest rates are being cut towards zero.

The weak pound probably hasn’t hurt either, although it’s squeezed importers – not least struggling retailers and restaurants.

Also, while we didn’t go into recession, we did go slump from being the fastest-grower among the leading G7 economies to the slowest:

Graph showing UK economy going from fastest to slowest in G7 after Brexit.

Source: Full Fact

If you’re a hardcore Brexiteer who wants maximum sovereignty then this economic hit – and even the chaos of a No Deal exit – may well be worth it.

I can respect that point of view, though I think maximum technical sovereignty is a hollow victory in our incredibly integrated world (we’re already seeing that in the compromises May struck with Brussels).2

But for the rest of us, it’s a bit sickening to imagine where we might be now had Remain won.

With Europe recovering and the rest of the global economy motoring, we’d likely have seen a mini-boom. Higher real wages, and politicians focused on all the important issues they’ve been forsaking for the phony Brexit war.

Maybe we’d even have made more headway with the public finances.

Pounding the point home

As for our personal finances, so far Brexit has appeared to be a boon for well-diversified British investors based in Britain.

This is due entirely to the sharp fall in the pound – something Brexiteer MPs reliably fail to mention when citing a rise in the FTSE 100 as proof the market is fine with Brexit.

As is now well understood, global equity trackers mostly hold overseas assets. Three-quarters of the revenues of the UK’s largest companies come from abroad, too.

So the sharp fall in the pound on worries about what Brexit means for Britain has actually boosted both the London market and many a diversified Monevator reader’s net worth.

Of course, that’s measuring your net worth in sterling terms, as most of us do.

On the global stage we’re poorer than before the Referendum, due to that plunge in the pound. This loss of purchasing power is showing up at the margins in higher import prices including food and fuel, and in Britain becoming a less lucrative market for EU workers.

You’ll also have felt it if you’ve holidayed abroad.

Investing in the face of Brexit

Having made it thus far intact through the Brexit saga, what should investors do now?

Well, in terms of your personal finances, I think a safety first review is in order. Even Brexiteers admit crashing out without a deal in March will be disruptive. At the other end of the spectrum the forecasts are dire.

Either way, given Hard Brexit has become a very possible – if still less likely – outcome, make sure you’re sandbagged against any potential storms.

I think my original post on actions to take ahead of a possible recession is worth reading.

What about investing specifically?

Passive investors

The good news for well-diversified passive investors is they needn’t do much, if anything.

Indeed the entire Brexit saga has been another notch on the bedpost for strategies like our own Slow & Steady passive portfolio.

One of many benefits to getting your equity exposure via a global tracker (or a basket of large geographic equivalents) is you diversify away country-specific risk. This inoculates you against the dreaded ‘Japan syndrome’ – the possibility that a particular country’s stock market goes down not for a brief bear market but for an investing lifetime.

True, with the bulk of its earnings generated overseas, the UK’s FTSE All-Share is less at risk of this than most indices. But it is still good practice for hands-off passive investors to follow the global money, as we’ve explained before, and it has served you well in the face of Brexit.

Most passive portfolios will also own a chunk of UK government bonds (gilts), which have held up well.

Of course gilts have not benefited from the weaker currency, but that’s fine. A good portfolio is about balance. Bonds are not really there for return, and you’ll be happy to have some exposure to the pound if Brexit is resolved amicably and sterling rallies.

Beyond those two lynchpin holdings come corporate bonds, commercial property, foreign bonds (typically hedged) and more exotic fair such as emerging market and small cap funds, gold and commodity ETFs, as well as factor funds.

These should all be relatively small allocations, and so in the short-term they shouldn’t be determining how your portfolio fluctuates as Brexit progresses. Their aim is rather to gain a small edge over the long-term.

Active investors

When I started this post I thought this would be the biggest section. Now I’ve got here though I find myself thinking there’s little to constructive say to my fellow naughty active investors.

I can only tell you what I’ve been doing.

Note: This post should be taken as a talking point, not as advice as to what you should do yourself. I am far less sure as to how things will unfold than I was even in the financial crisis! See below for more.

Firstly, I am shifting my portfolio allocations around a lot – daily – as things change. This has a big cost in terms of friction and hassle, but, well, that’s what I’ve signed up for. (See this for more. And again I don’t advise it!)

Right now I have the smallest allocation to UK -listed companies – my traditional stock picking ground – I’ve had in 15 years, though it’s still above benchmark weighting. I’ve been especially wary of most UK-focused firms.

Percentage-wise I’m the least exposed to equities I’ve ever been as an investor, although mostly for reasons other than Brexit.

I hold huge (for me) wodges of cash as well as a handpicked and changeable collection of bond ETFs. I’m 6% in gold ETFs (hedged and unhedged).

Diversify, diversify, diversify!

For two years now I’ve also invested with one eye on the exchange rate, which has been an extra headache.

Several times I’ve increased my UK focused holdings when the outlook has looked brighter.

The pound looks undervalued, and I fear a sudden reversal if Brexit pessimism proves unfounded.

But mostly the traffic of UK holdings from my portfolio has been outbound.

This snapshot of the biggest fallers from the FTSE 100 mid-afternoon yesterday gives a good idea why:

To make matters even more complicated, many UK-focused companies are probably falling due to the growing chance of an interventionist Jeremy Corbyn government.

In fact active investors trying to position their portfolios in light of the various Brexit outcomes have to think about at least five credible scenarios (my guesses on the likely impact in italics):

Hard Brexit – Clearly now possible given the universal dislike in Parliament of Theresa May’s deal and the time left before we’re meant to leave. Bad for UK-focused shares, unclear for gilts, very bad for the pound, good for overseas earners/holdings, could see interest rates may go higher or lower.

May’s Deal (previously Soft Brexit) – The deal on the table pleases nobody (leaving aside the fact that it’s not even really a deal, just a divorce settlement and an outline for how to proceed). In the short-term at least it’s a far worse arrangement than we have now in almost every respect. But MPs might end up voting it through anyway because it’s better than Hard Brexit. Okay for UK-focused shares, unclear for gilts, good for the pound, bad for overseas earners/holdings, interest rates probably go higher.

A New Amazing Deal With Unicorns – Perhaps the Government will somehow get more time to come up with something better. I don’t believe anything much better is possible, given the contradictions of Brexit and the EU’s position, but who knows. Great for UK-focused shares, unclear for gilts, good for the pound, bad for overseas earners/holdings, interest rates probably go higher.

Second Referendum / No Brexit – Does anyone believe Leave would win a Referendum if it was held tomorrow? Brexit was blatantly mis-sold, which you’d think would be enough to reverse Leave’s slender majority. I worry about the democratic impact of not Brexiting, given how it’s been spun up as The Will of the People, but that’s for another day. Still unlikely, anyway. Great for UK-focused shares, unclear for gilts, great for the pound, bad for overseas earners/holdings, interest rates probably go higher.

General Election – Possible now, and I think Jeremy Corbyn would have a fair chance of winning. It’s unclear what the Labour party’s approach to Brexit is. Yes I know what they say, but are, for instance, the fantastical ‘six tests’ really meaningful? Bad for UK-focused shares, bad for gilts, bad for the pound, good for overseas earners/holdings (short-term), interest rates may go higher or lower.

As you can see, describing Brexit possibilities as a binary outcome doesn’t really cover it.

Moreover as these possibilities come to seem more or less likely, their consequences are brought forward or discounted on a moment to moment basis.

Traders might thrive in such an environment (though I’ve seen little evidence of that) but it sure makes the fundamental company-level analysis I mostly employ extremely difficult.

Passive is a great alternative. If I could click my fingers and do it all again I think I’d put everything into a Vanguard LifeStrategy 60/40 fund the day before the Referendum and not look at my portfolio until this is over!

How are you invested?

Finally, remember our recent discussion of mental accounting in all this. In particular factor your home into your thinking about your exposure to recession and market risks, assuming you own it.

If you’re concerned that your global trackers mean you’ll be hit should the pound rise, your house may comprise a huge proportion of your wealth that effectively hedges against that possibility.

On the other hand if you’re a stock picker who has mainly been buying cheap UK-focused shares, the opposite could apply. Your house could fall 20% or more in some Hard Brexit scenarios. Why take the risk of all your shares going the same way?

How have you been investing through Brexit? I am sure – indeed I hope – we’ll hear passive investors say “drama, what drama?” That’s what this site exists for!

But I’d also be curious to hear how fellow travellers along the dark side of investing are approaching the conundrum.

  1. If you count the campaigning beforehand. []
  2. I also don’t believe it’s what motivated a majority of the 52% in the Referendum. But let’s not start that again. []

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{ 74 comments… add one }
  • 51 ChrisB November 17, 2018, 12:06 pm

    I think cash always has a place for an active investor. More than usual, right now it depends on what currency you’re in.
    The biggest wealth determinant in the next 6 months will be correctly calling cable. Parity is a bit extreme, but a 15-20 cent move (up or down) is likely. So long as I remember this is more gambling than investing, and not risk too much, I should be safe.

  • 52 MrOptimistic November 17, 2018, 12:08 pm

    @TI. Indeed so.
    @Chrisb. Why Brunner? Last time I looked it had a wide spread and stock overhang courtesy of Aviva. Neither that nor the FTSE 250 are my idea of small stuff. If you want to go the whole hog, Aberforth or Caledonia perhaps? However in this climate who knows!

  • 53 Lord November 17, 2018, 12:11 pm

    In these three years I could have learnt French, or done something more useful with my time. What a total waste of time it is for everyone.

    In terms of my portfolio, to my dismay Morningstar tell me I have 24% of my portfolio in the UK. I remember thinking years ago that the UK was a safe environment and that it’s unlikely anything dramatic could happen to the economy or political institutions…. Then came DC and the Tories. The bastards.
    24% is way too much for a potentially semi-failed stated, but I’m not keen on selling and rebalancing into other funds at the moment. Nothing to do but sit it out and reinvest GBP dividends into those of other other currency funds (unless GBP really gets really stupidly devalued in coming years). Who knows what will happen. I just really hate Brexit – that’s my only certainty.

  • 54 FI Warrior November 17, 2018, 12:31 pm

    Even neutrals on this issue would point out that those currently steering our lives on the ship Dis-UK couldn’t organise a piss-up in a brewery. (based on just the one proven fact of that arrogantly needless, election own goal) But to be fair, assembling the best experts in their fields, to deliver a self-replicating cake wouldn’t work either, as it contradicts the laws of reality that decide life on this planet.

    A good lesson a civilised country would learn from this is to optimise the political process whereby dissenters have to come up with their own plan instead of just chanting ‘No’ to the suggestions of others like a parrot could be trained to do. There should also be enforcement of laws against blatant lies to swing votes, as it is agreed for advertising to consumers for example; fraud means fraud.

    I’ve never had this much in cash and would increase it if liquidity allowed, the intention being to shift into $US, Euro, Swiss franc and a couple of other safer currencies just in the short term. I can’t see how it can be a higher risk to have more options and even if I lose a bit if switching back, that’s an acceptable price for peace of mind, like insurance. Two hits already taken are a void period on a BTL that wouldn’t sell other than for firesale prices and the entire P2P experimental end of my portfolio spectrum sinking a little lower below the waterline every day. If in 2 years racing towards a cliff edge, that couldn’t change anything, I don’t see why it would now; those who don’t believe in cliffs have to crash before they accept it can happen. For the rest of us, most are not able to insure against the damage, so can only brace ourselves while still hoping for a (non-unicorn) miracle to save ourselves. Vibrant times.

  • 55 ChrisB November 17, 2018, 12:41 pm

    The theme is to focus on domestic equities that haven’t been inflated by their international earnings. More of those in the FTSE250 than in the FTSE100. The theme wasn’t to go smallers (or micros) for the sake of it.

    On Brunner – good spot – bought for different reasons: First, it really has a ‘steady and dull’ portfolio which might be what’s needed as this bull market reaches its end. Second, the managers have been around for a long time so should have experience to see us through that turbulence. Third, this year it repaid its very high debt tranche (which has been a drag on performance and helped sustain a very wide discount) with much cheaper debt so that should improve relative performance. Fourth, these reasons combined should see the discount tighten.

  • 56 The Investor November 17, 2018, 12:54 pm

    @ChrisB @MrOptimistic — I’m confused by Brunner in the context of “UK smallers” too. The artificial overhang / debt part is interesting and I may research, but the actual holdings seem to be large cap international? Which is fine but not UK smaller? Or am I missing something? 🙂

  • 57 Norfolk November 17, 2018, 2:21 pm

    Funny, there were supposedly such complaints about the political aspects of brexit hijacking the agenda of this website, as if that wasn’t relevant, but once the shouty-types have no excuse when the articles are separated, in this week’s first; then at this point the ‘interest-score’ is 6 comments on the neutral weekly round up vs 56 on brexit.

    One might say that the majority aren’t disinterested at all then, far from it, logic suggests the aggression to shut down that conversation is simply an intolerance of other opinions.

  • 58 Mathmo November 17, 2018, 3:58 pm

    @TI — you might view global stocks as an unhedged currency risk, but isn’t it a hedged future consumption position? I look it as a way of “stepping off the crazy-a-bout” for a while. Leaving it in cash (ie sterling) would appear to be placing a massive bet by comparison. Obviously all assets are a position or sorts: once you have wealth you have exposure.

    If sterling tanks then I can expect my cost of living to go up over time as globally produced goods cost me more. If it recovers miraculously then I have fewer pounds but they buy more stuff so I’m happy. Only problem is with domestically produced goods — the most important to me being UK housing which I’m longer than I need to be already, and I believe will move more than sterling in any case — I’m not sure I need to personally consume more financial services, or aerospace/weapons tech. Besides, if that recovery of sterling is linked to my country not being quite as buggered as it looks like it’s going to be, then I’ll take a little less wealth as a trade-off for a happier life!

    That said if you’re moving significant fractions of your portfolio in and out of cash then you might be more tuned into the “noise” wavelength than I am. As a passive investor, I try to avoid checking whether I need to rebalance more frequently than once every five minutes (ie about every time we change Brexit minister)

  • 59 Grant November 17, 2018, 5:07 pm

    Haven’t changed a thing, and and only look at it occaisonally, anyway. Vanguard Life Strategy 60/40.

  • 60 The Investor November 17, 2018, 6:25 pm

    You might view global stocks as an unhedged currency risk, but isn’t it a hedged future consumption position? I look it as a way of “stepping off the crazy-a-bout” for a while. Leaving it in cash (ie sterling) would appear to be placing a massive bet by comparison. Obviously all assets are a position or sorts: once you have wealth you have exposure.

    Global stocks *are* unhedged currency risk. 🙂 But I agree it is a risk worth being exposed to for multiple reasons.

    Regarding future consumption, spending is made up as you know of both goods and services. I’d agree that once you’ve bought your house most of your spending on goods is going to come from overseas (whatever the ‘grow it/make it at home’ brand of Brexiteers believe, in diametric contradiction to the opposite view of the ‘global buccaneer / Singapore’ Brexiteers, both of which groups claim the Referendum and the 52% spoke for them. 🙁 )

    Still, a significant amount — for some frugal minimalistas maybe the majority, after a home — is going to be spent on services.

    That’s also where the long term inflation is too.

    Services is everything from school, medical, and legal fees to hair cuts to going to a restaurant, where the (imported) food only makes up a small amount of the bill. And of course care home fees, unless one plans to retire / die abroad (in which case most of the equation is different.)

    Also, you’ve said “cash is a massive bet” but as ever I am not talking, clearly and as stated, about me putting everything in overseas shares or £ cash or anything else. As I stressed, I am widely diversified. A “massive bet” is one thing if it’s 100% of your portfolio. It’s diversification and risk reduction if it’s a component of a broad spread of assets.

    But really we’re not disagreeing so much as playing a different game.

    I went into more detail than usual in these comments to give some context about my active investing. I hope I have something useful to say about the background to my thinking and positioning, that might inform others. I definitely don’t think all but a handful of our 5-10K+ regular readers (probably less than a dozen at a wild guess, informed by years of reading comments) should consider investing anything like I do, and even then only if they enjoy it.

    This is among many reasons why I rarely write about the specifics of my investing/trading style. It would be unhelpful and potential damaging.

    Most people should not be investing / liquidating six-figure sums on a timescale of days or even hours, whatever their level of wealth. Time may yet tell that includes me, though I have some confidence from my tracking that I can keep indulging in this activity for now. 🙂

    Edit: Added “long term” to clarify my thinking there. Recent spikes have been weak pound import driven mostly, as you know. 🙂

  • 61 Steve November 17, 2018, 6:35 pm

    @Richard ” the Brexiteers are making lots of noise against May deal but when it comes to the vote they will fall in line. They must be acutely aware that to not do so will very likely kill Brexit as no deal will inevitably lead to a referendum and having victory in their grasp now would they risk it all for a referendum that has a high likelihood of reversing the last vote”

    I think that is on the money. While the hard Brexiteer people like to excite and agitate their supporters by claiming different approaches to a “deal”, all the ones commonly referred to have the same flaw which is that the EU will demand its backstop (the main point of contention). So it looks like it is “vote for May’s deal or face a second referendum” which the hard Brexiteers would quite likely (but not definitely) lose. I am assuming May will try to legislate for a second referendum if the Commons turns her down twice). She obviously cannot acknowledge such a plan now.

  • 62 Jonathan November 17, 2018, 11:34 pm

    I think Steve’s prediction is realistic. The more pragmatic Brexiteers among the Tory party will return from their constituencies on Monday having discussed possible courses of action ad nauseam. They will realise that a declaration of No Confidence in May has little chance of success (seriously, is there any credible alternative in that divided party?) and that voting against her deal creates the likelihood that the undesirability of No Deal will leave a “peoples’ vote” as the only outcome.

    But it is still possible the arithmetic is against May and her deal won’t carry the vote. Whips will be working overtime.

    One of the saddest things over the last two and a half years is that Labour have not proved an effective opposition. Corbyn has scored a few debating points, but ultimately has shown that Brexit is not really something he cares about. (In my view he is a two issue politician uninterested in the bigger picture: he is still fighting the Clause 4 battles of the nineties, and has been a lifelong advocate of Palestinian human rights which is a worthy cause but has led to reputational damage when criticism of actions of Israeli governments has allowed the party to appear to and perhaps actually tolerate wider anti-Semitism). If the party had a coherent view on Brexit they could have run rings round May. It is a pity that the Liberal voice is so little heard after their collapse in 2015, at least they know what they think.

  • 63 ChrisB November 17, 2018, 11:42 pm

    @Steve @Jonathan
    All very interesting. But how is this relevant to FIRE or personal finance?

  • 64 Grislybear November 18, 2018, 1:14 am

    I have been watching the Brexit shenanigans with amusement. The best bit was when Jacob Rees Mogg declared that the Tory party was full of talent and proceeded to list names with David Davis and Boris Johnson at the top of the list.

  • 65 ZXSpectrum48k November 18, 2018, 1:24 am

    This year I moved heavily into cash and alternatives and out of bonds and equities. Returns since 2009 have outperformed my forward liability curve, so I can afford a few years treading water. Now is not the time to snatch defeat from the jaws of victory. We’re late cycle, so I’d probably be doing this anyway, but Brexit gives it an additional impulse.

    In terms of hedging Brexit itself, the currency seems the most effective vehicle. My aim at the start of the year was to end 2018 long GBP/USD volatility and long the tails. To lose smalls shorting central probability outcomes to be leveraged long the probability of both tails. So I’ve used the ebb and flow in GBP/USD between April and Aug (1.43 to 1.27) to buy large payouts in 1.21-1.25 digital puts and 1.38-1.42 digital calls for late April 19 expiry. For every unit of premium I lose between 1.25 and 1.38, I make about 40x this if GBP/USD is below 1.20 and 20x if GBP/USD is above 1.42. The topside hedge will neutralize my foreign currency exposure if GBP/USD rises in value on a “soft Brexit”. On the downside it will be a massive windfall gain to hedge against a host of potential unknowns; a sum that will now go straight to my childrens’ inheritance in a tax-free, offshore trust. Monetary compensation for a decision they had no ability to influence but which will have a major influence on their lives.

  • 66 Learner November 18, 2018, 3:07 am

    @TI speaking of cash, I’m curious if you kept your flat funds in cash before the purchase and how far in advance, time-wise. I am, which (combined with emergency cash) leaves me 80% in cash for the time being.

    Brexit has already done it’s worst on my finances as I was in the process of leaving the UK at the time of the referendum, and took the whole currency fall on the chin. I have been keeping an eye on the £ this year, trying to time some transfers back to cover voluntary NI payments as favorably as possible though that is now complete. I continue to observe Brexit from the perspective of someone who would like to return to the UK one day and wonders what kind of society it will be.

  • 67 Haphazard November 18, 2018, 8:39 am

    As a passive investor with a longish time horizon, I haven’t looked at the figures. But I usually rebalance around the end of the tax year – I’d be selling bits around Brexit date. The timing is a bit unfortunate.
    The main impact though for me will be losing my job and career, I think, as they depend largely on rights linked to free movement. I’m waiting to find out when free movement ends. What I need is to make sure my torrentially rainy day savings are well stocked if I can. Since the referendum I’ve been making an extra effort to tighten the belt.
    Jonathan raised the Labour party stance. A canvasser came to my door the other day, wanting to know if I’d vote for them. I said I was “concerned” about Brexit. His response: Are you a leaver or a remainer? He wasn’t going to start his pitch until he knew. I had this the last time I was canvassed, too. It’s all things to all people.

  • 68 The Investor November 18, 2018, 11:19 am

    @all — Gordon Brown wrote an interesting article on the FT yesterday — in Saturday’s links post under Brexit. He cites several things other countries do to moderate some aspects of EU integration (free movement) that we hear little to nothing about here. Not sure if they’d be dial changers; the lack of awareness/implementation is notable though. I guess it was politically toxic to talk about limiting free movement pre brexit, which won’t have helped.

  • 69 Mathmo November 18, 2018, 5:01 pm

    @TI – appreciate the clarification on cash. I’d hate to be caught with 25% portfolio in sterling when news of the PM being replaced by a hard Brexit clan breaks! I suppose your wheelin’ and dealin’ is always going to see some large temporary cash balances from time to time. I suppose my point – most succinctly – is that cash is an investment choice too.

    On GB’s “limits to movement thinking”, the thing that most EU countries do to limit inbound immigration is not speaking the world’s most popular second language as their national tongue. The fact that EU couldn’t even throw a little sop in that direction back in May 2016 when DC asked for a concession is arguably the straw that broke the camel’s 2%.

  • 70 Brod November 18, 2018, 11:53 pm

    @Mathmo – I made this very point to a Dutch friend when I asked her how many countries taught Dutch in schools. She was strangely silent.

  • 71 Tyro November 19, 2018, 8:37 pm

    @Mathmo, @Brod, @TI

    – No, at the time of ‘Enlargement’ (the 2004 incorporation into the EU of the eastern and central European countries of the former Soviet bloc, which by the way was strongly argued for by the UK against the reservations of some other member states) the UK Government chose not to adopt various restrictions of/mitigations on the free movement of those countries’ citizens that were available and were in fact adopted by other member states. So we have only ourselves to blame on that score. Also, rates of migration between member states ebb and flow as the economic cycles shift between the states. I’ve heard it said by economists (I’m not one; so I don’t know how sound this view is) that because of this, rates of inward EU migration would have started falling after 2016 even without the referendum result.

  • 72 The newbie November 19, 2018, 11:32 pm

    You mention this on your post:
    > I think I’d put everything into a Vanguard LifeStrategy 60/40 fund the day before the Referendum and not look at my portfolio until this is over!

    That’s, more or less, what I have been doing. I started as a passive investor a year and a half ago and slowly built up two portfolios inside an ISA.

    One of them is on Vanguard Lifestrategy 80% Acc with a YTD return of 0.19% https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-80-equity-fund-accumulation-shares/price-performance

    The other is on Vanguard Lifestrategy 60% Acc with YTD return of 0.15%

    I might have been unlucky with when I’ve done some of the contributions as my returns are slightly worse than that.

    Anyway, I’ve learnt the mantra. We are on this for the long run.

    A question(s) I’ve always had in my head: does it make sense to own both? should I just have one of them (based on how much risk I feel like taking)? should I use a different fund instead of Vanguard so that I am not exposed to them?

    PS: I am not prepared to build my own portfolio from scratch so I was happy with the concept that these funds offered me
    PS: the reason I run two… mine and the wife’s

  • 73 Tony November 20, 2018, 5:00 pm

    2 points on Brexit 1:
    1) the oft-forgotten irony that the referendum was because David Cameron wanted to end the decades old internal splits on Europe in the Tory party and to counter the rise of UKIP. Didn’t exactly work for tory unity did it….. Let alone the rest of the country.
    2) Economic factors aren’t key for a large proportion of Brexiters, which is why there hasn’t been a real reversal of opinion. Because for many it was about identity and immigration (latter being connected to the former). The oft cited “taking back control of our borders”. There’s been zero debate around it and the politicians continue to kick that can down the road, not least because immigration levels won’t be materially affected whatever controls are put in place as the UK fundamentally relies upon it.

  • 74 faithless November 24, 2018, 12:23 pm

    Based on reading financial blogs, including Monevator and the excellent JLCollins NH stock series, my investing strategy a few years ago became to sell my assorted active funds and random trackers and invest everything in Vanguard Lifestrategy 80:20, keeping the money I need to feel mentally comfortable aside in a cash ISA.

    I then switched from HL to a cheaper platform, and forgot my log in. I should probably find it, but as I get emails confirming transactions, I’m sure the money is still being invested every month and none is coming out. I’ve no idea what’s happened to my investments in the last few weeks and can’t actually be bothered to look, because I’m not going to do anything about it, because I don’t know what to do (and neither does anyone else).

    I’ve no idea what current Brexit plans means for investing, and theres at least a 50% chance that any change to my ‘strategy’ would make things worse, so I’m doing nothing.

    I find finance and investing articles interesting, but nothing I’ve read has convinced me that I could do better. Interestingly, my partner reads most of the same things I do but has taken the opposite approach.

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