Friday, 24 June 2016

A Momentous Decision is Made!

Well, having cast my vote to leave the EU yesterday, although I thought the outcome would be close I genuinely believed the majority would choose to remain. As the night of the results unfolded I was really stunned to see the level of support for Leave up and down the country - well except Scotland which was no surprise.

The final figures were 52% Leave and 48% Remain which is clearly decisive. The turnout was over 72%.

Of course, this is not the outcome predicted by the polls - we really should not be surprised - and the markets have seen a sharp decline with the FTSE 100 down around 5% at lunch and the pound losing around 8% against the dollar.

The result has seen our prime minister David Cameron announce his intended departure in the Autumn - he clearly misjudged the strength of feeling for Leave - and we will now be heading into unchartered waters as we negotiate our departure from the EU with a new PM (and probably chancellor) over the coming couple of years.

There will be lots of uncertainty and challenges over this period and beyond. Longer term, I am optimistic that the UK can do better for itself free from a failing EU. I suppose the question I ask is, if one member out of 28 choosing to leave the club is such a disaster, what does that say about the resilience of the club and the rules it follows?

I suspect the decision by the UK will accelerate the demise of the project and that other countries such as Sweden, Holland and France may well seek to offer a similar referendum to their people.

My Investments

There is no doubt my portfolio has taken a hit this Friday morning - my shares in house builder Berkeley are down 20%!

If I needed my capital next week, I would be feeling a bit sick right now, but I do not so I am not overly concerned. These sort of events and the resulting volatility have to be accepted as part of the deal for every small investor.

For me its all about time frame for investing - hopefully another 20 years or so, and then selecting the most appropriate asset allocation to keep me in the game at times like this.

Over the past 18 months or so, I have been adjusting my strategy and taking on board the likes of Vanguard Lifestrategy 60 and this has helped to smooth out some of the volatility associated with my individual shares and other equities. I also have a significant weighting in fixed interest securities such as building society PIBS which provide a lot of stability (as well as income).

Hopefully, in the coming months, this episode will just be a blip on the landscape - the markets and the pound will bounce back as we all adjust to the new realities.

Be patient, stay in the game and keep it simple.

What did you make of the EU result? What about your portfolio? Feel free to share any thoughts in the comments below.

9 comments:

  1. Hi DIY,

    Like you I voted out, with the expectation that Remain would win, but I do firmly believe we will be better out, once all the dust settles. Yes it may take 5 - 10 years, but longer term it means we (hopefully!) wont keep supporting the failed EU project.

    The impact on my portfolio? -1% in GBP terms, and slowly going back to where it was! The only time I panicked this morning was when TD was having issues and I couldnt buy more :) Had I been able to buy when I wanted to I would be in an even better position, but thats life :)

    Its certainly going to be interesting to watch the fall out, but I intend to leave my pensions and my other half's ISA on steady drip feed, so I dont care (within reason!) about those. For my ISA I am still continuing to put in as much as I can...

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    1. Robert,

      Yes, interesting to see how all the pieces fall into place - as you say it may take several years. The French have a saying "Plus ca change..." - the more that changes, the more that remains the same!

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  2. Hi diy
    As per my comment on the Firestarter's blog about Brexit, I was originally in the Undecided camp but in the end voted for Leave. For me, Leave = Change.

    We are now entering into the unknown but I'll live with the result, just as I would have lived had the public chosen to Remain.

    A shame that I had no spare capital to take advantage of the tanking markets this morning but the FTSE has pretty much recovered anyway already.

    My own portfolios have dropped a little but not significantly.

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    1. weenie,

      Yes, I think it is important in a democracy that we all learn to accept the decision of the majority. I too would equally live with 'Remain'.

      Even if you had the spare cash, I think the platforms were a bit hit and miss regarding trades earlier so you may not have been able to pick up the bargains. Its probably not the end of it though so there may well be other opportunities along the line.

      That monkey stocks league table has had a bit of a shake up!!

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  3. diy investor,

    I did not vote as the result is not binding. I however think that a deal will be done with EU where-bye we end up staying in. Apparently this is not uncommon.
    The cynic in me tells me that all those people in power are not going to let it go because somebody had a vote.

    Regards

    Louis

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    1. Louis,

      Surely we have not gone through 6 months of tedious campaigning followed by 34 million people physically turning out to cast their vote from Lands End to Orkney culminating in a once in a generation momentous decision followed by the resignation of our PM and then by some mechanism the decision of the winning 17 million people is overturned. I accept your cynicism but sorry, that is never going to happen - it would be a travesty of our system.

      I know the decision is not strictly legally binding but any attempt to overturn the will of the people would be political suicide and doomed to failure. Maybe these sorts of things happen at a lower level in the EU but could never happen in this case.

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  4. "If I needed my capital next week, I would be feeling a bit sick right now..." Interestingly my portfolio is up 1.9% on the week. Goes to show the value of a diversified global portfolio. You mentioned Berkley being down a lot but have you actually calculated your total portfolio value pre and post the vote. It might be surprising given my result.

    As a person who was looking to take advantage of the EU founding principle of the free movement of people I need to do a little thinking and research now although at least initially it looks like my Med move is still very much on. Let's see what plays out over the coming months though.

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    1. Well, that's interesting RIT. My comment was based upon my UK listed shares and investment trusts however the bulk of my portfolio has been moved over to more global Vanguard funds & ETFs in the past year.

      I just had a look at some of these and good news, they seem to have gone up by ~2% or so!

      So far as your move is concerned, I guess the vote raised a few unknowns - currency fluctuation v euro, prices of properties, residency issues, what happens if you buy and decide to return after 3 ot 4 yrs etc. As you say, see how things evolve in the coming months but glad to hear the planned move is still a possibility.

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    2. Excellent news. I thought you might be surprised given your work over the past year or so.

      Currency looks ok for now (my models assume 1.123 forever), if Brits are blocked might even reduce prices, looks like I have a way into residency and importantly permanent residency so I think it's all still go.

      As for buying a home. Good question. I plan to rent for 6 months or so first and then will make a call.

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