A summary of the investment implications, with an emphasis on the opportunities, is set out below.
A quick recap…
In January 2011 (TopFunds Guide) I said:
“There is a race, with the bureaucrats and politicians on one side, and voters and taxpayers on the other.
A relatively benign outcome requires that the patience of the latter holds while the clumsy decision-making of the former clunks towards a solution”
This was and is not just a UK or European phenomenon, rather it exists throughout the developed world. TopFunds Guide July 2010:
“Politicians and electorates of developed nations had broadly been in harmony for 30 odd years.
An aura of prosperity was created. Consumers took on more debt, a culture of “buy today, pay tomorrow” took a hold; similarly governments took on more debt knowing that tomorrows growing and increasingly prosperous population could meet the bill.
That is until the population stopped growing, and individuals weren’t so prosperous”
Now what? Look out for voter contagion, starting with Spain on Sunday.
Then look out for opportunities.
We already identified a downside target for the FTSE 100 of 5,000. The UK market was already looking decent value, and at 5,000 it is a raging “BUY”. Fantastic opportunity for small and mid caps plus income funds.
We also highlighted that support for £/$ is a long way down, around 1.10. Great for those dollar dividend companies when translated into sterling. Also very good news for exporters – who have 2-3 years to fill their boots before the possibility of tariffs within the EU.
More here on opportunities on Brexit.
But to stress again. What we just experienced was a global trend – there is much more where that came from (starting in Spain, with the US ending the year and Italy in between), and volatility will create buying opportunities.
