In December I underwent a TEVAR operation for acute aortic syndrome. The wonderful N.H.S. literally saved my life by successfully inserting a five inch metal mesh graft inside the aorta above and behind the heart to support the tear. Three months on, as part of my six month recovery, my wife and I are going away for six weeks to Dubai to see a nephew, Vietnam to see a brother, Perth to see a daughter, and then on to Tasmania to explore the ancient forests and explore the places I last visited sixty years ago.
This means that we will be away as Brexit reaches a conclusion, or possibly does not, if the can is simply kicked further down the road. The whole saga now has the feeling of having my chest hairs removed by a chimp equipped with tweezers! It is painful, and does not seem to be going anywhere. Nevertheless, as I am going away it is necessary to consider what I should do with my portfolios. A soft Brexit or no Brexit would likely result in a strengthening of Sterling with an adverse effect on Dollar and foreign currency investments. A WTO no deal hard Brexit would produce the opposite.
As I still hold a reasonably large percentage of my portfolios in cash I have decided not to make any changes. The investments I do have are basically split between UK, China, Health and Technology funds. The first will not be affected either way by sterling movements but the latter three most certainly will be. My reason for keeping these unchanged is simply that I believe they will be the strong sectors in the coming year and the decades that follow. So I might lose in the short term depending on the Brexit result, but they should quickly recover in the future.
I also feel quite bullish about the future of the markets in general and the UK in particular. The latter part of 2018 saw quite a major world-wide correction, and the financial commentators were full of gloom and doom. However, perhaps European economic weakness, China’s hard-landing, Federal interest rate movements, the ending of Q.E., and Brexit dread are being overplayed. It would be unusual to have two successive down years, normally there is a V-shaped pattern to the markets as they recover after a correction. Also there was an enormous amount of money withdrawn from mutual funds in 2018 which will now be looking for a home. Similarly, world trade continues to expand as money supply and global lending continue to finance investment. So who knows, maybe 2019 will be a year of recovery.
Recent reports would suggest that the UK, even with the Brexit shambles, is a popular destination for a considerable amount of inward investment from Banks, Pension Funds, Hedge Funds and Industry in general. Apparently the UK is still seen as a place of well-managed capitalism and democracy, and billions of pounds of foreign money is being invested for the future. Our Universities continue to be designated as some of the best in the world and foreign students hopefully return home with Anglophile views. We also have world-beating centres of technological, medical and pharmaceutical excellence to carry our country forward.
UK stocks and funds are undervalued at the moment and must be due for a lift for the reasons I have discussed above. In fact it should be a double whammy, with World recovery, plus a resolution of Brexit, – whichever way that biscuit crumbles. Therefore I intend to leave my UK investments as they are, and will probably “phone home” to increase them, when the result becomes known.
Best wishes and good investing,
Founder & Chairman