Regardless if you are a traditional or online investor or if you are a novice or an expert, if you are living in the UK it is likely that two things are keeping you awake at night: Brexit and the bear.
We are getting close to nine years of bull market, and it is not unreasonable to think that we could be very close to the top. However, it is very difficult if not impossible to beat the bear that everyone is expecting to be around the corner. The difficulty is that you don’t want to be too late as the first downturn could be swift but in the same way you don’t want to get out too early as this hurts too. Let’s be honest nobody likes to leave too much on the table.
Yes, the bear but what about beating Brexit? We only suspect the bear to be around the corner while we know for sure that Brexit is coming. It is almost here, and it is happening the 29th March 2019.
So far it has been a prolonged and tortuous process, and the stalls in negotiations are casing a long shadow over the UK economy. ‘We don’t know yet how this is going to end up, but we are bracing for the worse’, said John Pentin financial analyst at a leading Top Trading Platforms UK comparison site.
‘A rise in the inflation is going to have a detrimental effect on consumer confidence, and this could get worse if companies are forced to start cutting jobs in the country. However, then again being too negative it is probably not the right thing to do as there is still some time to avoid the worse and ultimately there are possibilities also outside the EU even if maybe more in the long run’.
What Brexit has delivered so far is uncertainty, and surely this is not something that markets like particularly. It has pushed UK investors, however, both online and offline to be a lot smarter about how they invest. For example, you might be looking to invest in companies that do benefit from the uptick in inflation like discount retailer B&M. This company are offering groceries and non-food items on a seasonal basis at significantly better prices than the supermarkets. Investing in gambling companies is also an option as those tend to continue to do well even in difficult economic periods. Alternatively, you can also look at companies with domestic earnings in the non-discretionary spending space like for example Motor insurers.
Another area that is not going to slow down is Cybersecurity: following the growing number of attacks in the last months, this is an area that continues to attract capitals.
Another thing to notice is that even if the stock markets have suffered some steep falls in the past months, London-listed shares have underperformed most major world markets in the last 18 months: this is almost certainly caused by the anxiety about Brexit with international investors that have started to cut back their exposure to British firms.
As always tough with challenges there are also opportunities for investors. If you are prepared to spot undervalued companies and get them at low prices, you can make a considerable profit. The main issue though is that the majority of investors do lack in time and confidence of making such strategic investments.
What is suggested at this time is to analyse to see how ‘British’ are your current investments. Since London’s stock market is very international, you can find companies that are listed in Britain but have the majority of their earnings from elsewhere. So you would need to find out what is the exposure to the UK as opposed to other markets of all the companies you have shares. Once you have done this due diligence, you might want to reduce your UK exposure progressively to reduce your risk that a ‘bad Brexit’ is going to destroy your investments. Reduce doesn’t mean completely cut out so if things have a positive turn you are going to be able to benefit even if your UK exposure is significantly lower than it was let’s say a year ago.