This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Whether watching TV or browsing the web/social media you can’t avoid the latest Brexit headlines. This has seen many retail investors shy away from the markets. But at what cost? How to you plan to bank any profits?
Every day I hear, “it’s all so uncertain” or “I’ll wait and see what happens”. My first thought is, what exactly are you waiting for? In fact, Mike wrote about this the other week and hit a chord with many clients.
One of the sectors most affected by the referendum result was Banks. It is fair to say that they have been equally, and understandably, impacted by recent “Brexit uncertainty”. How have they performed this year?
Lloyds is still up 24.7% since the turn of the year, but remains 14% off 2018’s highs. Barclays is up 2.4% year-to-date , but remains 30% from 2018 highs. Lastly, RBS is 18% higher for the year, but sits 18% back from last year’s peak. So there is upside potential. The stats are remarkably similar for the Housebuilders, up 20-30% this year, 15-20% off last year’s highs.
What you should be asking yourself is how long can I afford to let this pass me by? As Mike pointed out, sitting on the sidelines has an opportunity cost. The cost of missing out. How far do you want there Bank shares go fall before taking the plunge? What if they continue to recover from December’s lows?
We’ve known about Brexit for almost three years now, and too many retail investors have sat on their hands. Do you think the professionals (banks, hedge funds, pension funds, etc) have stopped trading UK stocks, waiting for Brexit. Whatever Brexit turns out to be, and whenever is is delivered.
Do you believe that the day after the UK officially leaves the EU, Lloyds will close its doors to new and existing customers? Will people stop buying houses? Me neither. Share prices factor in news and event probability pronto. I’m banking that much of the risk of a soft/hard/no Brexit is likely already baked into the price.
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Christopher Peters, Trader, 28 March 2019
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Prepared by Michael van Dulken, Head of ResearchComments are closed.