Investment opportunities in post Brexit world.
Brexit is a huge shock to the markets.
Markets despise uncertainty and this is what the markets have woken up to this morning.
It is important to realise that the actual implementation of the decision will not take place until 2018.
However, the short term uncertainty of how this work out and the added impact of a possible other uncertain political movements in other European countries will create some short term volatility.
Whilst many people are put off by the uncertainty of volatility, many investors welcome it.
The big fluctuations predicted today and the coming weeks will potentially cause mis-pricing across many asset classes.
The immediate impact has been felt by the British Pound. Sterling was at record highs last night for the year. It has dropped this morning by the largest amount in living memory to its lowest level since 1985 - fall even greater than that during the financial crisis. Major moves in currencies, equities and bonds are now a forgone conclusion. For example, UK currency fall, equity markets (FTSE downc.8.00% already 8.30am) and Standard and Poor's warned that the UK's triple A rating was at risk if it left the EU. This is how the market works.
Where are the opportunities ?
For instance, recent history has shown that higher quality equities are sold off cheaply and this creates opportunity for the longer term investor.
Global investors have more of their portfolios allocated to cash than at any time since 2001, according to a survey by Bank of America Merrill Lynch that underlines how market moves could be sharp if those funds are put to work.
The fact that many investors have dialled back their risk exposure prior to the vote means that those adding to their investments in the coming weeks may take advantage of mis-priced equities, bonds and currencies.
Investment markets will have periods of volatility, however, Nelson Life continue to advocate the need for a well diversified investment and pension portfolio. A well balanced portfolio (consistent with your appetite for risk) will allow investors to benefit from volatility and opportunities.
Want to know more? We are available to discuss your options, and we look forward to hearing from you.
Our job is to help you choose a product and structure that will help you meet your goals.
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