By Dante Peters
You only have to pick up a newspaper, turn on the radio, go online or speak to Janet in the supermarket and you know the conversation will shortly turn to the B word – with someone giving you their thoughts and opinions on what’s going to happen, not happen or might happen.
Theresa May’s New Year’s resolution this year was simple – deliver Brexit on 29 March 2019. She got back to work after the Christmas break, after agreeing a withdrawal deal with the EU in November, only to be shot down by 230 votes against the deal last week.
This week it’s all about ‘cross party talk’s’ – with May working hard to gain approval from her own Tory Brexiteers and DUP MPs to back her withdrawal agreement. Mr Corbyn says he will only enter cross-party talks if the Prime Minister takes the possibility of a no-deal Brexit off the table. Mrs May says that’s an "impossible condition". And if things weren’t hard enough at home, May is still trying to show the EU that MPs could back a deal without a backstop, in the hope Brussels will soften their position.
All of which is extremely unsettling for the UK economy, with fears of a no deal, cliff edge-style Brexit could send Sterling, and UK company share prices, into free fall.
The future is…still uncertain
So much could still change in the next three months. Will May’s deal ever pass through Parliament? Will there be a General Election? Will the EU budge on the Northern Ireland backstop?
One thing we can be sure of is there’s bound to be more twists and turns before we leave the EU in March, which could lead to more market volatility, because we all know that markets dislike uncertainty.
There is already volatility in global markets at the moment – partly due to the ongoing US and China trade war and more continued uncertainty over Brexit could lead to further volatility and market corrections, all of which will worry investors.
With the Brexit soundtrack, playing on repeat in the background, we know it feels almost impossible to remember that volatility is part of the investment journey.
But maybe you need to dust off your old, original investment soundtrack. Whilst it’s not a pleasant time to be invested, we still come back to the same investment strategy and advice. Stay invested – your portfolio is well diversified; moments of volatility are precisely the reason we do this.
Your portfolio is tailored to meet your specific risk profile and needs. It’s invested in different asset classes, industries, and geographies, so even if UK companies are adversely impacted by Brexit, this will only affect a portion of your portfolio.
And that’s not to say that a messy Brexit will adversely impact your UK holdings anyway. In the immediate aftermath of the EU Referendum in 2016, the Pound faltered. Conversely, the FTSE 100 rose by 10% in the three months afterwards, as the weaker Pound boosted the profits of UK companies’ overseas earnings.
Timing your (Br)exit, is futile
The temptation for any investor is to try and sell assets before their prices fall, and buy back just before they’re about to recover. But it’s impossible to reliably and repeatedly predict how markets are going to perform in the future. In fact, it can be futile, dangerous even, to attempt to do so.
We understand that it’s difficult watching markets gyrate, knowing that our financial futures could be impacted. However, your portfolios are carefully constructed to perform over the long-term, through these moments of market turmoil, as and when they arise.
Barring an extraordinary change of course, which we still can’t rule out, Brexit negotiations are due to conclude late March 2019, but that won’t of course be the end of things, in fact just the start. During this time we will be here, managing your investments as diligently and expertly as we've always done.
Finally, in our recent client survey (more on the results of that in due course), you told us you wanted to hear from us in times of significant market movement and we want to stay in touch with you as Brexit, China, US and the global economy continue to make daily headlines, but only when we think there is something actually worthwhile saying.
That’s why we’re setting up a brand new area on our website called ‘Perspective’ – where you will find a series of updates and articles, designed to help you put the latest economic news into context with your wealth plan.
We’ll let you know when that’s live, so you can visit the site at a time that suits you, but in the meantime, if you have any concerns on what any of this may mean for you and your investments, do get in touch with your Magus Financial Planner.
Past performance is not necessarily a guide to future performance and you may get back less than invested.
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