Still selling thing here and there.  I am not convinced that the market will rebound swiftly from this.

Sold a bit of WCW – asset managers are generally down, Exited Titon – I think this may be the beginning of the end of the property bubble which will hurt them eventually…

Lots of things looked quite expensive before the vote so there is lots of scope for it to fall.  We are not near capitulation, equally we are not near a political resolution – so I think we are going to keep falling.

Now many would say I shouldn’t sell out – that I should let the long run take its course and wait it out.  This is not the approach I intend to take.  I don’t have a huge amount of capital – in situations like this I have a bit of an advantage as I can get out of positions nimbly and ideally get out and back in again where I see a chance.

In addition when there is a lot of dislocation – I can switch to better opportunities which may present themselves.  If the market keeps falling we will eventually get forced selling – babies being thrown out with the bathwater and the real opportunity to make money will happen.  I may loose my regular 20% a year through selling out – but I gain the opportunity to get a much bigger return if I can pick the bottom, or even get close…

In addition, Brexit has changed things quite a lot – particularly for Vertu given the movement in exchange rates.  Ideas which once worked now do not.

My main positions are now.

Fondul Proprietatea – unchanged – also Euro denominated.

Rasmala – holding

TCF – terra catalyst fund – Italian telephone exchanges at a discount to NAV – hasn’t moved.

DUPD – Ukranian property at a discount to NAV – again shouldn’t move much.

Tejoori – UAE property – awaiting return of capital.

Stagecoach – quite a big position – fallen heavily – I don’t understand why really, I will add when I think the time is right.

Marks and Spencer – again fallen as it sells imported goods which are much more expensive now – its a solid blue chip – I will hold on and may add when this looks to stabilise.

I have also covered 31% of my portfolio value in GBP/USD shorts – its badly timed but I can’t allow continued falls to erode the purchasing power of my pot.  I wish I had done this Thursday night when I saw the FTSE250 trade.  Its a weakness of my approach that I don’t really look at currencies much – I didn’t see it coming and wont allow that to happen again.

I think sterling could fall much more

Holding on to the FTSE250 short.

Eventually we will get a rebound.  I suspect any rebound will come in Europe first – I don’t believe the talk of Brexit leading to contagion.  There might be but it wont be  caused by this.

The end game I am anticipating is that Britain wont leave the EU.  Its become clear that the Brexiter’s vision of a no regulation Hong Kong situation in the North Sea is very unappealing to many of the people who actually voted for Brexit.  Backtracking and obfuscation on the immigration issue – why many people (myself included) voted for Brexit undermines the whole coalition which led to the Brexit vote.  Its clear that the referendum result was achieved via lies.

The Brexit leaders can’t allow a settlement with little immigration as wage rises would rapidly occur if immigration was cut as workers would also gain increased bargaining power, offset by a weak economy.  There would also be skill shortages in some areas.

I also suspect there may need to be an election to discuss and debate what happens next, and ideally to get a workable majority to push any settlement through.  The fixed term parliaments act will be sidestepped.

I anticipate at this stage a Labour / SNP coalition will win.  Many Conservative voters are wealthy, educated professionals, they wont appreciate the disruption the referendum and its consequences will have.  They will (rightly) blame the conservatives and vote Labour – even a Corbyn led country would be preferable to loosing the benefits of EU membership /  a recession.  These are the people Labour need to win over – they wont do it on their own but the conservatives are quite capable of alienating them.

The North and working class will revert to type and blindly vote Labour…

If we move to the EEA I suspect there will need to be another vote – I don’t think this will pass, equally I don’t think exiting to WTO rules – with liberal immigration would get approval in Parliament, much less the country.

In the meantime we will proceed without leadership and direction whilst this is worked out.  Its clear no-one had a plan or any type of vision for what Brexit would look like or what concrete action to take.

The economy will worsen over the next few months / year.

Volatility will be the word for the week…

I am also concerned about the housing market – this article from the FT is very informative – BTL doesn’t pay in London.  If BTL doesn’t pay then the asset class of London property doesn’t really make sense and you are relying on the safe haven arguments to make the numbers work.

BOE is in a bind – if they lower rates more money will flow from sterling, if they raise overextended borrowers will go pop and demand is taken out of the economy when it needs it.

Its all very speculative but thats where my thinking is today.

I am still only down a 3-4% over the past few days in GBP, key is now getting the timing right on when to go long and in what to get the rise.  Up 10% for the year in GBP or flat in USD so I must be doing something right !

Advertisements