My rationale being whilst we see more on Social media calling for leave, it is generally those who want change who make noise. Lots of people really do not know what to do, but are fairly happy with their everyday life and want to keep the status quo. Its those voters who will decide, albeit I think it will be close.
A poll suggesting a leave vote caused a sharp fall in the FTSE in the last trading session of May, meaning it ended the month flat, down just 0.2%. Sterling also bore the brunt of this poll falling below 1.45.
Other market / currency movements for May were:
Dow Jones up 0.1%
Nasdaq up 3.2%
Nikkei up 2.8%
Shanghai down 0.7%
On the currencies, against the USD:
GBP fell 0.4%
EUR gained 3.3%
JPY fell 3.8% (much needed)
AUD fell 3.6%
So what does it all actually mean from an investors point of view. Like I always talk about, markets are emotional places, but the people who are successful investors are able to detach the emotion from the reality.
Yes there will be a spike either way (probably drop in GBP / FTSE if leave, increase if stay) and if you are a day trader, then you need to be aware, but as I have mentioned when asked before, this is not what I do. I buy companies for the long term, sound companies I believe will provide my clients with long term sustainable growth and security, especially when dealing with savings and pensions.
Lets look at three companies I like on the FTSE, Diageo, Rolls Royce & Glaxosmithkline
All companies which pay good dividends (despite Rolls Royce halving theirs this year, you will still get 2.5% more than any bank) which is important to me. But more importantly these are Global companies who derive their earnings from all over the world. Many of you live in South East Asia, where we are seeing a growing middle class, is a Brexit going to stop these guys buying their bottles of Johnnie Walker….?
At a recent trade show local airline Vietjet committed to buying 107 planes in the next ten years, many other airlines throughout the developing world are also committed to expansion, Rolls Royce will capture a lot of business as one of the leading providers of the engines, not to mention the USD 10 billion plus order book they already have.
Pharma giants like Glaxo are sure to benefit from an ageing population, which expects millennials to reach the rip old age of ninety. The following aligns this with my view on a worrying pension deficit.
So more reason to own than not own. Of course if you are planning a trip to Spain on 23 June and only have pounds, perhaps hedge yourself against the spike but in the longer term given the globalised world we live in, owning sound companies and you will be just that whether Boris and Nige get their way or not.
Slight muse to finish on, if it is an “out” or even close, then the talk is Boris will take over as Conservative leader. I also see that Mr Trump has been given the backing of none other than Kim Jong Un of North Korea. If the Trumpster does make it to the White House, and perhaps opens dialogue with North Korea and invites Boris along, that would be some picture…….the “Battle of the Barnets……” (Barnet Fair = hair , for my non British friends…) ……….