Reap the Brexit harvest!

At the time of the EU vote I made one of the biggest calls of my financial life. I moved a six-figure sum out of UK-based companies and into ones with foreign currency earnings, leaving myself less exposed to the UK economy than at any time in my life.

My judgement was and is that the most likely Brexit scenario will be a slow decline of the United Kingdom relative to our main competitors. In measuring this, I am not interested in the hype or the politics, just raw data. The Brexit bus told us we’d have £350m extra per week for the NHS. Instead, by December 2017 the drop in UK GDP compared to the EU average since the vote worked out at just under £350m per week. The NHS £350m is one Brexit “dividend” we will never cash.

I expected success from this non-UK strategy, in fact it has delivered the best year for my portfolio in its 22 year lifespan – up 34% in 2017 compared to the UK market rise of just 9%. Whilst our GDP, retail sales, new car sales and most other hard data continue to be poor, I will if anything put even more money into foreign investments and less in this country.

No doubt many Brexiteers will be snarling “Traitor” whilst reading this. My key investment strategy is to run winners and ruthlessly cut losers, and for the time being our economy is a loser economy. But I want to be right at the front of the queue if this looks like changing, because on a pure valuation basis our major companies are miles cheaper than their peers in the USA, Japan or Germany.

In the unlikely event that Brexit looks like working I will move a ton of money back to the UK at 100mph in order to benefit from this. Meantime it stays firmly abroad. You might argue that this short term Brexit economic pain is all worth it for the long term gain. Fine, but another investment rule which has worked well over the years is that the short term always gets to cast its vote before the long term. In the long run we are all dead. So in 2018 reap the Brexit harvest by investing abroad!

Tuesday 6 February 2018