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I'll also note the pound is down quite a bit already, so you're betting on further decline and that the pound negative nature of a Scottish result hasn't already been factored into recent decline.
Thanks for the inputs. A couple of comments: 1) I am looking to play the referendum rejecting independence...I expect the pound to benefit from this. 2) This is a very short term trade. Very speculative. Using the small portion of my assets I set aside for speculative trades. This is not how I invest. 3) The potential trade has too much of a Dennis Gartman-y feel to it. May be reason enough to not carry it out.
Re: "This is a very short term trade. Very speculative."
Yes - It certainly is. Gives new meaning to the term "speculation." Wonder what the odds makers in Vegas are saying on this one? Too late now, but a month ago, Scotch whiskey makers might have been a good short term play as events like this often cause irrational hoarding by consumers,
I have read that if it passes, Scotland would cease to remain in EU or NATO. Also, Britain has a major nuke sub base in Scotland for their Tridents that would need to be closed and moved elsewhere.
Again, not something I'd suggest, but if you believe the result is GBP positive, then you're long FXB.
" Too late now, but a month ago, Scotch whiskey makers might have been a good short term play as events like this often cause irrational hoarding by consumers,"
Good move. I wouldn't sell. Likely all the publicity will increase demand for this product. (Actually, it's making me a bit thirsty:-)
Corny - but those old enough will recall that after Gerald Ford became President and toasted his own muffin one morning (in front of cameras) sales of English Muffins went through the roof and remained high for some time.
Or you could buy a UK focused ETF except that it doesn't seem the FTSE has suffered much from the Scottish uncertainty. In general I think the market and the currency know Scotland won't vote to split and its priced in. If the Scots do vote to split then not only will the Pound suffer but I'd guess the Euro will get crushed.
Good move. I wouldn't sell. Likely all the publicity will increase demand for this product. (Actually, it's making me a bit thirsty:-)
Corny - but those old enough will recall that after Gerald Ford became President and toasted his own muffin one morning (in front of cameras) sales of English Muffins went through the roof and remained high for some time.
Thanks. I tend to like industries where there the product or service has been around for ages and there's only a few public companies. Aside from Diageo, the only public majors are Brown Forman, Constellation (although that's mostly wine and beer) and Pernod since Beam was bought.
Plus, nice dividend yield. It has lagged recently with concerns in EM, but it's a long-term holding and not something I really ponder day-to-day.
Or you could buy a UK focused ETF except that it doesn't seem the FTSE has suffered much from the Scottish uncertainty. In general I think the market and the currency know Scotland won't vote to split and its priced in. If the Scots do vote to split then not only will the Pound suffer but I'd guess the Euro will get crushed.
UK stocks (ADRs or ETFs) will see a benefit if the currency turns around to the upside. As noted above, I like Diageo, but - and this is an instance where I don't particularly love the business prospects but I like the value - is Vodafone (VOD), which is trading at about 0.75X book value (book is about $43, stock is trading a tad under $33.) I don't like the heavy exposure to Europe, but great dividend and technically very cheap. Something I'm pondering.
I had a limit order in to buy October calls on FXB. The goal was to exploit any panic drop in the pound immediately before the vote, as I expected the vote would not be in favor of independence. The pound did not fall far enough for the order to be executed.
Comments
1. I hate Dennis Gartman, but there is the Gartman Gold/British Pound etf:
http://advisorshares.com/fund/ggbp. So you're effectively going long gold and short the pound.
2. Short the FXB (British Pound ETF.)
I'll also note the pound is down quite a bit already, so you're betting on further decline and that the pound negative nature of a Scottish result hasn't already been factored into recent decline.
1) I am looking to play the referendum rejecting independence...I expect the pound to benefit from this.
2) This is a very short term trade. Very speculative. Using the small portion of my assets I set aside for speculative trades. This is not how I invest.
3) The potential trade has too much of a Dennis Gartman-y feel to it. May be reason enough to not carry it out.
BWG
Regards,
Ted
Yes - It certainly is. Gives new meaning to the term "speculation." Wonder what the odds makers in Vegas are saying on this one? Too late now, but a month ago, Scotch whiskey makers might have been a good short term play as events like this often cause irrational hoarding by consumers,
I have read that if it passes, Scotland would cease to remain in EU or NATO. Also, Britain has a major nuke sub base in Scotland for their Tridents that would need to be closed and moved elsewhere.
" Too late now, but a month ago, Scotch whiskey makers might have been a good short term play as events like this often cause irrational hoarding by consumers,"
Long Diageo (DEO)
Good move. I wouldn't sell. Likely all the publicity will increase demand for this product. (Actually, it's making me a bit thirsty:-)
Corny - but those old enough will recall that after Gerald Ford became President and toasted his own muffin one morning (in front of cameras) sales of English Muffins went through the roof and remained high for some time.
Plus, nice dividend yield. It has lagged recently with concerns in EM, but it's a long-term holding and not something I really ponder day-to-day.
UK stocks (ADRs or ETFs) will see a benefit if the currency turns around to the upside. As noted above, I like Diageo, but - and this is an instance where I don't particularly love the business prospects but I like the value - is Vodafone (VOD), which is trading at about 0.75X book value (book is about $43, stock is trading a tad under $33.) I don't like the heavy exposure to Europe, but great dividend and technically very cheap. Something I'm pondering.
BWG