Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
How The Brexit Could Affect U.S. Investors: If Britain votes for a Brexit, the markets may see a short-term overreaction due to uncertainty surrounding the event. Ramifications facing U.S. investors are likely to take time to ensue, as new trade and credit agreements emerge. Investors must remain prudent as developments regarding a Brexit continue. Regards, Ted http://www.investopedia.com/articles/markets/061616/how-brexit-could-affect-us-investors.asp
Maurice: I find the Brexit thing highly interesting from a macro-sociological perspective. Indeed, we have been cursed to live in interesting times.
I do think there will be opportunities in international stocks. What was the figure I heard on Bloomberg the other day? Something like over 25-30% of the world's economies (by size/capitalization) were running with negative interest rates?
The market panics now at everything except an extension of QE. So, I have amassed a small amount of cash for my Roth, which I will put into international stocks if Brexit goes through. In my taxable, I've substantially reduced my market exposure. All of my retirement accounts are remained invested "as they ever were".
Rant Alert... For the record, and although I've read just enough Foucault to make me fear the emergence of new forms of bureaucratic / therapeutic power, I thought the chances of a Brexit were low until one of the polls which came out this weekend. But, I also thought Trump didn't have a chance. I think people, everywhere, have had it with the elites and established institutions. I, for example, in spite of having family in investment banking, have grown to hate those institutions. When I vote my proxy, I study the executive compensation arrangements, and now almost always vote in the negative.
I recall the fear about a Scottish exit from the UK. The vote was close, but it did not happen. The Scots have a socialist bone, and I was of two minds about it, though it would not directly affect me. Re: BREXIT: I think the Brits will stay. The EU, which has been in the works since the days of what we referred to as "The Common Market" after World War II, has taken a lot of time and cooperation to construct. I dunno if I'm over-stating the case, but I think deep down that nobody over there wants to go backward and unwind the thing. Countries like Greece and Portugal and Ireland were mutually assisted when they fell into the toilet a few years ago. A FISCAL Union must happen some way or another, if they are going to go any further. And by the way, the Brits would not have to worry about that: they are still using pounds stirling.
Addendum, June 13: There’s been a lot of response since the memo that follows was originally published on May 26. In the discussions that have ensued, I realized that I should have led with something like this:
Ultimately, economics is the study of choice. Because choices range over every imaginable aspect of human experience, so does economics. . . . We would always like more and better housing, more and better education – more and better of practically everything.
If our resources were . . . unlimited, we could say yes to each of our wants – and there would be no economics. Because our resources are limited, we cannot say yes to everything. To say yes to one thing requires that we say no to another. Whether we like it or not, we must make choices.
Our unlimited wants are continually colliding with the limits of our resources, forcing us to pick some activities and to reject others. Scarcity is the condition of having to choose among alternatives. (Macroeconomics Principles, Libby Rittenberg and Tim Tregarthen. Emphasis added) Because of the above, we make economic choices every day. Everyone knows choices like these are inescapable.
Everyone, that is, except for politicians. The politician promises better grades and more leisure time. A cleaner environment and faster economic growth. That’s what caused me to write the memo: in politics and government – unlike the real world – the word “or” often goes out the window, replaced by “and.” No choices are necessary.
A few months ago I saw a cartoon featuring caricatures of two primary opponents. Under one it said “bulls**t” and under the other it said “free s**t.” There’s bound to be a lot of the former in any election season, but economics tells us the latter is unrealistic. I wrote this memo to help readers understand why.
For those of us in the business world, economics defines reality. (You may think you’ve heard me poke at it, but what I deride is economic forecasting, not economics. There’s a big difference.) The realities of economics are the subject of this memo. My primary methodology will be to describe ways in which people (and especially politicians) tend to propose things that conflict with economic reality, and explain why they’re unlikely to work. https://www.oaktreecapital.com/insights/howard-marks-memos
Hey You Banksters! And maybe us Ma & Pa investors too ?
...However, one Ill. House Democrat has filed a plan that she says won't hurt the average Illinoisan. Rep. Mary Flowers has proposed a financial transaction tax that would be applied to stocks, futures and other monetary transactions.
Flowers said the people in the financial sector can afford to pay more.
"Illinois could quickly generate upwards of $10 billion a year of new money** without raising any existing taxes, without forcing the loss of thousands of jobs, without gutting educational institutions and without cutting necessary health and human services," said Daniel Silver, plan supporter. Calling the tax a "ridiculous" one which would destroy his business, CME Group President Terry Duffy promises to pull his company out of the state were it to become law. He notes CME has 28 other data centers around the country which would be very welcoming of a move there. http://seekingalpha.com/news/3188216-cme-chief-promises-illinois-exit-transaction-tax-passes **What have they done with the old ?
The people who make money on money aren't likely to want anyone else to make money on money. After all, once the people who make money on money finish their transaction, their money from money is theirs. After that it is other entities making money on THEIR money. I do wish more of it (the money) was put to a purpose that enhanced the human experience.
Leading up the recent weeks, the polls was against BREIT. As of this week polls are too close to call. In the near term, there is likely a pullback across the globe. Will this worsen further in light of weak economy and low yield environment? I simply don't know.
If global markets continue to trend downwards over the next 10 days then perhaps this would indicate to the people of the U.K. what could happen if a Brexit actually happened.
Hope you're doing well. Ah, the Brits and how to play them . . . I'd have some cash on hand, but geez, at our age, we Always have some cash on hand. If they bolt - head for those sectors that get crushed the most. If they stay - continue the march. I wouldn't venture a guess as to which - WTF knows?
As for TSP's interesting postie - feh, the politicians always promise what they cannot deliver - thereby culminating in a situation where the vast majority of Americans, as represented by those supporting Donald and/or Bernie, want to burn Washington to the ground. With the exits blocked.
Glad to read a substantive discussion here. Was occupied with family for a few days and I sure had to scroll down though a lot of topics with little or no discussion to reach any meaningful participation by the members. Was in Scotland shortly before their vote and my take is that polls are not much help. I do hope The Economist is not whistling whilst strolling past the graveyard and that their EU advocacy carries the day.
@BenWP- To avoid "a lot of topics with little or no discussion" try using the Discussions + category, found on the upper left of the page. That category eliminates posts with no responses, so cuts the clutter substantially.
FWIW, I'm now thinking that the odds are that Brexit will happen, according to the latest from The Economist, WSJ, and other sources. Going to be really close, and doesn't look too good.
If so, @Old_Joe, there's one less reason to invest in Europe. Too many balls to juggle. They've already got their hands full, dealing with the day-to-day malaise over there. And then there are refugees from Syria and elsewhere--- poor souls. Negative and nearly negative rates. Terrorism threat.... Reminds me, as the saying goes, of a monkey trying to do something to a football. I'm VERY light on Europe in the funds I own.
So to reel this in, I've been thinking about the global stock market implications, should Brexit come about. I think it is a big deal. Daring to predict, which I don't do very well, I expect that there will be a sharp drop in global stock prices. Downward volatility might last 1 day, a week or a month. (Maybe that's not so daring.) Or if our president is true to his word, there may be a longer lasting impact. On the other hand, if the Brexit vote is to stay the course, then I predict a one day rally is likely.
Do you see any opportunities in Brexit? Opinions on what I've said about Brexit or the market implications?
I don't think there will be much of a reaction on world indexes. The world doesn't care and it won't have a big effect on the world.
European stocks may decline a but there really isn't any future in European stocks.
European bonds interest rates will go even lower.
In the long run Britain will be better out of the EU. They will have more control over their future.
If there is a money play it is in the euro and sterling.
Europe is on the eve of entering a new dark ages where their social/economic/population demographics/aging/immigration policies will bring it down. The chickens have come home to roost in Europe. And from a long term historical perspective, maybe they deserve it.
Who is next if UK leaves the EU? Certainly, the stronger export-oriented countries such as Germany who benefits the most. But Greece's problem demonstrates the downside of the EU as well. The common currency, the EURO is another problem.
Those of us who have been INVESTORS for decades, not timers or traders, can rightfully say the BREXIT thing will turn out to be a blip when we look back 5-10 years from now. It is difficult for folks to have any long-term perspective when we are bombarded by 24-7 media who treat everything as a potential end-of-world event. BREXIT is not. If anything, a vote to exit could be a buying opportunity once the smoke has cleared. Besides, it is a two-year process, not something that will occur in the next week. Might it have long-term economic and political consequences? Sure, but nothing that will cause markets to go down and never come back.
The EU recognizes 28 official languages and may expand to 29. However, English, French and German are the three working languages for all members. The European Commission translation services are extensive and can translate any document into any of the official languages. How's this for a thought? The Brits vote to exit and take their language with them! In fact, the EU cannot function without the English language and it would be supremely ironical if the community were stuck with the language of a former member who had thumbed its nose at unity.
Comments
How The Brexit Could Affect U.S. Investors:
If Britain votes for a Brexit, the markets may see a short-term overreaction due to uncertainty surrounding the event. Ramifications facing U.S. investors are likely to take time to ensue, as new trade and credit agreements emerge. Investors must remain prudent as developments regarding a Brexit continue.
Regards,
Ted
http://www.investopedia.com/articles/markets/061616/how-brexit-could-affect-us-investors.asp
I do think there will be opportunities in international stocks. What was the figure I heard on Bloomberg the other day? Something like over 25-30% of the world's economies (by size/capitalization) were running with negative interest rates?
The market panics now at everything except an extension of QE. So, I have amassed a small amount of cash for my Roth, which I will put into international stocks if Brexit goes through. In my taxable, I've substantially reduced my market exposure. All of my retirement accounts are remained invested "as they ever were".
Rant Alert...
For the record, and although I've read just enough Foucault to make me fear the emergence of new forms of bureaucratic / therapeutic power, I thought the chances of a Brexit were low until one of the polls which came out this weekend. But, I also thought Trump didn't have a chance. I think people, everywhere, have had it with the elites and established institutions. I, for example, in spite of having family in investment banking, have grown to hate those institutions. When I vote my proxy, I study the executive compensation arrangements, and now almost always vote in the negative.
Latest memo from Howard Marks: Economic Reality
Addendum, June 13: There’s been a lot of response since the memo that follows was originally published on May 26. In the discussions that have ensued, I realized that I should have led with something like this:
Ultimately, economics is the study of choice. Because choices range over every imaginable aspect of human experience, so does economics. . . .
We would always like more and better housing, more and better education – more and better of practically everything.
If our resources were . . . unlimited, we could say yes to each of our wants – and there would be no economics. Because our resources are limited, we cannot say yes to everything. To say yes to one thing requires that we say no to another. Whether we like it or not, we must make choices.
Our unlimited wants are continually colliding with the limits of our resources, forcing us to pick some activities and to reject others. Scarcity is the condition of having to choose among alternatives. (Macroeconomics Principles, Libby Rittenberg and Tim Tregarthen. Emphasis added)
Because of the above, we make economic choices every day. Everyone knows choices like these are inescapable.
Everyone, that is, except for politicians. The politician promises better grades and more leisure time. A cleaner environment and faster economic growth. That’s what caused me to write the memo: in politics and government – unlike the real world – the word “or” often goes out the window, replaced by “and.” No choices are necessary.
A few months ago I saw a cartoon featuring caricatures of two primary opponents. Under one it said “bulls**t” and under the other it said “free s**t.” There’s bound to be a lot of the former in any election season, but economics tells us the latter is unrealistic. I wrote this memo to help readers understand why.
For those of us in the business world, economics defines reality. (You may think you’ve heard me poke at it, but what I deride is economic forecasting, not economics. There’s a big difference.) The realities of economics are the subject of this memo. My primary methodology will be to describe ways in which people (and especially politicians) tend to propose things that conflict with economic reality, and explain why they’re unlikely to work.
https://www.oaktreecapital.com/insights/howard-marks-memos
Hey You Banksters! And maybe us Ma & Pa investors too ?
...However, one Ill. House Democrat has filed a plan that she says won't hurt the average Illinoisan.
Rep. Mary Flowers has proposed a financial transaction tax that would be applied to stocks, futures and other monetary transactions.
Flowers said the people in the financial sector can afford to pay more.
"Illinois could quickly generate upwards of $10 billion a year of new money** without raising any existing taxes, without forcing the loss of thousands of jobs, without gutting educational institutions and without cutting necessary health and human services," said Daniel Silver, plan supporter.
Calling the tax a "ridiculous" one which would destroy his business, CME Group President Terry Duffy promises to pull his company out of the state were it to become law. He notes CME has 28 other data centers around the country which would be very welcoming of a move there.
http://seekingalpha.com/news/3188216-cme-chief-promises-illinois-exit-transaction-tax-passes
**What have they done with the old ?
Hope you're doing well. Ah, the Brits and how to play them . . . I'd have some cash on hand, but geez, at our age, we Always have some cash on hand.
As for TSP's interesting postie - feh, the politicians always promise what they cannot deliver - thereby culminating in a situation where the vast majority of Americans, as represented by those supporting Donald and/or Bernie, want to burn Washington to the ground. With the exits blocked.
As Shosh noted, 'we live in interesting times'.
and so it goes,
peace,
rono
http://krugman.blogs.nytimes.com/2016/06/12/notes-on-brexit/
Some misunderstanding here of democracy vs representative gov, odd. We do not want the former almost ever.
FWIW, I'm now thinking that the odds are that Brexit will happen, according to the latest from The Economist, WSJ, and other sources. Going to be really close, and doesn't look too good.
Regards,
Ted
OJ
European stocks may decline a but there really isn't any future in European stocks.
European bonds interest rates will go even lower.
In the long run Britain will be better out of the EU. They will have more control over their future.
If there is a money play it is in the euro and sterling.
Europe is on the eve of entering a new dark ages where their social/economic/population demographics/aging/immigration policies will bring it down. The chickens have come home to roost in Europe. And from a long term historical perspective, maybe they deserve it.
https://en.wikipedia.org/wiki/Partitioning_of_the_Ottoman_Empire
http://www.spiegel.de/international/world/world-war-i-led-to-a-century-of-violence-in-the-middle-east-a-946052.html
Regards,
Ted
Brexit, The Aftermath:
Consquences Everwhere You Look
http://ritholtz.com/2016/06/brexit-the-aftermath/
How's this for a thought? The Brits vote to exit and take their language with them! In fact, the EU cannot function without the English language and it would be supremely ironical if the community were stuck with the language of a former member who had thumbed its nose at unity.
http://www.nytimes.com/2016/06/17/opinion/fear-loathing-and-brexit.html
Regards,
Ted