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How to hedge against the financial risks of Scottish Independence?
HAMISH_MCTAVISH
Posts: 28,592 Forumite
It seems pretty clear that there are two possible outcomes to the Scottish Referendum....
1. Scotland votes No, which the polling data suggests is the most likely outcome. Which would then be followed by a mini-boom in the Scottish economy as the last couple of years worth of uncertainty is relieved, and currently-delayed investments in industry and capital spending commence.
2. Scotland votes Yes, which the polls suggest is unlikely, but would have extremely negative financial consequences if this came to pass.
So for an ordinary person just now, how best to hedge against the risks?
Sell property and park the funds in England for 6 months? Maybe.... but realistically it would be difficult to buy back in quickly enough to not miss the immediate bounce in economic activity and asset values in the event of a No vote.
Borrow against property and park the funds in England? Possibly... If you were to do it, now is the time, as it would be virtually impossible to borrow in the immediate aftermath of a Yes vote.
Move savings and pensions out of Scottish institutions? Definitely.... already done that.
What else?
1. Scotland votes No, which the polling data suggests is the most likely outcome. Which would then be followed by a mini-boom in the Scottish economy as the last couple of years worth of uncertainty is relieved, and currently-delayed investments in industry and capital spending commence.
2. Scotland votes Yes, which the polls suggest is unlikely, but would have extremely negative financial consequences if this came to pass.
So for an ordinary person just now, how best to hedge against the risks?
Sell property and park the funds in England for 6 months? Maybe.... but realistically it would be difficult to buy back in quickly enough to not miss the immediate bounce in economic activity and asset values in the event of a No vote.
Borrow against property and park the funds in England? Possibly... If you were to do it, now is the time, as it would be virtually impossible to borrow in the immediate aftermath of a Yes vote.
Move savings and pensions out of Scottish institutions? Definitely.... already done that.
What else?
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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HAMISH_MCTAVISH wrote: »
What else?
Do something [STRIKE]to[/STRIKE] with Motherwell?
http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E958&sortType=1&maxPrice=50000&includeSSTC=true&_includeSSTC=on&googleAnalyticsChannel=buying0 -
To go back to basics, the idea of a hedge is that it goes up and down perfectly and inversely to the part of the asset you want nullified.
For example, if you buy some shares valued in USD, you might buy them using a USD overdraft: the value of the overdraft will rise andfall in such a way as to nullify the change in value of the currency on the GBP value of your investment.
Clearly with independence you can't do that. So what to do?
Well you could simply have a bet on the Yes mob winning although that might be expensive. Alternatively, you could take out a short position on assets you'd expect to do badly out of independence, highly leveraged companies that earn most of their revenues in Scotland. Clydesdale Bank springs to mind. It's pretty easy to take a short position through a futures broker.
The hardest bit will be to calculate your losses should independence go ahead.0 -
depends upon what assets you have but in my view there will be plenty of time for 'ordinary ' people to move their assets once the result is known as you will still be part of the UK for 18 months.0
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Book yourself a caravan holiday and stop reading the papers.... what'll be will be. You've a 50% chance of getting it right if you spend a lot of time thinking about it .... you've a 50% chance of getting it right if you do nothing ... so, I vote: do nothing.0
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in my view there will be plenty of time for 'ordinary ' people to move their assets once the result is known as you will still be part of the UK for 18 months.
I don't think so.
Moving cash? Yes, should remain easy enough, for a while.
More complicated situations involving property or borrowing? I doubt it...
I rather suspect in the event of a Yes vote it'd be virtually impossible for Scots to sell a house or get a mortgage until the currency issue is decided. And perhaps not even for many years after that depending on the outcome...“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »I don't think so.
Moving cash? Yes, should remain easy enough, for a while.
More complicated situations involving property or borrowing? I doubt it...
I rather suspect in the event of a Yes vote it'd be virtually impossible for Scots to sell a house or get a mortgage until the currency issue is decided. And perhaps not even for many years after that depending on the outcome...
Why ever would it be difficult to buy/sell property?
will supply and demand laws stop working?0 -
Why ever would it be difficult to buy/sell property?
will supply and demand laws stop working?
Are you being deliberately obtuse?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Sell up and move to one of the Gulf states or somewhere similar, coin it in tax free for a couple of years whilst someone else pays your living costs and wait to see what happens?0
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There are of course other outcomes which have not been discussed.
3. They vote No, which is followed by rioting in Scotland, demonstrations outside the naval base, vandalism of English-owned property and businesses, and SNP vows to continue the campaign
4. They vote Yes, which is followed by a burst of euphoria. The launch of the Scottish stock exchange heralds a boom in shares, property values, investment, jobs, etc. It even stops raining.
Ex-pat Scots flood back home, further stimulating the economy. Immigration is good for an economy, remember.
5. Close result, insufficient majority, everyone exhausted and tired of the whole business. Salmond retires, Scotland sinks into lethargy and carries on drinking.
There are probably other possible outcomes .
Investing in single malts is probably the only realistic hedge.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Clifford_Pope wrote: »Investing in single malts is probably the only realistic hedge.
I've gone 'long' on deep fried mars bars. :money:0
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