A good time to invest in UK equities?

aroominyork

The view that UK equities have been oversold in light of ‘Brexit noise’ seems increasingly compelling. What do others think?

Voyager2002

aroominyork wrote: »

The view that UK equities have been oversold in light of ‘Brexit noise’ seems increasingly compelling. What do others think?

I think it depends on what deal (if any) is struck. If there is a no-deal Brexit then companies exposed to the UK market will be worth a good deal less than their prices today. If Brexit is cancelled then such companies will be worth very much more. All sorts of outcomes between these extremes are possible: if you think you know what is going to happen then invest accordingly. Personally I am shifting funds to India.

aroominyork

The point is that good quality British companies will continue to earn, and the weakness of Sterling makes international stocks expensive.

Re India, with the pro-business Modi having a bad time at the polls this week I wonder what attracts you to it? I reduced my India exposure early last week.

Aegis

aroominyork wrote: »

The view that UK equities have been oversold in light of ‘Brexit noise’ seems increasingly compelling. What do others think?

It's a very uncertain time. It could be that in 6 months people are saying "I'd hate to have invested back then!"


That said, it's a better time to invest now than it has been for a while, and there's a saying about tree planting that sounds a little relevant:


"The best time to plant a tree is twenty years ago, the second best time is now. Someone's sitting in the shade today because someone planted a tree." No idea who said it, but it has traditionally applied to investing as well as horticulture.

Thrugelmir

Some UK equities have been offering value for some time. A contarian investing strategy works if you've the time horizon and patience to reap the rewards.

Voyager2002

aroominyork wrote: »

The point is that good quality British companies will continue to earn, and the weakness of Sterling makes international stocks expensive.

Re India, with the pro-business Modi having a bad time at the polls this week I wonder what attracts you to it? I reduced my India exposure early last week.

It is important to distinguish between companies that earn globally and companies that rely on the UK market for most of their earnings. And of course to be aware of which borders their supply chains cross. Your belief about how Brexit will turn out should have a major impact on your expectations of whether they will continue to earn.


On India, Modi has spouted a lot of pro-business rhetoric but has not actually done anything positive, so his difficulties are not a problem. My main consideration is that the trade war between China and the USA creates a lot of opportunities for Indian business, while such businesses are relatively well insulated from the rises that we all expect in US interest rates.

Thrugelmir

Voyager2002 wrote: »

while such businesses are relatively well insulated from the rises that we all expect in US interest rates.

Rose another 0.25% this week to base of 6.5%. India has inflation to contend with.

Wildsound

I've just looked on CamelCamelCamel and the UK market is the cheapest it's been for a long time. It could be the Boxing Day Sales have come early for the UK market! Fill your boots!

Or, it could later turn out that the price gets cheaper for the New Years sale... And again at the Easter Sales... And again at the Summer Holiday Super Sale... And again at the Autumn sales... Black Friday, they're looking rather cheap... Can't wait for those Boxing Day Sales again!

Question is...
Do I need it (investments to hold for the long term to beat inflation)?
Can I shop elsewhere (other global markets)?
Can I afford it (is it suitable and do I have the best provisions in place)?

CKhalvashi

Invest where you think will do well, with a safety net.

There are only a handful of U.K.-based shares I’d consider touching st the moment with the majority having significant non-UK operations, although part of that takes into account my own knowledge and skill set, as I won’t typically back a sector I know little about. Others may vary.

Alexland

There are a lot of UK dog companies but perhaps that is just familiarity breeding contempt. S&P500 companies also issue junk rated corporate bonds so perhaps these hopeless opportunities are everywhere.

If you are running a fixed allocation strategy then I don't see any harm in rebalancing or having a slight home bias but I am not about to bet the farm on going significantly overweight on UK companies.

Alex

OldMusicGuy

You are Neil Woodford and I claim my £5.