Brexit, funds and equities

Diplodicus

Short term consequence would be a £ depreciation, making FTSE companies cheaper in the world. So good ones maybe ripe for foreign takeover, like ARM in ‘16. 

The unfortunate corollary for everyone in the U.K. is that a devalued currency makes us poorer in the world as well.

Long term, being outside of the Single market means inexorably falling behind its members: that’s why Britain begged to join the Common Market  in the first place.

Thrugelmir

Diplodicus said:

Short term consequence would be a £ depreciation, making FTSE companies cheaper in the world. So good ones maybe ripe for foreign takeover, like ARM in ‘16. 

If UK investors don't buy shares in UK companies then one by one they fall into overseas ownership. Been plenty of such instances in the past 12 months. 

Moe_The_Bartender

Diplodicus said:

Short term consequence would be a £ depreciation, making FTSE companies cheaper in the world. So good ones maybe ripe for foreign takeover, like ARM in ‘16. 

The unfortunate corollary for everyone in the U.K. is that a devalued currency makes us poorer in the world as well.

Long term, being outside of the Single market means inexorably falling behind its members: that’s why Britain begged to join the Common Market  in the first place.

The single market didn’t exist in 1973. 

MaxiRobriguez

Thrugelmir said:

MaxiRobriguez said:

Thrugelmir said:

MinuteNoodles said:

alecm said:

What will a WTO Brexit do to the FTSE...immediately and over the next 10 yrs

Nothing. The stock market has already factored in a WTO Brexit. Whilst you're still worrying about something the financial markets have already reacted. 

From: https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

My second point is that the stockmarket is not the economy. The global stockmarket is made up of the big publicly traded corporations of the world. The stockmarket is made up of Big Tech, Big Capital and The Rise of The Machines.

The stockmarket does not include the small businesses, the independent private businesses, the (good) pubs and restaurants, the local businesses. Last week one of our local gyms went bankrupt; another casualty of lockdown…not a problem for the stockmarket but a personal tragedy for the young family that ran it.

My third point is that the stockmarket is looking forward. All the economic data you are seeing relates to last year, or last quarter or last month. All the news you are seeing relates to what happened yesterday.

In contrast, the stock exchange is looking far, far out into the future. Anyone who has prepared discounted cashflow models valuing companies knows that a large percentage of the value of the company usually sits in the continuing value: the perpetuity value of the cashflows outside the explicit forecast cashflow period.

......

The stockmarket is like a gigantic super-computer that gathers information, reflects uncertainty, weighs up all the bets placed and produces prices that reflect that information and that uncertainty. In the jargon, the stockmarket is “efficient”. That means it reflects the available information and uncertainty well enough that you can’t beat the market by reading newspapers, broker research or listening to your mate Dave down the pub.

So how good is that super-computer? How good is the market at pricing the zillion pieces of information, picking out what’s important and discarding the noise? Well, given the impossible scale of the task, the super-computer is REALLY, REALLY good at it.

This is not to sat that the market is always right. The stockmarket is not 100% efficient. It is not some all-powerful deity or omnipotent being. But it’s got more computing power than any one mortal individual.

Robinhood investors may well be at the controls of the machine currently. Collective force influencing events rather than mundane fundamentals. 

Heard this a couple of times but struggling to believe that 3 million or so new users who are "furloughed and bored" have the combined capital to swing markets significantly in any direction. 

Americans haven't been furloughed. Certainly been some unusual stock price movements. Hertz being one. In essence a bankrupt company with the share price rising from $0.4 to $6.25, a 896% rise in just 13 days.  Carnival PLC isn't the same level but nevertheless buoyed by optimism. 

I'm not doubting the numbers just the assertion the price changes are being driven by newbie millennials throwing caution to the wind. There's 3 million new Robinhood users, if every single one of them put £1,000 in then that's only £3bn odd - that's not enough to drive the changes being seen.

I think it's more likely that the normal scenario of institutional investors are driving the markets. Perhaps not Hertz, but for the vast majority of "at risk" companies.

ElephantBoy57

Michael121 said:

That's just talk to get people in the right mindset.

The long appraisal may be correct, but just like the housing market, a very big influence is confidence.

AnotherJoe

alecm said:

What will a WTO Brexit do to the FTSE...immediately and over the next 10 yrs

Why would you care?

Diplodicus

“The Single Market didn’t exist in 1973.”  - but the EEC had long been working towards it; on the principle that its members benefit from the synergies of a single market. Which is what happened. Which is why the U.K. wanted to join (and not be left behind). 
No reason to imagine a different result next time.

moneyfoolish

Alistair31 said:

Thrugelmir said:

WTO would be a boost to the UK domestic economy. 

Only my opinion but I think there will be a deal of some sort.

Never bet against BoJo getting something done.

Well, if he handles it as well as he has handled covid, then God help us!

Diplodicus

“If UK investors don’t buy shares in U.K. companies then one by one they fall into overseas ownership” - Thrugmir.

Not to disparage such a prolific MSE poster but -  Have we been failing our collective patriotic duty? Or what is being said?

Prism

Diplodicus said:

“If UK investors don’t buy shares in U.K. companies then one by one they fall into overseas ownership” - Thrugmir.

Not to disparage such a prolific MSE poster but -  Have we been failing our collective patriotic duty? Or what is being said?

I'm not sure what we could do about it or why we should do anything. If a large US, Japanese or Chinese company buys a smaller one of ours then so be it. It makes no difference to most people I imagine where the company that they buy their stuff from has its head office, or in fact even makes its goods.