How to invest if you think there will be a post-transition deal with the EU

aroominyork

Are there two things to do?:

1. But UK small/mid caps

2. Sell global stocks because Sterling will rise, and rebuy after Sterling rises/global stock prices fall.

The first feels do-able, the second would be gutsy.

csgohan4

your going into speculation territory and there will be those who suggest one or the other. 

Crystal ball time

A cheap index tracker will beat speculation in the long run

aroominyork

I'm not sure this falls into the usual 'avoid speculation' category. The issue will not drag - it will shortly be resolved one way or the other. It's a binary choice (though obviously with detail in the terms) and it looks to me like the markets are on the fence. So my question stands: if it was announced this week that issues of fisheries, state support etc. have been resolved and they are now working on final text, what would the currency and market responses be?

AnotherJoe

... and IF its not ?

Its a 50/50 bet. Or 70/30. or 1/99.  Depends what you think the odds are.

If you want to speculate and IF the deal comes together you'd likely be right. And IF it doesn't, you'd be wrong

Maybe hedge by investing 50/50?

 

NottinghamKnight

Binary options anyone?

The_Green_Hornet

But 50 on black, 50 on red and hope it doesn't come up green.

steampowered

If you want to gamble, go to Vegas. Much more fun.

aroominyork

OK, I'll ask the question another way. The Wellcome Trust (which is the world's second largest medical research philanthropic donor after Gates) made a huge gain on the 2016 referendum because, as their Trustees' report explained: “Tactically, we viewed the risk to sterling from the referendum to be asymmetric and reduced our sterling exposure (including hedges) to an all-time low ahead of the vote." So they were not necessarily predicting the outcome of the vote but thought Remain was pretty much priced into Sterling while Leave would see Sterling fall significantly. What do people think the impact on Sterling will be of deal and of a no deal outcome over the coming two months? 

talexuser

I haven't seen any reputable forecast of Brexit that said it would improve the economy, at least in the short or medium term. WTO terms would harm the economy, talk of a bad deal is illogical because any deal worse than WTO would not be signed by anyone with any sense, therefore any deal signed surely should have aspects better than WTO. I started reducing my UK exposure after the referendum, now down to less than 5%, and have done very well out of it. The competance of the response to the pandemic has not improved my outlook. A contrarian might make some good returns from parts of the 350 if brave and clever enough now, but it won't be me.

Thrugelmir

Europe taken as a whole isn't in a good place either. Now is the time for the political project to come to the fore. As fiscal integration is the only way forward. Will it work though?  Challenging times are ahead. 

[Deleted User]

aroominyork said:

I'm not sure this falls into the usual 'avoid speculation' category. The issue will not drag - it will shortly be resolved one way or the other. It's a binary choice (though obviously with detail in the terms) and it looks to me like the markets are on the fence. So my question stands: if it was announced this week that issues of fisheries, state support etc. have been resolved and they are now working on final text, what would the currency and market responses be?

I think $1.30 speaks of the markets expecting some deal so unless it’s surprisingly comprehensive I don’t expect £ to rise above $1.35. 
In the case of no deal or, more likely, when U.K.  reneges on whatever the Johnson Govt agree now, I expect £ to dip below $1.20, so I wouldn’t be looking to get back into £ at this point.
You probably already have a house, salary, pension etc valued in £ anyway so would benefit indirectly from a sterling rally.