Monthly Archives: June 2016

Brexit and the investor

The unexpected happened and the UK will leave the European Union! World financial markets have been caught completely off guard. The immediate consequences are significant volatility on world markets and big currency fluctuations.

Other consequences can be expected, including:

  • further falls in world economic growth forecasts.
  • a recession for the UK and the European Union.
  • difficulties for Asian markets exporting to Europe.
  • a lower AUD and lower interest rates for Australia
  • falling commodity prices consistent with lower growth.
  • increased political instability in Europe – more opportunities for Putin
  • other EU countries calling for an exit vote

What can investors do?

The volatility will produce buying opportunities but is the current market exuberance warranted? At this stage it is imperative to stay with the investment plan. A world event such as this is an opportunity for the media to give their “expert” opinions but no one knows what the fall out… Continue reading

Brexit and the bear market

Brexit

So, the UK will leave the European Union!   The issues were very complex and there were merits on both sides of the argument   But in the end, voters obsessed over a frustration with their political leaders, neglected to look at the big picture and evaluate the real economic and political issues.

What lies ahead for the UK is economic uncertainty. By contrast the future for the European Union is much more certain because that organisation is now very unlikely to remain politically and economically stable. It is likely that other members will leave the European Union resulting in a union which is economically and politically feeble. Such political instability is at a time when Europe is under pressure from refugees and the political aspirations of Putin. Will NATO now be strong enough to deter Putin from picking off the Baltic States?

The world is really… Continue reading

A bear or the start of a bull market?

When economic views are very negative then this is often the time for a new bull market to start. Current sentiment is very negative so can we expect a bull market to soon?

Consider the economic and political negatives.
• Falling world growth and falling inflation.
• The inability of central banks to control very slow economic conditions.
• Historically high levels of sovereign debt
• A coming crisis for the European Union, in part due to refugees
• An unknown impact of a changing Chinese economy
• Japan continuing a multi decade recession with little hope of change
• A weakening United States economy.

Of immediate interest is the UK vote to leave the European Union. Should the UK vote to leave the European Union, then it will be weakened economically and there is the likelihood that Scotland would then leave the UK.

 
The European Union is at… Continue reading

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