Author Topic: Brexit  (Read 44523 times)

capitalninja

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Re: Brexit
« Reply #200 on: June 30, 2016, 12:20:58 PM »
What I dont get is all the bullish sentiments today and the last few days.  Brit is still leaving EU and our economy didnt get a whole lot better since last week.  I am seeing nothing but downside from here. 

Oh, Puerto Rico just said they're going to default on their debt, but nobody seem to care.

The point is that the UK leaving the EU simply doesn't matter from an economic standpoint. The UK exported almost half a trillion dollars worth of products in 2015. They're the world's 8 or 9th largest economy based on exports which means that unlike most of the countries making up the EU, they're actually productive. Being on their own is going to be good for them longterm.

Will there possibly be short term issues associated with exporting to the EU (2 years from now) because of the tariffs that will undoubtedly be imposed? Sure. But ultimately capitalism will win out. Last I checked, Rolls-Royce is still making cars and jet engines, BP is still pumping and refining oil products, and RBS, Barclays and HSBC are still among the largest financial giants in the world. Most of the world happens to like the products that come out of the UK so again, capitalism will ultimately win out.

The big sell off on Friday and Monday was simply panic by the masses. "Things are changing and we don't like change so let's do something completely irrational". There was/is no economic reason to reduce ownership in British companies that are both profitable and have a competitive advantage in the marketplace.

If you took advantage of the 2 day sale, great. If not, just wait a month or 2 and there'll be some new media induced panic causing people to behave irrationally. Thanks to human psychology there will always be new opportunities out there.


Mr. Green

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Re: Brexit
« Reply #201 on: June 30, 2016, 12:25:40 PM »
Brexwhat?

capitalninja

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Re: Brexit
« Reply #202 on: June 30, 2016, 12:52:12 PM »
Brexwhat?

Case and point. :-) The market isn't on a huge bull run. It's simply returning to where it was before the masses lost their minds on Friday and Monday.

TheAnonOne

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Re: Brexit
« Reply #203 on: June 30, 2016, 01:02:45 PM »
Brexwhat?

Case and point. :-) The market isn't on a huge bull run. It's simply returning to where it was before the masses lost their minds on Friday and Monday.

Yea, the market has been more or less flat for 2-3 years and is returning to it's... flatness

We are only 2-3 percent from a record high, but we have been just barely missing that spot for over a year now.

effigy98

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Re: Brexit
« Reply #204 on: June 30, 2016, 01:34:49 PM »
The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.

Livewell

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Re: Brexit
« Reply #205 on: June 30, 2016, 02:07:13 PM »
What I dont get is all the bullish sentiments today and the last few days.  Brit is still leaving EU and our economy didnt get a whole lot better since last week.  I am seeing nothing but downside from here. 

Oh, Puerto Rico just said they're going to default on their debt, but nobody seem to care.

PR is $2B.  Does that really matter in an economy of our size?   No.

Sentiment in 2016, my read, has been climbing the wall of worry.   More bears get flushed out every time the media comes up with the next disaster.   It isn't great in the USA, but it's not bad.   2-3% growth is more muddling along.   Brexit was a surprise outcome, but the facts are things are ok, both here and there.   It may create more positive movement in the EU politically as Germany/France realize they don't want everyone leaving for the exits, it will certainly create more dovish Fed behavior.   

To get things really moving again in the medium term (say 2-5 years), IMHO, is infrastructure spending post-election.   With interest rates so low and the need so high, this is such a no brainer that I cannot believe our congress would go against Obama on this one just because they didn't want him to be successful.   Vote Democratic if this the outcome you want to see.   

In the EU, it's all about removing some (all) of the austerity and for Germany to step up to make the European project sucessful, versus all the morality play BS that has been their go-to response since 2009.   

johnstein

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Re: Brexit
« Reply #206 on: June 30, 2016, 02:38:04 PM »
$2B is what they'd default on tomorrow.  The bill is to restructure some of the $72B debt.  Yes, not a big number by any mean, but if you were one of the States that is also facing large deficit, what's stopping you from doing the same?  Govt is stepping in to help PR, wouldnt they help their very own states? 

Tester

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Re: Brexit
« Reply #207 on: June 30, 2016, 03:03:45 PM »
Regarding fluctuations, I am sad I did not have my 80USD I put monthly on individual stocks to buy more Nokia when they dipped 10% this month...

EDIT: I already have some Nokia shares, buying 12 more when they dipped would get me out from losing with them :).
« Last Edit: June 30, 2016, 03:07:35 PM by Tester »

Livewell

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Re: Brexit
« Reply #208 on: June 30, 2016, 03:18:58 PM »
$2B is what they'd default on tomorrow.  The bill is to restructure some of the $72B debt.  Yes, not a big number by any mean, but if you were one of the States that is also facing large deficit, what's stopping you from doing the same?  Govt is stepping in to help PR, wouldnt they help their very own states?

Most states, I live in CA, require balanced budgets in their constitutions.   Yes, the feds would step in to help any state, just like states step in to help local city/counties, the federal government is after all just the world's largest insurance company with an army.   

Since we are talking about EU on this thread, I think it's important to point out that US states are very different from EU nations.   The level of fiscal integration is not comparible.   All this talk about CA or PR or fill in the blank is the next Greece is just balony.   PR is a US territory, and does not have the same protections as for example CA or TX do, so it an issue for them for sure.   But to compare PR to CA or TX, it's apples and oranges or maybe more apples and cows.

At the end of the day, while debt should be managed, USA cannot go bankrupt on debt denominated in dollars and so the risk of a default is extremely low.   More chance we get hit by lightening on the golf course.... so worry more about that.    :)

Scandium

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Re: Brexit
« Reply #209 on: July 01, 2016, 06:57:44 AM »
Regarding fluctuations, I am sad I did not have my 80USD I put monthly on individual stocks to buy more Nokia when they dipped 10% this month...

EDIT: I already have some Nokia shares, buying 12 more when they dipped would get me out from losing with them :).

You buy $80 of individual stocks every month? Do you pay the regular ~$8 commission too? For a 10% ER!!?

settlement

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Re: Brexit
« Reply #210 on: July 01, 2016, 08:48:37 AM »
I don't understand how markets have rebounded. In fact they are now stronger than before the brexit

frugledoc

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Re: Brexit
« Reply #211 on: July 01, 2016, 09:03:30 AM »
I don't understand how markets have rebounded. In fact they are now stronger than before the brexit

And if you hold global assets in british pounds, you have made a killing, happy days (unless we get hit with high inflation)

frugledoc

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Re: Brexit
« Reply #212 on: July 01, 2016, 09:04:31 AM »
Regarding fluctuations, I am sad I did not have my 80USD I put monthly on individual stocks to buy more Nokia when they dipped 10% this month...

EDIT: I already have some Nokia shares, buying 12 more when they dipped would get me out from losing with them :).

You buy $80 of individual stocks every month? Do you pay the regular ~$8 commission too? For a 10% ER!!?

Even if it was free I'm not sure what the point is.

Mr. Green

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Re: Brexit
« Reply #213 on: July 01, 2016, 11:01:30 AM »
I don't understand how markets have rebounded. In fact they are now stronger than before the brexit
Because everything in the world looked exactly the same the day after the vote as it did the day before the vote. The actual financial impact won't be felt for quite some time. It was fear selling plain and simple. After two days people realized that and bought right back to where we were. It's pretty much what I expected. Nice buying opportunity though for someone with cash to play.
« Last Edit: July 01, 2016, 11:05:29 AM by Mr. Green »

dougules

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Re: Brexit
« Reply #214 on: July 01, 2016, 11:06:46 AM »
I'm disappointed.  I was hoping Brexit would deflate the market at least a little.  I didn't even make it to pay day without the market getting close to record highs again. 

Jack

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Re: Brexit
« Reply #215 on: July 01, 2016, 11:19:03 AM »
Nice buying opportunity though for someone with cash to play.

Yep. I made $250 for buying $3300 worth of VEURX on Monday and then exchanging it for VTSAX on Thursday. The only real difference from my normal behavior was that I front-loaded the remainder of my IRA instead of DCA-ing it at $127/week for the rest of the year.

(I had been planning to hold the VEURX for a while, but it rebounded so quickly I thought "why not just take my profit and get back to my normal AA?" Of course, VGK is up by a larger margin than VTI so far today too, so maybe I got out too soon. Whatever.)

Incidentally, I don't plan to make speculating like this a habit.

Chargem

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Re: Brexit
« Reply #216 on: July 01, 2016, 03:16:46 PM »
I don't understand how markets have rebounded. In fact they are now stronger than before the brexit

I think the markets are only above their pre-Brexit level due to rumour that the Bank of England will cut interest rates down from 0.5% to 0.25%. Also, 70% of FTSE 100 income is from overseas, so the weakened Pound is actually pretty good for the FTSE 100 in isolation. The European indexes like the CAC and the DAX are still down, as is the FTSE 350, which is much more reliant on the UK for revenue than the FTSE 100 is.

MoonShadow

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Re: Brexit
« Reply #217 on: July 01, 2016, 05:29:12 PM »
Well, I dropped $45K into a S&P500 fund Monday afternoon, and finished today with just over $2K in gains from that move alone.  Thanks Brexit voters!

The markets rebounded because it was an irrational panic anyway.  The Article 50 exit process takes 2 years from the point that parliament votes to exercise the clause.

ender

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Re: Brexit
« Reply #218 on: July 02, 2016, 05:32:43 AM »
Yeah, I'm realizing my window for refinancing may have just been extended, which is nice.

I asked during our closing the other day what rates would be and they'd dropped 0.25% from what our mortgage was (we closed last week, so too late to get a lower rate without delaying closing).

Was a bit sad :'(

Retire-Canada

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Re: Brexit
« Reply #219 on: July 03, 2016, 10:00:08 AM »
I don't understand how markets have rebounded. In fact they are now stronger than before the brexit

Look at what happened:

- UK making no radical move to actually leave anytime soon
- EU saying if you want access to the EU market you are going to take the good with the bad
- Leave leaders walking back from all their most incendiary comments/promises on immigration and trade
- Scotland stating they want to stay in the EU regardless

That ^^^ looks a lot like the UK in the EU whether it's called "full membership" or they have some new term to cover the situation. The markets just realized they were panicking about nothing and went back to the business of making money.

RedmondStash

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Re: Brexit
« Reply #220 on: July 03, 2016, 11:20:07 AM »
For those who enjoy a little humor with their updated Brexit info:

https://www.buzzfeed.com/lukebailey/the-crisis-explained-maybe?utm_term=.kew2jQPzE#.lr51y7NY4

Since the beginning, I've had the feeling that Great Britain would not actually leave the UK. I could of course be wrong. Time will tell.

Grog

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Re: Brexit
« Reply #221 on: July 04, 2016, 12:03:14 AM »
By the way Switzerland voted and accepted in 2014 the proposal of the right wing party to control immigration (limiting the number of working visa per year from EU). This is a bit of a problem since nobody here wants to leave the free trade access with EU, which is a condition bound to the free movement of people. So we are in the same pickle, but our politician are bound to find a solution up to February 2017, but with Brexit going on nobody of the EU has time for our representative to discuss it.
Interesting times.

Sent from my YD201 using Tapatalk


Metric Mouse

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Re: Brexit
« Reply #222 on: July 04, 2016, 12:14:01 AM »
For those who enjoy a little humor with their updated Brexit info:

https://www.buzzfeed.com/lukebailey/the-crisis-explained-maybe?utm_term=.kew2jQPzE#.lr51y7NY4

Since the beginning, I've had the feeling that Great Britain would not actually leave the UK. I could of course be wrong. Time will tell.

Interesting, now that the economy freak out is over and everything is swimming along.  Not sure what will happen either, but we can probably agree they're a hell of a lot closer to leaving than anyone thought they would be two weeks ago.

RedmondStash

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Re: Brexit
« Reply #223 on: July 04, 2016, 09:41:33 AM »
For those who enjoy a little humor with their updated Brexit info:

https://www.buzzfeed.com/lukebailey/the-crisis-explained-maybe?utm_term=.kew2jQPzE#.lr51y7NY4

Since the beginning, I've had the feeling that Great Britain would not actually leave the UK. I could of course be wrong. Time will tell.

Interesting, now that the economy freak out is over and everything is swimming along.  Not sure what will happen either, but we can probably agree they're a hell of a lot closer to leaving than anyone thought they would be two weeks ago.

Very true. I was sure the Brexit vote would lose.

dixonge

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Re: Brexit
« Reply #224 on: July 06, 2016, 05:49:59 AM »
Interesting, now that the economy freak out is over and everything is swimming along.

Uh, maybe not so much...yet...

Pooperman

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Re: Brexit
« Reply #225 on: July 08, 2016, 07:04:49 AM »
Interesting side note about Brexit. The bond yield dropped like a rock and so I was able to get a home loan for 3.250% (to buy, not a refi). That's insane!

MoonShadow

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Re: Brexit
« Reply #226 on: July 08, 2016, 06:41:43 PM »
Thanks again, Brexit voters!

http://reason.com/archives/2016/07/05/brexit-continues-to-reverberate-around-t

No, seriously.  Thank you.  You have done more for the world than any of us may ever know.

Heckler

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Re: Brexit
« Reply #227 on: July 08, 2016, 10:09:49 PM »
The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.

So, is this an effective strategy?   My US holdings (in CAD) are at all time high due to low exchange rate. If I sell US now, I could rebalance to CAD bonds, but then tomorrow when the exchange goes back up, I'd then be lower on US holdings, snd earning less US dividends.  Am I better off to buy and hold, but just buy bonds because I'm under allocated?

IPS says to balance through contribtions and once per year in March if off by more than 5%. I plan to buy and hold, not trade.  However "capturing gains" seems like a good idea.
« Last Edit: July 08, 2016, 10:24:14 PM by Heckler »

MoonShadow

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Re: Brexit
« Reply #228 on: July 08, 2016, 10:29:00 PM »
The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.

So, is this an effective strategy?   My US holdings (in CAD) are at all time high due to low exchange rate. If I sell US now, I could rebalance to CAD bonds, but then tomorrow when the exchange goes back up, I'd then be lower on US holdings, snd earning less US dividends.  Am I better off to buy and hold, but just buy bonds because I'm under allocated?

IPS says to balance through contribtions and once per year in March if off by more than 5%

A rules based portfolio like the GB (& the Permanent Portfolio that it is based upon) gets part of it's outsized gains by taking advantage of volatility like happened following Brexit.  The idea is that the different parts of the portfolio are either not correlated with the others, or are sometimes counter correlated.  (Gold is mildly counter correlated to large cap stock indexes, historically, as a 'flight to safety' kind of asset)  The way it works, as designed by Harry Browne, is there is a trigger rule that results in a rebalance.  Harry Browne recommended either if a single asset class varies by more than 10% of the total portfolio or if any two assets are more than 10% out of wack with each other.  In the case of Brexit, major stock indexes dropped rather suddenly, and gold rose; so with a target percentage of 20% for each of 5 asset classes; once Large Cap Stocks dropped to 10% or Gold rose to 30% individually, or they reached more than a 10% span between them (which is what actually happened) the rule would require a rebalance, thus selling gold while it's high & buying Large Cap while it's low (also a bit of Small Cap).  As the markets regained their senses last week, and investors realized how silly they were, the price of gold pulled back a little, but the Large Cap stock asset class rose to higher than where it started, and (if it got to 30% of the overall portfolio, I'm not sure that it did, because it hasn't made it there yet for me) then another rebalance would be called for.  Thus, selling Large Caps while high to buy Gold back while low.  If these rules are followed without emotion, the theory goes, that no matter what condition the market is in, you are only buying an asset class when it's out of season & selling high.  The original Permanent Portfolio only had 4 equal classes, so each target would be 25% with a range of 15% to 35%.  Harry Browne didn't know if the rule should be 10% or something else, but he believed that  such a rule was required to keep the emotion of the moment out of the decision making process.  Another rule was, if the markets were low volatility, then the portfolio should be rebalanced at least once each year anyway.

EDIT:  To fully answer your question, yes, a rules based rebalancing portfolio is, historically better than a buy & hold strategy of comparable asset classes.

You can also keep a PP or GB in balance by using contributions to buy the lowest percentage asset class, and it still works out that you are usually buying the asset class that is least in favor at the time.  But why March, per se?
« Last Edit: July 08, 2016, 10:36:33 PM by MoonShadow »

MoonShadow

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Re: Brexit
« Reply #229 on: July 08, 2016, 10:30:57 PM »
The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.

Wouldn't the Golden Butterfly be 30% for the high mark, not 35%?  Or did you start with a modified asset balance?