Buy now or wait for Brexit

[blueskies]

What are peoples thoughts on buying shares at the moment. Is it worth waiting to see what happens with the Brexit talks and if there is an agreement or not be concerned if the companies shares you're buying you feel won't be affected by the final decision (or lack of!)

[richfool]

I have recently increased my exposure to the UK (by adding Murray Inc IT [MUT]) in anticipation of an eventual rebound, and have also topped up my holding of Warehouse REIT (WHR), but am keeping some cash available for other possible developments.

I did also look at SMDS (DS Smith) who make cardboard boxes and packaging, but haven't bought.

[WickedLester]

I'm not sure how the markets are likely to react whatever the final outcome but personally I don't think even a no deal Brexit would make too much difference to things. The powers that be have tried to terrify the public, first with tales of emergency budgets in the event of a vote out (and in the event it wasn't necessary) and now with talk of troops on the streets in the event of a no deal Brexit (are they expecting an armed insurrection for God's sake?)

The reality is both the UK and the EU have an interest in keeping trade going, it is not necessary to have political union for this so I think that economically Brexit will be a damp squib.

[PeterBill]

According to Stokopedia, the median foretasted PE ratio of all UK stocks with estimates is 11.9
The median foretasted dividend yield is 3.9%

Currently UK stocks are cheap ... but could get cheaper.
I'm adding in small doses ... whatever type of Brexit we get, eventually, the market will recover.
It's the uncertainty that is causing the market jitters.

[johnhemming]

A hard brexit could cause some serious problems for some companies and those companies on that basis would not now be cheap. However, if there is
some form of deal between May's deal and remaining in then the market is cheap.

[simoan]

I always find it curious that people discuss whether "the market" is cheap or not. Unless you're going to invest in a FTSE tracker, who cares? We should be finding individual companies that are cheap and have good prospects, no matter how Brexit turns out.

One thing is for sure though, and that is that the two extremes of No Deal or No Brexit will have diametrically different effects on the movement of GBP relative to other currencies. It's difficult to look at a portfolio and decide what the effects on the operations of each company are going to be, but it's fairly easy to estimate the effect of a currency change one way or the other on the companies profits (assuming they don't change!) and any dividends paid in USD or EUR.

I've already calculated how much my dividend income will be hit by any change in GBP/USD as a start because that will be the most immediate impact. I was surprised that 28% of the dividends paid by companies in my portfolio was in USD.

All the best, Si

[gryffron]

One thing is for sure though, and that is that the two extremes of No Deal or No Brexit will have diametrically different effects on the movement of GBP relative to other currencies. It's difficult to look at a portfolio and decide what the effects on the operations of each company are going to be, but it's fairly easy to estimate the effect of a currency change one way or the other on the companies profits (assuming they don't change!) and any dividends paid in USD or EUR.

I concur that trade is likely to be largely unaffected either way. And the only significant difference is likely to be in currency movements. However, I would correct you and point out that it doesn't matter what currency the dividends are PAID in, it matters what profits are EARNT in.

Gryff

[simoan]

I concur that trade is likely to be largely unaffected either way. And the only significant difference is likely to be in currency movements. However, I would correct you and point out that it doesn't matter what currency the dividends are PAID in, it matters what profits are EARNT in.

Gryff

Yes, both profits and dividend payments will be effected but the most immediate and noticeable impact will be on conversion of dividend payments which are declared in USD or EUR. If you are living off UK equity dividends and GBP moves 10% (or more), which it could easily do, then that represents a fairly dramatic change to your income one way or the other. So it does matter.

The effect on profits is far less easy to determine on a company by company basis. Some companies are naturally hedged, others will not be, but most large international companies earn profits in a range of currencies and source raw materials in multiple currencies too. Try and calculate all these currency interchanges across a large portfolio and it will make your head hurt!

All the best, Si

[Dod101]

I concur that trade is likely to be largely unaffected either way. And the only significant difference is likely to be in currency movements. However, I would correct you and point out that it doesn't matter what currency the dividends are PAID in, it matters what profits are EARNT in.

Apropos a recent thread the word is EARNED.

Dod