Market underpricing risk of no deal - Ivan Rogers

[TUK020]

Transcript of Sir Ivan Rogers speech to the University of Liverpool's Heseltine Institute of Public Policy

https://news.liverpool.ac.uk/2018/12/13 ... on-brexit/

Profoundly depressing take on the maturity of our political process, and the level of self delusion/bullshit in Parliament.

My takeaway is that the risk of a disorderly Brexit is very real, and could involve really horrendous costs. Sir Ivan's closing point is that corporate players haven't adequately priced in the risks involved.

Think I may need to review my portfolio urgently, with a beady eye of the UK market exposure of each of my stocks.

[Dod101]

This is covered on the thread 'An Essential Brexit Read'

Dod

[TUK020]

Just done some extensive browsing of this topic and some others on 'Polite Debate', and just decided that I will go back to not looking at that board.

To modify the topic slightly, and avoid 'polite debate' areas:

If one were to accept the premise of Sir Ivan Rogers' arguments, what HYP stalwarts would you stick to, and which ones would you avoid?

[SalvorHardin]

Just done some extensive browsing of this topic and some others on 'Polite Debate', and just decided that I will go back to not looking at that board.

To modify the topic slightly, and avoid 'polite debate' areas:

If one were to accept the premise of Sir Ivan Rogers' arguments, what HYP stalwarts would you stick to, and which ones would you avoid?

Good idea regarding Polite Discussions. You won't get much from there about investment (many regular posters have made well over 1,000 posts on polite discussions and only a couple elsewhere on TLF - they're not here to discuss investment or personal finance). Go there for a political bunfight, not investment discussion.

I'm not a HYP investor but when it comes to the HYP shares, stick to those which do most of their business overseas and have most of their operations overseas. The likes of BP, Shell, Standard Chartered, HSBC, BHP Billiton, Vodafone and of course Unilever. The only one of those I own is Unilever but then I'm not a HYP investor. Avoid companies with massive UK exposure such as Lloyds, British Land, Land Securities, United Utilities and to a lesser extent National Grid (it has big American interests). Possibly BAT Industries and Imperial Brands, though tobacco has its own major problems which have nothing to do with Brexit (regulation, bans, punters switching to vaping).

One way of avoiding too many problems if Sir Ivan's Brexit predictions come true is to buy foreign shares which don't do much business with the UK. Australian banks, Canadian banks, foreign telecoms are the sort of companies which spring to mind if you're looking at high yielders, and possibly some of the American REITs (but exercise caution there, America is massively oversupplied with second tier retail real estate).

Consider some of the higher yielding international investment trusts, such as Henderson Far East Income and Murray International (I hold both of these), which have very little to do with the UK other than being quoted here. The HYP purists will no doubt consider this heresy, but bear in mind that this is not a HYP board.

[Dod101]

As a HYP investor (with a smaller growth portfolio alongside) I entirely agree with SalvorHardin. Not surprising really because he is pretty well describing my portfolio, including the two ITs mentioned. I would not buy for instance, Lloyds Bank, nor any utility (having sold SSE earlier this year, I now hold only National Grid) and sold B Land, BT and have never held support services and hold no supermarkets, or other UK retailers. If I had any spare cash, I would probably buy Nestle and one or two other foreign shares.

I expect just to sit tight for a while and see how the whole Brexit business shapes up. Of course if there is another Referendum and it reverses the previous one, the UK market might take off, although after an initial relief rally, I suspect it might drop back again.

Dod

[tjh290633]

I have not quoted the extensive post above, viewtopic.php?p=187165#p187165, but would like to comment that the guidelines say that HYP shares should be drawn from the FTSE350.

If you want to diversify outside shares in the index, with a London quote, do so by all means, but keep them in a separate portfolio, as far as reporting on your HYP is concerned. Likewise with funds and ITs.

You may then be able to draw comparisons in due course as to how the alternative tactic has performed in relation to the HYP.

TJH

[Ashfordian]

Be greedy when others are fearful

While I don't think we are at this point yet, this situation is being perfectly created by the politics of Brexit.

The level of debt is what I will use to filter down potential candidates as the level of debt has been the main reason for failing companies in the last couple of years.

[SalvorHardin]

I have not quoted the extensive post above, viewtopic.php?p=187165#p187165, but would like to comment that the guidelines say that HYP shares should be drawn from the FTSE350.

If you want to diversify outside shares in the index, with a London quote, do so by all means, but keep them in a separate portfolio, as far as reporting on your HYP is concerned. Likewise with funds and ITs.

You may then be able to draw comparisons in due course as to how the alternative tactic has performed in relation to the HYP.

Hang on. This isn't HYP Practical (it's Macro and Global Topics) so why are you demanding that we follow HYP restrictions (erm, I mean "guidelines"?

Is this some new moderation policy ("thou shall not post about non-HYP when HYP has been mentioned"?).

This is the sort of thing that puts people off TLF. I know several people offline who use to post a lot about investment matters on TMF who've largely stopped posting here because of this sort of thing.

[tjh290633]

Hang on. This isn't HYP Practical (it's Macro and Global Topics) so why are you demanding that we follow HYP restrictions (erm, I mean "guidelines"?

Is this some new moderation policy ("thou shall not post about non-HYP when HYP has been mentioned"?).

This is the sort of thing that puts people off TLF. I know several people offline who use to post a lot about investment matters on TMF who've largely stopped posting here because of this sort of thing.

I haven't made any demands. I just suggested that any diversion, in line with your suggestions made by someone with an HYP, would be best kept separate from the HYP so that the investor could compare them with the HYP approach. If you mix the two and report as a combined portfolio it no longer remains an HYP.

Were it me, I would wish to know whether my alternative investments were doing better or worse than the original.

You are stirring up controversy where none exists.

TJH

[Dod101]

Sorry TJH. I did not understand the point of your post either and still do not actually. You are not in Mod mode now I assume?

Dod

[tjh290633]

Sorry TJH. I did not understand the point of your post either and still do not actually. You are not in Mod mode now I assume?

Dod

No, I'm not. I thought my comments were perfectly clear.

Have you tried reading the full context?

TJH

[TUK020]

I explicitly posted here because I suspected that constructive answers might stray from phasic pyadic purity.
Btw, thanks SalvorHardin - helpful response

[OhNoNotimAgain]

Transcript of Sir Ivan Rogers speech to the University of Liverpool's Heseltine Institute of Public Policy

https://news.liverpool.ac.uk/2018/12/13 ... on-brexit/

Profoundly depressing take on the maturity of our political process, and the level of self delusion/bullshit in Parliament.

My takeaway is that the risk of a disorderly Brexit is very real, and could involve really horrendous costs. Sir Ivan's closing point is that corporate players haven't adequately priced in the risks involved.

Think I may need to review my portfolio urgently, with a beady eye of the UK market exposure of each of my stocks.

It's noise, ignore it.

No one knows what will happen therefore it is pointless trying to anticipate it.

[TUK020]

It's noise, ignore it.

No one knows what will happen therefore it is pointless trying to anticipate it.

Having slept on this, I am coming to a conclusion that is somewhere in the middle between SalvorHardin/Dod and OhNoNotHimAgain
I am not going to start rebalancing my portfolio, which will incur trading costs against an uncertain outcome. But I will take this into account as part of my top up process until after the dust has settled - so ITV gets bumped from top spot by HFEL for next month's purchase.
thanks everyone

[Dod101]

Without really making a conscious decision I find myself very much with SalvorHardin, simply because I started picking off shares such as BT (mostly on account of its trading and pension problems)and B Land because of its exposure to London property certainly because of Brexit. Support services were excluded a long while ago and this had nothing to do with Brexit; ditto retailers. As far as utilities are concerned I only held National Grid (which I still do ) and SSE which I have sold this year as much to do with its finances and the Corbyn threat as anything to do with Brexit.

However all of that has meant that I do not have a great exposure to the UK market. I do not believe in Strategic Ignorance but at the same time I am not advocating that anyone should suddenly divest themselves of all UK exposed shares. Brexit may not happen and if that comes about there would probably be a relief rally because the consensus (which could well be wrong) is that the UK market in undervalued or oversold.

So to return to the title of this thread, I wonder if the market is underpricing the risk of no deal. No one knows because it has never happened before.

Dod