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Portfolio Positioning For Brexit Vote

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#41

My approach would be to control what you can control and stop trying to second guess things that you have no control over. Look the market opens every day, if you are worried, take some risk off. Do you seriously think if TM gets enough votes, the train will leave the station and everything is suddenly ok?

I don’t actually think the vote matters that much. What I do think matters is a GE. I would suggest that is what you need to fear. Looking at the broader markets VIX is higher now 18-22 and we are scraping around the lows for the year.

Looking at Lloyds specifically, I still think it has to create some sort of price acceptance at the low. For me unless it clears 63, I would play the short side.


#42

No… we will then be in for months of uncertainty with SPs swinging up and down like a yo-yo… as the vague, woolly future trade deal is negotiated over years.

More likely, it will be voted down and there will then be uncertainty reflecting the options of people again voting for either a No Deal, Remaining in the EU or the Tory Deal… but they certainly won’t just go down.
The impact on UK markets and GBP in 2016 was a far greater impact than any GE in modern times… or probably any… so the possibility for #BrexitRef2 and the potential for the associated upward swing upon a Remain vote is certainly nothing to be ignored. In fact, I rather hope the markets do ignore that as there will be plenty of bargains around if they do.

Not concerned about a GE either. There’s always concern about Labour getting in but even when they do they rarely carry out the nationalisation that was talked about pre-Election and they will inherit the same issues as are around today if not worse so they aren’t going to rock the boat too much.


#43

Hi Pref

I believe your approach is right under the circumstances.
I doubt markets will soar even if the vote is passed.

If you sell pre vote there will be opportunities to buy back and as you say, if prices do rise, so what ?
Markets are going to be volatile, whatever happens.
Nothing wrong with stepping back for a short while.

GL

soi


#44

hi @soi,

Thanks for that. Your summary correctly expresses how I am feeling about this trade.

For me personally it:-
a) Takes the potential of a big loss on the brexit vote day off the table
b) Provides the opportunity to buyback lower if the market does fall, providing for future profits.

The costs and risks as I see it are:-
c) The trading costs (commission, stamp duty & spread) of both selling and buying back in
d) That if the vote is passed and the markets react positively I will have given up some gains that I might otherwise have had.

If things dont go as planned then I am prepared to incur the costs that I have identified for the benefit of having avoided a big potential loss. I quite see that others may see it all TOTALLY differently and I wish them ATB with managing their portfolios in these challenging times.

I say again it is certainly NOT my intention to try and persuade others to do what I am planning. Anyone doing so must take total responsibility for whatever actions they might take.

I sold LLOY at 58.3 and SLA at 271.1 yesterday, a bit risky perhaps as they may well go higher than that in the coming days. However personally I dont see LLOY going above 60 in the next fortnight and before yesterday I thought I would be lucky to get 270 for SLA. I will keep an eye on the other investments that I have targeted for this exercise and I do have “sell limits” set for them all at VERY optimistic levels, just in case. But it is likely that I will only actually sell the others just before the vote to avoid the risk of them moving substantially other than because of the vote.

ATB

Pref


#45

Well done Pref, great trade to sell at 58.3, I wish I was as prepared as you. A short while ago I was talked out of selling at 62 and regretted it since.

When you opened this new topic, I agreed with your logic and that you’d be creating an immediate rebuy opportunity straight after the no vote and knee jerk reaction that will probably come.

I set a sell at 58.5, greed for that fraction extra but it’s not arrived. Now I’m snookered but still feel that it could dip to 54 or lower.

Only good news I cling to is an almost unanimous reluctance to see a no deal. That may change though as who knows what exactly will happen after Dec 11th.


#46

Hi @Swamp_Cat,

Thanks for the congrats but didn’t really do anything special, just watched LLOY going up on a 1 minute update chart and updated my stop loss every so often to implement a trailing stop. Had hoped for 59+ and looked like it might get there at one stage, but in practice it stalled at about 58.5 and started falling back and eventually triggered my stop loss.

Still worried that I may have sold too early and that it might go higher than 58.3 before the vote. Big bounce on the cards tomorrow for example following the Powell speech and the surge in US markets due to implications that US interest rates may not get hiked as often next year. But I’ve sold now and I can only sit and watch.

I must say that today’s BOE assessment of a “no deal” brexit as being worse than the 2008 financial gives one considerable pause for thought, thinking back to what happened to markets back then. Hopefully it wont be as bad as that this time as the problem should be limited to the UK (?), but still pretty scary really. Hey maybe the vote will go thru first time and it will all come to nothing…

ATB

Pref


#47

Hi Pref.

Nice exit on LLOY, at + 4 % on yesterdays close.
I thought your plan would work, glad it has done.
Agree I do not see LLOY above 60p pre vote.

Neat work,

ATB

soi


#48

Hi @soi,

Thanks, but as I said to swamp_cat I am still slightly concerned that may have sold too soon and that the price might still peak above my 58.3 before the vote. Just have to wait and see. Will be watching the bounce today with interest.

On a completely different topic I continue to monitor my preference share portfolio as held in March of this year before I sold out. Periodically I go through the LSE pages for each of the prefs and put the latest buying and selling prices in as best I can determine them, not an easy job in all cases. Anyway prices have dropped a lot and yesterday was a very bad day for prefs - they all dropped and the pref portfolio dropped close to £3,000 and overall it is now worth over £7,000 less than my current equity portfolio. But the yield is interesting at over 7%. Also many prefs are now priced below 120 leaving them not a whole lot further to fall I suspect ?. Dont see any of them falling below par.

I did an exercise last night to compare selling everything and buying back into 13 prefs at current prices and the income that would result is a good £2,500 a year higher than my current equity portfolio. I confess I am a bit tempted by that proposition. Very conscious of rising interest rates though and the potential therefore for prices to fall still further, but that would make things even more attractive if it happens.

ATB

Pref


#49

Hi All,

A further example of the perils of single stock investing today with INTU down ~37% this morning. Size of the fall Im guessing probably accounts for the 0.8% drop in my IUKD ETF which has a 3% holding in INTU, but much better than holding it directly !.

Housebuilders (PSN, BDEV, TW, CRST) all got thumped yesterday most down about 2.5-4.5% suspect this was likely caused by the BOEs dire nodeal brexit prediction that house prices might fall by 33% ?.

After 30 mins LLOY is still below the price I sold at but SLA has reached 271.2 which is 0.1p higher than I sold at.

ATB

Pref


#50

Hi S_C

Who talked you out of selling at 62 ?

Posters here, perhaps holding underwater holdings and not wishing to be left alone ?

4 posters suggested selling or going short there and urged caution.

Drowned out though and called crazy.

There is some support at 54, doubt that will be of any use if TM deal is rejected…
Next support is 49.

GL

soi


#51

Can’t remember who SOI, should have listened to myself.

51p was immediate after effect of Brexit vote.

I can’t see mays deal going through. It’s bonkers that Irish back stop


#52

I’d consider re-buying @ 46p , Too much risk for me @ 56p .


#53

Surely the market has priced in a rejection of the deal, already? While I’m not going to suggest an outright buy on LLoyds, I think there are better opportunities. I think shorting house builders and estate agents is work a look.

At the start of the year, one of my chosen plays was shorting Purplebricks at 414. (Check post in 1st week Jan). It’s off over 60%


#54

Hi broadmoor

Genuine question here.

Why 46 ? Any significance.

Are you tempted to short it at current levels?

ATB

soi


#55

I currently have no open positions in Lloyds, imho upside risk is slightly less favourable than downside risk, But I’m not a gambler, plenty of juicy trades around to keep me entertained.
46p has a nice feel about it, nothing scientific.

Ps…I’ve made my money for the year, I’m currently talking to oil traders that have just wiped 2 years profits down the pan in a few months. Be careful out there, it’s ruthless.


#56

Hi @macbonzo,

Well you could be right, but i dont think so.

Not long now, we’ll know soon enough…

ATB

Pref


#57

When you’ve seen enough market cycles you know that markets correct on unknown knowns.

It’s not about who is wrong or who is right it’s about making money.

I suspect if we do get a big sell off on a rejection of the deal, you will find that the US futures are already heavily down. i.e. a sell off will have little to do with the decision.


#58

Hi @macbonzo,

Though my main motivation is to avoid a potentially significant loss…

ATB

Pref


#59

Pref, you did well. Your over 3% better of already. Come 12th Dec, you’ll be ok.

Personally I’m considering selling a chunk at 57. Now that’s a toughie but may is not getting that deal through, it’s a nightmare.
Having said that, how many mp’s protecting their portfolios, I’ll bet there’s a few.


#60

I know that many of you disagree, but, efficient market theory would suggest that if there is a small chance of the agreement being approved, then it is likely that market has priced it in.

However, if you are really concerned, why not use CFD shorts to create a market neutral position? If you don’t have a CFD account GNI touch are pretty good.

I find it strange that many of you are content to hold over results, but, feel this vote is a game changer.

You could also go long VIX futures or ETF.

Or just go flat to the market.