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Portfolio Positioning For Brexit Vote

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#61

Well @macbonzo you are a trader. You operate in a world of financial guerrilla warfare, taking positions, hedging, taking profits, living off your wits – and good luck to you. But I am a bit old to be playing those games. I am never going to short anything, don’t want a spread betting or CFD account (had one, tried it, closed it, never again).

My mode of operation is more akin to a farmer, I want to plant some seeds, watch them grow, harvest some dividends – but most importantly be doing SOMETHING ELSE 99.9% of the time.

Trouble is some political idiots have created the equivalent of a hoard of locusts that are quite likely to wipe out my cultivated crop. So it’s time to pull stumps, load up the wagons and going looking for another plot of land. Analogy wearing a bit thin at this point !.

I am sure your mode of operation is extremely efficient but I’m afraid it is not for me. What I would really like is a good old fashioned savings account where you put your money in, didn’t risk losing it and got paid 5% interest every year for doing so. If you could still get such things I’d leave the stock market in a flash and never return. Sadly we will never see those times again.

ATB

Pref


#62

For myself, I don’t even know what cfd stands for. As with long the vix.

I do appreciate your advice and suggestions btw.

Yes market has priced lots of the price to accommodate the non acceptance of Mays deal but won’t the market will still blip on the result?
It will in either result for my money, I just see voting down more likely.


#63

Hi Again All,

Well I can see that housebuilders have taken some damage and the £ is down a bit - but nothing like Mr Carney s predictions. Financials seem largely unaffected and the FTSE is still comfortably above 7000, was up 0.5% today and is up quite a bit this week. Now I am aware of the effect that a falling £ has on some FTSE stocks but if that constitutes pricing in a no deal brexit I’m more than a bit surprised. But as always I could be totally wrong…

ATB

Pref


#64

FHardly “comfortably” above 7000 since it is falling below and then above constantly over the last few weeks.

Cheers,

Frog in a tree


#65

Gee that’s alright then !. Panic over…

Pref


#66

Pref, back to trading strategy. Nobody wants a no deal. Don’t forget that.

Neither UK nor Europeans would let it happen. There would be an article 50 extension before no deal.

So, if Mays deal gets voted down, yes markets will dip but that’s the buying oppo for me.

It could result in a remain (I doubt it) or it could result in a tweaked deal.
Both the above would boost the sp.

But what do you guys see as dragging it further down at that point after not accepting Mays deal?

I suppose leadership challenge wouldn’t help.


#67

Hi @Swamp_Cat,

My thoughts are much the same as yours, I think that the deal will be voted down and there will be a big dip in the FTSE and the £ will crash as everyone faces up to the potential economic damage of no deal brexit. I plan on buying back in on this dip.

Beyond that point anything could happen, I suspect that the government will have a Plan B that they will bring forward at that time and it’s likely that there will be a vote on that. There could also be a vote of confidence, PM change, general election, agreement to hold a people’s vote - any of those things. I suspect markets and £ situation may worsen on some of these and strengthen on others. I agree that were we to end up remaining that I think that this would be a long term positive for markets and the £. I have no plans to wait to see how any of that plays out before buying back in though.

Of course if it’s already all priced in then nothing much will happen. I just don’t think that will be the situation though, but I could be totally wrong. I suspect that a big part of TMs plan to get the deal through is the threat of the economic / market / £ damage that would likely result.

And of course if the vote did get passed first time then markets and the £ would likely strengthen I think.

ATB

Pref


#68

You could just transfer more into your SEDY (iShares EM Dividend UITS ETF) and IAPD (iShares AsiaPacific Dividend UCITS ETF) which haven’t heard much about the Brexit thing(?)


#69

Hi @J_Westlock, I am indeed planning to purchase more of these Overseas / Global ETFs with some of the funds liberated by my FTSE based investment sales to benefit from any weakening in the £ on the brexit vote. Haven’t done so yet but am going to do so.

I have a question for you if I may. I am new to ETF investing and have yet to experience receiving a dividend from an ETF. I am assuming that it will work exactly like a share and that the ETF Price will drop on the XD date by the amount of the dividend?. Is that correct ?.

I only ask because as I see it the situation isn’t quite the same as a regular share as an ETF is really only returning dividends that it has received from its components stocks. If the ETF price is purely a function of the stock prices of its components and does not include dividends received then it is conceivable that the share price might not dip on XD. As soon as I receive my first dividend I will know the answer to this question, but at the moment I don’t.

Can you please confirm that an ETF share price does indeed drop by the dividend amount on XD ?.

Thanks In Advance

Pref

PS I have tried looking at ETF charts to see what happens to the share price on XD date but unfortunately I haven’t been able to see what the answer is.

PPS Both SEDY and IAPD have been doing very well. IAPD in particular has benefitted from the GBP/AUD rate moving markedly in favour of the AUD I think.


#70

Hi @PrefInvestor1 … yes, just like shares they pay divis and have an XD date but both according to the timescale defined for each particular ETF (eg. Quarterly or every 6 months say).
And yes, the price of the ETF should rise before the XD date and go down later just as a function of those trading the ETF immediately around the XD date. It’s something I’ve never tracked though so would be interested to see if you corroborate that with your graphs.


#71

Hi S_C.

Most people wouldn t.

CFD stands for Contract For Difference. It is a derivative product.
One can use it to hedge a shareholding, as well as trade.

VIX is the Volatility index.
When markets are calm it is generally overly priced.
Vice versa when markets are going crazy.

Hence one can use it to hedge or trade when you think market volatility will increase by going long.

ATB

soi


#72

Hi All,

On the PC sharp at 08:00 this morning to sell VIN and RGL my last two REIT/property based investments.

Why is that ?. Well its putting two and two together (probably to get 5) regarding the INTU situation. The takeover deal there it is said has fallen through because of macroeconomic environment (Brexit) and looks like their retail property portfolio has been heavily marked down over the year.

Looking at the biggest fallers on the FTSE yesterday highlighted Hammerson, British Land and Land Securities, also REITS/property companies, and all down ~5%+. I have read elsewhere that HMSO is selling many of its retail parks due to shareholder pressure to exit the retail sector.

Add that to the INTU situation and I wonder whether we might see a situation where commercial retail property valuations might come under pressure, especially when combined with brexit. If this does happen it could knock on to other REIT NAVs and share prices. Also as I recall REITs were cited as a risk area for Brexit in that report referenced in the opening post of this topic.

Again could be TOTALLY wrong here, but a precautionary move on my part. Please do your own research.

ATB

Pref


#73

Hi Pref

You are proactive for sure.

You have no more REITs left then?

I still hold RGL, not a big holding as well as 3 others.
Flat on 2, down on 2 , not taking divis in to account.

I do understand your logic.

Would you buy back in to some REITs when the overall picture is clearer.?

ATB

soi


#74

Sorry if I was a bit esoteric with my advice. I appreciate your circumstances are different. I suppose you have to do whatever allows you to sleep at night.

Going liquid may not be a bad option. GS have a savings account call “Marcus” which pays 1.5%. The other point about going completely liquid is that maybe, and whisper it, this bull market has topped, hence, you can be patience and wait for a 20% correction.

For me, too many people think, they HAVE to invest spare cash. You don’t. Many people have invested in Lloyds or BT, to get a better return, but, compromised their capital. Whether you are momentum trader or long term investor, patience plays a big part.


#75

hi @soi,

Proactive (do you mean hyper-active ! lol).

Anyway Ive been through my whole portfolio and anything UK equity based with the exception of RDSB, BP & GSK is getting sold at some time before the vote, I figure these may all benefit due to their $ based earnings. I am also keeping all my renewable investments of which I have quite a few. When I started the list contained 11 holdings in all, I have 6 left to sell. I may stop loss even those 3 that I mentioned earlier on the day.

I am using this opportunity to reduce my holding count (mistake in my post pref portfolio I think), increase the use of ETFs and ALMOST totally eliminate single stock investments in favour of ETFs & Investment Trusts (another mistake). I dont plan to buy back into LLOY or SLA for example, planning to buy ETFs instead.

I have a plan for all my proposed buys on my spreadsheet complete with costs but am obviously hoping to get better prices !. Having sold a few things I am trying to pick up some overseas ETFs and investment trusts with the cash in the next week hoping these will benefit from a fall in the £.

Yes I quite like REITS. At one stage there I had AEWU, NRR (which I then replaced with FCRE), RGL and WHR. I liked the property focus and the dividends. Sold them all now and only made a profit on RGL and WHR including dividends. Yes I would hold them again but have no plans to buy any during this exercise.

ATB

Pref


#76

Hi @macbonzo,

Well its effectively my annuity that I am investing here. For many years (starting in ~2011) I invested almost exclusively in preference shares (hence my username). I got pretty good at it and almost doubled our capital over that time. Then came the Aviva event in March (they threatened to redeem their prefs at par and the whole pref market crashed) and I took a major hit and decided that my only hope of recovering the lost capital was to start investing in equities - especially as interest rates were rising and pref prices falling (a very different proposition to when I started with prefs).

Just to give you a flavour I bought my first prefs NWBD and LLPC for less than 100p, the yield was 10%+ and the prices soared over time. In March before the Aviva event LLPC was at ~175p and I had ~7 years of 9.25p a share dividends every year. I still look back at prefs longingly on occasion, prices have crashed and yields are very attractive. I still track the value of my pref portfolio and compare it with my current equity based one. Pleased to say that the equity one is substantially ahead ATM.

But now I am here doing this equity stuff and its much harder. Trading wouldnt be a good solution for me as I need guaranteed income, hence my focus on dividends. Living on my wits making money by spotting opportunities and trading them isnt exactly on my agenda. I am playing golf or off with the grandchildren most of the time.

Yes I am aware of Marcus and we have money in savings accounts at that sort of rate 1.5%. Doesnt compare with the growth I achieved by investing in prefs though and am searching for an equity income solution.

ATB

Pref


#77

I think the first thing you have to do is congratulate yourself. You are well ahead of most people with that performance and importantly you have been consistent.

This business doesn’t get any easier. You ultimately get back what you put in.

For me, it’s not so much about living on my wits, rather, finding an identifiable edge and leveraging it. For me it is ES (emini S&P futures). There are basically 3 or maybe 4 drives to a low which I can identify using 3.5pt stop. When market conditions change (as they did in February) you need to be alert and STOP.

I only say that because, your consistency in the last 7 years suggests you have kept meticulous records, hence, you could actually stop playing golf (get out of the retired mindset) try something you could be very successful at.


#78

If you are looking for a “boring” income share;by boring I mean one that is predictable as to income & capital value and might be a worthwhile consideration as part of a portfolio.I suggest Starwood Real Estate Finance Ltd (Guernsey based) is worth a look.
It specialises in secured loans mainly to hotel & leisure industry.Its loan book is approx 25% UK & 75% Euro Zone.It largely lends its own money with only about 10% gearing.The small flexible borrowing allows it to keep it owns assets fully deployed.
It pays currently an income per annum of 6.5p per share paid in four divis.Asset value is just over 100p and the shares currently trade @ 103p/104p.The shares have traded in the range 99p to about 110p over the last 5 years(Since float).Present price about right.
Best held in an ISA.I have held them for nearly five years as a small part of a largely equity based portfolio( which holds around 50 different shares) purely for the shares income.


#79

Hi @TX2, yes looks interesting. Never happy putting too much money in these guernsey based operations though. Not like your bank where you could stick a decent wedge in there and get FSCS protection. But still interesting nonetheless. Just need to share it around with other investments as it sounds like you are doing.

Thanks for the input.

Pref


#80

Hi can anyone please tell me what it means when you see “founders” under a posters avatar / nick name ?