The approach of all parties on the UK side of the Brexit discussions –  Mrs May, the Remainers and the Leavers – all expect us to accept at face value that their incomplete reasoning and arguments will turn out alright for the UK population in the future.

 
I spent the bulk of my working life negotiating sales, labour, and financial agreements for my own businesses and I have found it incredible to observe the amateur performance of our representatives, of whichever persuasion.

The golden rule is, that you are not finished and never leave the negotiating table without a firm conclusion to the deal.

You are dreaming if you believe the handcuffs will stretch in the future!

‘you are not finished and never leave the negotiating table without a firm conclusion to the deal’

Recently, as a gold fund holder, I have been pleasantly encouraged by the increase in the dollar price of gold bullion.

This is not a straight relationship, as the funds are invested in companies that do the mining and rely on their accumulated performances as well as on the price of bullion.

The funds I hold are sterling denominated and therefore are also subjected to the relationship between the dollar and sterling over this period. As an example…

 

  • 100 shares at $10 per share = $1000.  With an exchange rate of 1.20 $/£ = £833.33
  • If the value of the shares increases by 10% they would then have a value of $1100.
  • If during this same period sterling increased in its relationship with the dollar by 10% to 1.32 $/£
  • Then your $1100 would be worth £833.33 and you are back where you started.

 

This is not a complaint, just an observation; as a sterling investor the above argument applies to all the funds you hold which are denominated in dollars, or have assets or earnings in any foreign currency.

That is why the conclusion to the Brexit negotiations are important to our portfolios.

‘as an investor in unit trusts and OEICs the expense of an exit is low and will be far less than remaining with a failure’

A so called “hard exit” is likely to result in the fall in value of sterling and therefore an increase in the value of dollar denominated funds and a “soft exit” would produce the opposite.

Nearer to the moment of “Brexit truth” we should all be sharpening our pencils and poised to protect our finances.
These will be nail biting times, as for most people selling a fund that you believed in when you made the purchase can be emotionally difficult.

Hopefully you made the purchase based on facts, current conditions, and actual performance.

Selling can be more difficult, as it involves admitting you perhaps made a poor decision, and it is then harder to make an objective move.

This we should battle to overcome; as an investor in unit trusts and OEICs the expense of an exit is low and will be far less than remaining with a failure.

 

Best wishes and good investing,

 

Douglas.

 

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