All in all it might be fine for you guys in the US to dismiss but where this is taking place it is affecting a lot of people in real ways.
Thanks Ant, for a very thoughtful post, and fascinating insight from a British point of view, that the rest of us don’t get in terms of how it affects people on the ground. I guess what I was addressing was more along the lines of what Denny said:
I have no idea what the economic consequences will be but the market and my stocks think it’s a non-event.
In my Brief review two trading days ago, I wrote:
I’m up 5.6% from the Friday before Brexit…
I’m up 12.7% from the Brexit bottom, two days after Brexit. And that was only eight trading days ago. Up 12.7%!
Now, just two days later, and it’s just 10 trading days from the Monday-after-Brexit bottom, I can say:
I’m up 9.1% from the Friday before Brexit.
I’m up 16.6% from the Brexit bottom, two days after Brexit. And that was only two weeks ago. Up 16.6%!
I think this addresses three issues.
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As Denny said: the market and my stocks think it’s a non-event, and all the people looking at arcane charts and telling us the world was going to come to an end were wrong. Sure there may be a recession somewhere ahead (there always is), but anyone who went all into cash and gold was taken in.
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I said in an earlier post that the market was like a compressed spring, with compressed PE’s, as revenues and earnings for our companies had been going up for the past two years, but stock prices were going down or staying stationary. Some people mocked and said according to their charts the S&P was overvalued. I beg to suggest that my portfolio up 16.6% in two weeks looks a lot like a compressed spring expanding. It was as if the market was looking for an excuse to take off, and the uncertainty about Brexit (yes or no) being over, it took off.
But that doesn’t mean stocks have gotten overvalued now. LGIH and SKX, my largest two positions, still have PE’s of 12+ and 16+. They both had earnings up over 70% last quarter.
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Our little stocks, although they go down faster than the market, sure rise faster when the market is rising. And the market rises more than it falls.
Yes a recession will always come. Yes the market may be down today (even probably will after rising as it did). But enjoy the ride.
Best to you all
Saul
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