A New Year is often a time of reflection on the year that has ended and what the forthcoming year might bring (the fact that we have arbitrarily decided this is in on the 1st January is an interesting point, in the same way that most people say they want to retire at 65 because this was for many years the State Pension age – we anchor to dates/times due to societal influence).
Therefore, what will 2019 actually bring in financial aspects? Clearly, we do not know but the dreaded “B” word will no doubt come up more and more.
For me it is important to separate the issues of long-term global investment performance from the UK economic effects of Brexit. The latter is clearly an issue for many people and businesses in the UK but in my day-to-day work it is the former I am asked about frequently. The most common questions being “What do you think Brexit will do to my portfolio?”.
The answer depends on where you are invested; if you are 100% invested in one UK based export company whose main market is Europe this is very different to having a global portfolio of over 9,000 companies.
If you are invested in the latter then consider this. Each company you own a bit of is run by people trying to make that company profitable and competitive in the area in which it trades by selling its products and services. Some will succeed, others will fail. As we cannot know who will or will not in advance, it is a good idea to buy them all. The aggregate return of these companies over time (decades) is the engine of the portfolio and what we are invested in.
How then does Brexit affect the long-term outlook for these thousands of global companies (most of which are probably not based in the UK)?
In the short term we will likely see more uncertainty but in the long term I expect this to pass as every other “apocalypse du jour” has passed before.
This is why having a plan is so important as I believe successful investing is goal focused and planning driven with unsuccessful investing being market focused and performance driven.