A volatile time but it can bring opportunities

In recent columns, I avoided commenting on the EU referendum as I hadn’t made up my mind which way to vote. Today, it is not credible to write a topical column that does not comment on the consequences of the referendum.

Firstly, a few comments on the conduct over the debate. I think it is widely accepted that the quality of the public debate was poor and became personal. This is sad but ultimately the electorate must take responsibility because we elected the principal protagonists in the debate, our MP’s. If the principal purpose of the debate was to give the electorate the information needed to make an informed decision, then it failed massively. Perhaps we were naive to think that was the purpose.

The information provided was often lost and our elected representatives did themselves no favours in their presentation and their reputation has suffered as a result.

As regards the result, I am angry and disappointed at people who have resorted to insulting and name calling voters on the other side because they have a different opinion. As far as I am concerned we all have an equally valid opinion and we all have an equal right to express it. I have heard certain Remain supporters refer to Leave voters as lunatics, bigots, racist, isolationists and ignorant. Frankly, this is the conduct that we expect from our worst politicians. The Remain argument didn’t win because it was not presented in a way that convinced the majority of voters. It is as simple as that.

Calls for a second referendum, largely by the voters who lost the first referendum, is an insult to the democratic processes we fought two World Wars to protect. Having a second Referendum just sits very uncomfortably with me and I think it is disrespectful. Similarly does the thought that the result, however close, will be ignored by those who think they know better than the people they serve. Without respect for the electorate and their decision, we are heading down a very dangerous path.

However, the important thing now is to concentrate on the future and not to resort to the fear laden sound bites of the past. The next two years will clearly be quite volatile in terms of markets but volatility always creates opportunity. I invested in the stock market at 08.15am on the Friday after the result was declared and have made 10 per cent return in just over a week.

Investment managers often tell you to invest little and often during periods of high volatility, and that opportunities exist to make sensible returns with intelligent and, importantly, broadly based investment strategies.

For example, some UK real estate stocks have fallen almost 20 per cent since the vote, maybe some bargains to be had. Some investment managers have renewed their preference for equity income strategies particularly against the background of falling interest rates. Infrastructure will always be needed and, in times of difficulty, infrastructure spending is often accelerated to provide a timely economic boost. There are many businesses which are largely domestic in nature which should continue to be relatively unaffected by the result. A weakened currency may provide a timely boost for exporters. We should expect consumers to be a bit more circumspect in their capital spending patterns but there is little reason to think that their normal retail patterns will change materially.

When capital expenditure is deferred, generally maintenance expenditure increases to compensate. Opportunities here perhaps.

As regards interest rates, then there is every likelihood that they will fall further to the benefit of any individual who has a base rate related mortgage as well as the vast majority of corporate borrowers who have base rate related borrowings.

UK growth is likely to be affected, but a straw poll of big bank economists suggest that growth rates will moderate over the next twenty-four months or so, but probably not for much longer. Some are forecasting growth rates remaining positive throughout that period and some are suggesting a short period of negative growth, perhaps even a technical recession. Most are expecting this to be short lived, certainly shorter than the impact of 9/11 or the global financial crisis, shocks to our economic system which we have survived without catastrophe.

There is every reason to expect that we will do so again with opportunities to make some money on the way through. Good luck.