r00lish67
Member of DD Central
Posts: 2,691
Likes: 4,048
|
Post by r00lish67 on Jul 30, 2019 7:56:48 GMT
I'm just wondering how others are feeling about the fall and fall of Sterling currently?
In my case, I feel a little conflicted. I have almost exactly half of my total net wealth in global equities (mostly via my DC pension). These, of course, rise and rise almost exactly inversely to Sterling's fall. But,frankly, in my case they bl**dy need to, because I spend a huge portion of the year abroad.
So my current feelings:
1) I'm in a weird position where I nominally become 'richer' every day,which I know is largely illusory (although the vast majority of UK citizens won't have this benefit). Given the full effects of inflation in Sterling won't be passed on, I suppose this would make the UK a better home for me than it used to be. Still, don't fancy it currently.
2) Being abroad, I feel poorer every day, despite being somewhat cushioned in theory.
3) Probably most importantly, this situation really stymies where I want to be with my portfolio. I want to be 75% in equities as I have the investment time horizon to support that. I could probably stomach investing more in VWRL (or whatever) at a CAPE of 25 knowing that it'd work out in the long run....if it weren't for the fact that i'd also be paying a 15-20% tax on being unfortunate enough to be buying in Sterling currently.
How's it affecting others? Any small business owners feeling the benefit of the weaker pound? Expats suffering?
(any feedback welcome on my feverish thoughts about my own finances btw)
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Jul 30, 2019 8:03:30 GMT
It’s kind of fun seeing my paper net worth in sterling melt up. I don’t keep much in cash.
|
|
benaj
Member of DD Central
Posts: 4,829
Likes: 1,586
|
Post by benaj on Jul 30, 2019 8:31:26 GMT
It's could be an opportunity to acquire asset in Sterling when someone is willing to exchange foreign currency. For travelling aboard, may be it's better to become a currency tourist. www.bbc.co.uk/news/business-49043992
|
|
KoR_Wraith
Member of DD Central
Posts: 293
Likes: 297
|
Post by KoR_Wraith on Jul 30, 2019 8:36:12 GMT
As someone without significant non-GBP assets in the process of building up their pension I can't say I'm particularly enjoying the current stuation.
Buying into world index trackers means that I'm essentially overpaying whilst GBP remains weak. As GBP (I hope) gradually returns to a more 'normal' exchange rate in future, my pension will essentially erode in value. So that's not great.
The alternative is to redirect my pension contributions into a UK tracker, but many UK-listed companies have significant non-domestic income so are already priced more expensively to account for the weak pound.
The other alternative is to redirect my pension contributions into a focused UK-domestic tracker, but if a no-deal Brexit somehow goes ahead then that'll likely be disasterous. Having said that, the Conservative Party will have to have truly lost the plot to willinging go no-deal in any circumstance, so a UK-domestic tracker may actually be the smartest move. On the other hand, they happily made Boris PM...
Hmmz!
|
|
|
Post by Deleted on Jul 30, 2019 8:42:36 GMT
Sterling has continued its retreat started in 1945. This is and has been government policy throughout this period. Clearly, with the Brexit car crash, it has merely accelerated the process. Last year the Economist had an article on the very subject where it suggested that all the major economies would start a race to the bottom. We have already seen the Chinese currency continue its trend down, while QE for the Euro is driving it the same way and Trump's amazing pressure on the FD to reduce interest rates on an overheating economy has to be seen to be believed.
My concern is that 1) I want to stay in the dollar, 2) if I do I will generate larger and larger capital gains, 3) which will be open to massive tax charges under a Macdonald (the only leader the Labour party has) government. So I will need to generate the capital gains after Johnson falls from power and before Macdonald gets in. So I'm planning for a big sell-off around the 5th of November.
Wednesday night will see the next steps in this farce.
|
|
agent69
Member of DD Central
Posts: 5,547
Likes: 4,166
|
Post by agent69 on Jul 30, 2019 8:43:30 GMT
In my case, I feel a little conflicted. I know how you feel. I live in UK, but spend a lot of time and money on holidays.
It is frustrating to see the value of the pound plumet, especially when people tell you how many Baht they use to get to the pound 5 or 6 years ago. However, I have significant investments in socks and shares, which more than offset the depreciation of the £.
Would be nice to have it both ways, but there aren't a lot of currencies where the £ has strengthened over the last 5 - 10 years
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Jul 30, 2019 8:43:33 GMT
As someone without significant non-GBP assets in the process of building up their pension I can't say I'm particularly enjoying the current stuation. Buying into world index trackers means that I'm essentially overpaying whilst GBP remains weak. As GBP (I hope) gradually returns to a more 'normal' exchange rate in future, my pension will essentially erode in value. So that's not great. The alternative is to redirect my pension contributions into a UK tracker, but many UK-listed companies have significant non-domestic income so are already priced more expensively to account for the weak pound. The other alternative is to redirect my pension contributions into a focused UK-domestic tracker, but if a no-deal Brexit somehow goes ahead then that'll likely be disasterous. Having said that, the Conservative Party will have to have truly lost the plot to willinging go no-deal in any circumstance, so a UK-domestic tracker may actually be the smartest move. On the other hand, they happily made Boris PM... Hmmz! If you are accumulating shares then make a plan and stick to it no matter what the market conditions are. In the long term it will all balance out.
|
|
SteveT
Member of DD Central
Posts: 6,871
Likes: 7,915
|
Post by SteveT on Jul 30, 2019 8:44:45 GMT
Provided your expenditure (and therefore investment) horizon is measured in decades, not a year or two, then I’d treat short-term currency movements as pretty much irrelevant. I firmly predict that, over the next 40 years (my personal planning horizon) Sterling will both go up and go down, many times over.
Of course, if you make your money from FX or face a major cross-border transaction in the coming months, it’s more of a headache.
|
|
|
Post by Deleted on Jul 30, 2019 8:46:35 GMT
I too have major investments in socks, but my wife is getting bored of hanging so many on the line especially these new-fangled ones, made of bamboo, that takes forever to dry.
|
|
SteveT
Member of DD Central
Posts: 6,871
Likes: 7,915
|
Sterling
Jul 30, 2019 8:54:00 GMT
via mobile
Post by SteveT on Jul 30, 2019 8:54:00 GMT
I too have major investments in socks, but my wife is getting bored of hanging so many on the line especially these new-fangled ones, made of bamboo, that takes forever to dry. They’re weirdly slippery too, and lose their elasticity within minutes (until re-washed). A triumph of style over substance. Best left for the pandas.
|
|
|
Post by dan1 on Jul 30, 2019 8:55:24 GMT
I'm a little more ambivalent regarding the effects of brexit on the UK economy and exchange rate. It's clear that the country is divided and I really can't see how that's going to change for a generation. Why is that important, well it implies continued political battles regardless of what happens over the coming year, and unlike the previous 20-30 years of inner turmoil in the Tory party it's now at the forefront of policy. That in turn will reduce investment and businesses will continue to exercise caution to the detriment of GDP. I guess what I'm saying is that IMO permanent damage has been done regardless of the eventual resolution (no-deal, deal, revoke A50, whatever), and the politicians are left to fight over which they believe has done the least damage until the call for a reversal deafens them (rejoin EU if we leave, or leave if we remain). It's a mess and it's not just a blip, instability is here to stay.
Perhaps $1.25/EUR1.10 is the new "normal".
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Sterling
Jul 30, 2019 8:58:28 GMT
via mobile
Post by hazellend on Jul 30, 2019 8:58:28 GMT
I'm a little more ambivalent regarding the effects of brexit on the UK economy and exchange rate. It's clear that the country is divided and I really can't see how that's going to change for a generation. Why is that important, well it implies continued political battles regardless of what happens over the coming year, and unlike the previous 20-30 years of inner turmoil in the Tory party it's now at the forefront of policy. That in turn will reduce investment and businesses will continue to exercise caution to the detriment of GDP. I guess what I'm saying is that IMO permanent damage has been done regardless of the eventual resolution (no-deal, deal, revoke A50, whatever), and the politicians are left to fight over which they believe has done the least damage until the call for a reversal deafens them (rejoin EU if we leave, or leave if we remain). It's a mess and it's not just a blip, instability is here to stay. Perhaps $1.25/EUR1.10 is the new "normal". Could be good, could be bad. Maybe will end up rejoining?
|
|
|
Post by dan1 on Jul 30, 2019 9:00:44 GMT
I'm a little more ambivalent regarding the effects of brexit on the UK economy and exchange rate. It's clear that the country is divided and I really can't see how that's going to change for a generation. Why is that important, well it implies continued political battles regardless of what happens over the coming year, and unlike the previous 20-30 years of inner turmoil in the Tory party it's now at the forefront of policy. That in turn will reduce investment and businesses will continue to exercise caution to the detriment of GDP. I guess what I'm saying is that IMO permanent damage has been done regardless of the eventual resolution (no-deal, deal, revoke A50, whatever), and the politicians are left to fight over which they believe has done the least damage until the call for a reversal deafens them (rejoin EU if we leave, or leave if we remain). It's a mess and it's not just a blip, instability is here to stay. Perhaps $1.25/EUR1.10 is the new "normal". Could be good, could be bad. Maybe will end up rejoining? Agreed. But, then quite rightly the calls will grow to demand we leave as voted for in 2016. My point is we're stuck in this for a generation at least!
|
|
IFISAcava
Member of DD Central
Posts: 3,661
Likes: 2,984
|
Post by IFISAcava on Jul 30, 2019 9:11:57 GMT
It's just another self inflicted wound in the pursuit of a Brexit fantasy.
I've exchanged as much cash as I can into various currencies, I have invested as much as I can in overseas stock markets, but I earn in Sterling, and my currency has now been irreversibly devalued in terms of buying power. For what? Exactly what gains do I now have from this predictable and much predicted slide? What benefits will Brexit bring me? What do I get in exchange for a 25% reduction in my currency and a loss of my freedom to work, live and travel in my continent?
I've had enough of the idiot politicians who got us here, and who have played Eton games with people's lives and livelihoods.
|
|
IFISAcava
Member of DD Central
Posts: 3,661
Likes: 2,984
|
Sterling
Jul 30, 2019 9:15:18 GMT
via mobile
Post by IFISAcava on Jul 30, 2019 9:15:18 GMT
I'm a little more ambivalent regarding the effects of brexit on the UK economy and exchange rate. It's clear that the country is divided and I really can't see how that's going to change for a generation. Why is that important, well it implies continued political battles regardless of what happens over the coming year, and unlike the previous 20-30 years of inner turmoil in the Tory party it's now at the forefront of policy. That in turn will reduce investment and businesses will continue to exercise caution to the detriment of GDP. I guess what I'm saying is that IMO permanent damage has been done regardless of the eventual resolution (no-deal, deal, revoke A50, whatever), and the politicians are left to fight over which they believe has done the least damage until the call for a reversal deafens them (rejoin EU if we leave, or leave if we remain). It's a mess and it's not just a blip, instability is here to stay. Perhaps $1.25/EUR1.10 is the new "normal". That's optimistic. If the headbanging no dealers get their way, we will be lucky to stay at parity with the Euro and the Dollar.
|
|