Strategies to protect yourself from Sterling-geddon?

Thanks for spotting


This is my source: 
www.bondora.com/blog/performance-recovery-process-bondora-october-2016/

KEY TAKEAWAYS

After the significant increase of the recovery rates in September, Estonia’s principal recovery declined slightly from 71% to 67% in Q2 of 2016.

Slovakia’s principal recovery improved drastically from only 23% up to 548% in second quarter of 2016 due to increased recoveries in June.

Finland’s principal recovery for Q2 was down slightly from 102% to 83% in Q2.

Spain saw an improvement in recoveries from 79% up to 133% for the month, averaging around 80% across two quarters of 2016.

Understood, I will weave this in the review.

invest I assume you are based in Euroland and hence the devaluation of sterling denominated assets hurts. If this is the case then whilst I appreciate the hurt, investing in sterling assets from Euroland over recent years implies a lack of appreciation that sterling has been horrendously overvalued for many years, and a sharp correction was inevitable at some point. Even a simplistic study of trade defecits vs currency valuations would give you the clue that something was seriously amiss with sterling.

Manufacturing industries (the sector in which I have spent my career)  have struggled in the UK primarily due to the strength of sterling - it weakens both export opprtunities (prices are uncompetitive), and domestic consumption (why bother to make xyz in the UK when you can buy it in from abroad as cost effectively).

Sterling is likely to be volatile for the next 4 years (say) until the trade deals post actually leaving the EU are finalised, and the true affect on the financial services sector is understood.  As a country we import far too much of everything, but sometimes are unable due to EU quotas on specific items to import the most cost effective supply.  So whilst (for example) Irish beef may become uncompetitively priced in UK shops, we are unable (for now) to import (for example) an equivalent quantity of Argentinian beef at a more realistic price.

It is therefore going to take some time after brexit for a new stable level for the balance of trade defecit to become apparent, and until then sterling is likely to react to every bit of news and rumour in the brexit negotiations, good and bad.  My personal view is the city types don't have a good understanding of manufacturing / trade of goods (as opposed to trade of services) and are going to overshoot with their pessimism for the UK economy post brexit as the inevitable loss of some trade of services is confirmed.  That, plus the fact that too many people still do not believe brexit is actually going to happen in any meaningful way, means that unlike hazellend I believe sterling will fall quite a bit further over the next 18 months, and then recover to somewhere around current levels within a couple of years thereafter.


The root cause of sterlings overvaluation for much of the last 20 to 30 years has come about due to the overwhelming success of the financial services deregulation and technology changes that occured in the mid/late 1980's. It is rather ironic that its been success of the City of London that has prevented sterling from finding a level that better reflects the needs of those engaged in manufacturing / trade of goods.  The great hope is out of the inevitible turmoil of the next few years will come a more balanced UK economy.

Back in June when the banks were predicting $1.20-$1.25 GBP/USD by the end of the year I didn't believe it... but looks like they were right!

For Euro based investors, property crowdfunding could be interesting. You can now buy more of the same asset for the same price, and as inflation begins to rise perhaps their prices will too.

Woo. £6m into a plant that employs 20 people currently.

Meanwhile, over at Nissan Sunderland...

2.6m isn't to be sniffed at - 8% of total employment. 70% of R&D expenditure and 44% of exports.
researchbriefings.files.parliament.uk/documents/SN01942/SN01942.pdf