Stock picking in the UK ?>

Stock picking in the UK


Well, we’ve seen this morning something that even markets thought that was impossible, UK citizens have decided to leave the EU. I wrote about it before and I recommended hedging your positions, and I can say it has worked (at least for me). Volatility as been really really high, even higher than I expected to be honest.

Now, what am I going to do? Well, the thing is simple, I will wait until the sell-off stabilizes, and until that happens, I will conduct a ‘stock picking’ strategy in the UK.

Now the question is, what I’ll look for? Simple, great companies that are not dependent (or not much) from the EU market, I mean, companies whose market is only the UK or that exports to outside the EU (to countries that have a trade deal directly with the UK, not with the whole EU).

The idea is that, in situations like this one, the whole market suffers the impact, not taking into account if the company is going to be affected by the decision (well, some companies suffer more than others, that’s true, but for example, let’s imagine a company based in the UK that only sells to the USA, I mean, the company market is just the USA. That company will be only affected by the USA economy and UK’s tax related things and all that).

So, my idea is to take profit from the sell-off picking that kind of companies (if they exist, I still haven’t take a look) because if the U fails to exit in a ‘correct way’ (correct way= exit the EU but preserving free trade deals with the EU or its members). Markets usually are not rational, especially in high volatility situations like this one.

I would recommend to short UK dependent companies or the GBP but I think that with today’s sell-off the margin is not too high and I would recommend sticking into gold or volatility related assets.




PS: if you do the same, just take into account the fair price of the company you’re analyzing, I mean, buying an expensive company just because is a great one, it’s not EU dependent and its price has fallen more than a 10% is not a great deal.


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