Severe swell in the English Channel
Swell
Swell is an old disturbance of the sea; in a manner of speaking an old, outbound sea, whose driving force (the wind) no longer has an effect. Swell waves have a long wavelength. Especially approaching storms give themselves away long in advance by a swell from one direction.
No one anticipated Jeremy Corbyn, but it looks like Theresa May’s call to the polling stations holds the potential to go awry just like Cameron’s referendum on Brexit. We won’t know before Friday morning whether Labour wins, loses by a narrow margin, or whether it will be a “Hung Parliament.“ But it’s a tight race, and Theresa‘s victory parade from Nelson’s Column to Downing Street has the potential to be canceled.
Theresa May made the mistake to link the referendum to the suggestion that older citizens pay more for healthcare. Considering the current demographic situation she shot herself in the foot. Bloomberg is calling May in an article today “brittle.“ And not without adding that that’s always the case when she’s under pressure.
Whether she is the right leader for the upcoming marathon negotiations in Brussels, which George Soros anticipates to take at least five years, is questionable. In light of the falling real estate prices in London resulting from the looming migration of numerous banking jobs this is certainly not a cocktail that the English–experienced negotiators–enjoy. What is further interesting is that the Brexit party UKIP has the potential to sink without a trace as quickly as it appeared. And American stock TV channels point out that the volatilities of currencies are presently higher than those of stocks–unusual.
First voices are saying that once Jeremy Corbyn locks his bicycle to the fence at Downing Street 10, it won’t be long until the second real Brexit referendum. Consequently, it’s more uncertain than ever whether Brexit will really happen. That would certainly not be bad for Europe.
But it also must be taken into consideration that Corbyn is advocating massive tax increases for companies with his program. Not a good ingredient for rising stock prices on the island.
Of course you may say now:
“What do I care, prices have increased after every event from the political arena in the past, staying with it is all that matters.“
We don’t share this view and prefer to stay mobile. That has the character of gymnastics, and we like it better than lounging in an armchair. Active is better than passive. An interesting side effect is that through exercises of this kind we have come to know quite well how liquid our investments really are. An important information when the portfolio is supposed to be made weatherproof.
The expansion of the cash ratio to over 10 percent occurs through the reduction of well-performing cyclical stocks from the industries transportation, semiconductors, and materials, which we have already and regardlessly been considering for weeks. We are working on additional safeguarding through DAX futures.
As part of our strategy, of course, we are already looking for opportunities that may arise when the swell in the English Channel hits the European shore without causing damage. Stock pricing has helped us achieve a good performance after the first election in France. And at that time, too, we were positioned risk-aversely beforehand. Of course we are making every effort to replicate this success.
Interesting possibilities to get in are becoming apparent in the area of late-cycle industries including consumption, travel, and similar investment topics, which we believe hold a higher potential for development due to the improved economic situation of European consumers. In addition, we see good chances for the topic internet video which is casting its shadows before in the M&A business as well (e.g., United Internet is acquiring Drillisch or Kinnevik [ex-Rocket internet investor] enters Com Hem [Swedish cable company]).