Brexit ad nauseam

Brexit Ad Nauseam

Markets move through cycles over time looking for catalysts to propel them from levels of over valuation to levels of under valuation (and the reverse). In the absence of catalysts markets can scale heights or plumb depths to levels that have been referred to as irrational. Analysts and pundits comment and predict with varying degrees of accuracy along the way.

Brexit by the Numbers

Voters tend to vote according to their own self interest. Approximately 72% of eligible voters felt it was in their best interest to vote in the Brexit referendum. This means that 28% felt that their circumstances would not change regardless of the outcome. .72 X .52 = 37.44% thought that they would be better off if the UK left the EU and .72 X .48 = 34.56% thought that they would be better off if the UK stayed in the EU.

What does it all mean?

Very few are able to prognosticate with any significant degree of accuracy. What we can do though is examine history. Humans have been trading with each other over great distances for 5,000 years or more. Brexit will not change that.

Our Actions

Every aspect of the relationship we have with our clients is confidential. We can say that within the accounts that we manage on a discretionary basis we fortuitously increased our exposure to gold by purchasing a shares of a Canadian gold miner the day before the Brexit vote and subsequently have purchased shares of a Canadian bank and US retailer. 

Larry Schmidt is a Portfolio Manager with CIBC Wood Gundy.

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. ? CIBC World Markets Inc. 2016.

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