Given the way it is disrupting our politics, you would think that Brexit is just about the only thing that matters to the UK. Not so.
In this week’s magazine, Matthew Lynn looks at some of the other (rather more important) things that the brave (or perhaps foolish) person who becomes the next prime minister needs to concentrate on. As far as he is concerned, our trading relationship with Europe comes pretty low down the list.
John Stepek agrees that Brexit doesn’t much matter. Note that for all the sound and fury, the UK is still seeing rather better GDP growth than most of the other EU countries. At the same time, unemployment is at its lowest for 44 years (3.8%) and retail sales are up more than 5% year-on-year. This is a very resilient economy.
The biggest threat from Brexit
However, the shenanigans over how we leave the EU might have one nasty long-term effect on the UK. In making a general election more likely, they also make a Jeremy Corbyn government more likely – and that could have a fairly unpleasant effect on the finances of those who are higher earners, wealth creators or both. The UK economy might be resilient but it’s hard to imagine any modern economy that wouldn’t crumble at least a little in the face of the kind of policies Corbyn’s old-fashioned socialist silliness threatens.
What can you do? John has a good look at the options available in this week’s cover story. We would not, however, recommend abandoning the UK stockmarket as a whole. Far from it. Good value high-quality stocks are hard to find these days, but the UK is jammed with them – Troy’s Hugo Ure suggests a few in this week’s magazine. The pound is also very cheap – discounting pretty much every risk out there. If Brexit goes better from here, and the Corbyn threat retreats, it will be become clear, as Hamish McRae puts it in the Daily Mail, that “on a long view UK assets must be bargain basement”.
If you are a less value-oriented investor you might turn to my interview with Walter Price. Price is a huge believer in the US technology sector. We might carp about the valuations of the likes of Uber, Lyft and Tesla (now increasingly being seen as a heavily-indebted car company with production issues, rather than a super-duper tech firm), but he reckons that if we look among the mid-caps and concentrate on the less whizzy-sounding areas of technology that are gradually transforming corporate behaviour (and costs), as well as our day-to-day lives, there is huge value in the technology sector.
Most investors think this round of the great tech boom is coming to an end. Price thinks it is just beginning – and that we should all be heavily invested for the next 20 years. The growth will, he says, more than justify today’s prices (the average price/earnings ratio in his portfolio is a lot more than 30 times).
Finally, if that’s not punchy enough for you, we look at Facebook’s cryptocurrency launch. Is it time that us old-timers at MoneyWeek gave in and accepted that crypto is the future? For the answer to that (hint: John and I aren’t quite there yet) listen to our latest podcast.