Friday, June 24, 2016

So This is Brexit...

So along with many of you, I heard the name "Brexit" many times over the last month or so. For the longest time, though I let it go in one ear and out the other. I didn't even know what Brexit was. Then a few weeks ago I decided to do what we all do now, when we want to learn more about a subject: Google It. In my search, I came upon the explanation that simply, it was the upcoming vote on whether the UK will leave the European Union.

Personally, I'd rather the news outlets just say that instead of coming up with some cute word combination/buzzword, but whatever, we're already here. So after learning about it, and enduring the onslaught of speculation of all the news outlets, it seemed to be something that would be a tremendous waste of energy to continue worrying about, going through all the scenarios with the vote not even happening yet. By the way, I am not a big fan of extensive worrying about things you cannot control. So after a few segments on Brexit before the vote, I already had my fill of journalistic speculation. I'm also not a big fan of speculation, as I have come to realize that when the experts speculate, it turns out that most times they know just about as much as I do, very little.

So fast forward to this morning. I went to bed, believing the reports that the UK would probably remain in the EU. I woke up, checking my phone only to find out that David Cameron was resigning, and that the UK was indeed leaving the union. Next I checked my Seeking Alpha app, to see what was happening pre-market. Knowing the result of the vote, I wasn't really surprised that the pre-market prices were on the downside. However, the fact that they were down by so much was a bit of a surprise. So I figured, today must be a great day to buy! Let me get my watchlist ready!

A couple problems with this exuberance:

  • Cash on Hand - My monthly bills are rather imbalanced. The majority of what needs to be paid comes in the second half of the month. So the majority of my savings to go into the market comes in the first half of the month. Also, I had not been stockpiling cash for this event as others have, so there isn't a whole lot to go shopping with. Lesson learned.

  • My Watchlist Bargains Were Very Few - I keep a watchlist of stocks I want to buy, but I also pay attention to valuations, and I have computed target prices where I would pull the trigger and buy if the opportunities presented themselves. Shockingly, very few came within my target price. I counted 2 companies: Polaris (PII) and Cummins (CMI). That's 2 companies out of the 60 plus companies on my watch list. Cummins ranks higher on my list, but I believe it is likely to go lower, so I am waiting. Polaris, I really have not done a lot of research on, and was not ready to go whole hog on it right now. Target (TGT) did get close, but not quite at the "target" price I wanted. Interestingly I read something today where even given the nosedive of many stocks today, when compared to where they were at the beginning of the week, it was not that much of a dropoff. It is more like we are just reversing the exuberance of the last few days when most thought Brexit would not succeed.


I think the largest opportunities today would be had with bank stocks. This is great, but I am admittedly skiddish to pull the trigger on any big bank stocks, mainly due to the fact that at any financial crisis, they tend to be front and center, and with the consensus being that we are nearing the end of a bull market, I don't want to test that theory. If you held a gun to my head, and told me that I must invest in a bank stock to save my life, I'd probably go with Wells Fargo (WFC). My portfolio at the moment does lack some financial representation, but I would prefer to satisfy that with something in the insurance space, rather than banking. Aflac (AFL), I need you to come down a bit more for me! 

So although I was all excited to jump in today on the news, when I examined it a little more carefully, it was not quite the right time for me to jump in, given the cash available, and the valuations of the stocks on my watch list. I could have broken from my plan, and bought something by shifting some money around (thereby lowering my emergency fund amount) or reaching for stocks at still not-so-good valuations, but I decided to hold off, and follow my plan. I hear bad things happen when go off-course from your plan in this endeavor, as with many other things. So I shall wait, gather more cash, and wait for more opportunities down the line. 

Did any of you go shopping today, because of the effects of Brexit? Let me know what you bought in the comments!

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