The vote of the UK to leave the European Union sent shockwaves around the world. It was a dramatic event with huge implications politically, socially and economically, and the most significant effect in the short term has been a high degree of uncertainty. In the two years since the referendum vote, there has been a great deal of speculation about what a post-Brexit UK could look like and much of it has tended towards the pessimistic. But as the date of the UK’s EU exit next spring looms large, it could be the case that Brexit offers a positive opportunity for investors. Here’s why.
Disruption and innovation
Brexit has certainly been a disruptive influence across several social spheres. Politicians, economists and others are having to re-evaluate their predictions in a number of different areas as the implications of the referendum are worked through. But rather than seeing this as a negative, the smart investor sees it as a positive. After all, disruption is the defining quality of our age. Technology, in particular, is breaking up old-fashioned methods and outdated traditions right across the global economy.
Disruption leads to and is, in part, driven by innovation, and innovation should attract the smart investor. Brexit will disrupt the UK economy, which will create opportunities for innovative companies and for smart investors who can identify them at an early stage. So, any smart investor looking to seize on the opportunities provided by Brexit will be keeping a close eye on the markets. Forex and CFD trading will undoubtedly be popular options so ask questions like how do I get started in Forex trading and who are the best CFD Brokers?
European recovery
In the immediate aftermath of the Brexit vote, there were dire predictions about the future state of both the UK and the European economies. But while the UK economy has understandably remained volatile, there have been clear signs of a recovery in Europe. This pattern is likely to be replicated when the UK finally leaves the EU in the spring of 2019, with many economists predicting doom and gloom for the EU as a result of the upheaval. But the long-term prospects for the EU economy appear to be strong, so going against the prevailing wisdom could pay dividends for investors.
Global growth
Pro-Brexit politicians have made much of their belief that the UK will be able to make new trade deals with other countries around the world. That has been derided in some quarters, but the fact remains that post-Brexit, there will inevitably be trade agreements between the UK and a number of other new partners, and the deals will have an impact on a wide range of economic sectors, providing opportunities for informed investors to profit.
Small company opportunities
While investing in large companies can provide a secure long-term income, there are opportunities for more dramatic profits if you can spot a small company that is on the threshold of major growth. It has been a consistent factor in the UK financial markets for a number of decades that shares in small companies provide better average returns than large companies, and that trend is likely to be exaggerated immediately post-Brexit as smaller companies are more agile and can more quickly position themselves to exploit the changed economy than larger bodies. Shrewd investors will be looking closely at new start-ups and small companies in the UK across all sectors of industry.
Going against the crowd
It is a fundamental rule of investing that the best returns are to be found by going against the prevailing wisdom, rather than following the herd. Indeed, the principle that underlies much of the capitalist model is founded on the idea of correction, that if trends and markets move too far in one direction, there will be a swing back the other way.
Yet human nature kicks against this logic. How many financial crises and bad investment decisions have resulted from people going with the flow and being afraid to break with conventional wisdom? The prevailing opinion among investors and economists is that Brexit will be bad news. With that mindset, investors are not going to be in the best position to exploit opportunities. By simply adopting a positive post-Brexit approach to your investing, you will be going against the crowd and putting yourself in the best possible position to profit from the changing economy.
Conclusion
Brexit will be a huge upheaval, and uncertainty is never welcomed by financial markets as a whole, particularly those who have large vested interests in the status quo. But for the shrewd investor, upheaval and change means opportunity, and that’s why taking a positive approach to the post-Brexit world could be the smart move in the years to come.