Brexit Chaos: How Investors Can Stay Calm

Morningstar Investment Management's Dan Kemp says the link between political events and investment returns is less predictable than we think

Dan Kemp 16 November, 2018 | 3:17PM

Theresa May Prime Minister

People love to talk about Brexit, and investors can be tempted to trade based on expected outcomes. We believe the investment basis for this is weak and don't see a strong connection between political developments and investment fundamentals. Benjamin Graham—the father of value investing—considered investing in something you don't understand and can't analyse to be speculation. We agree. As long-term investors, politics doesn't play much of a role in how we view our portfolios. We want to know the range of possible outcomes and position accordingly, but we must resist speculating.

Writing About Political Events

Much has already been said about the recent Brexit developments — before, during, and after each negotiation point. Even professional investors spilled a lot of ink or pixels exploring the possible outcomes and implications. We don't always write about these events as we don't want investors jumping at shadows. It's not that we ignore politics or don't want to share our thoughts; it's that we believe doing so may send the wrong message to investors.

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About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA

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