Savvy investors eliminate emotions and invest for fundamentals
I’ve been getting more frustrated by the ‘despite Brexit’ lobbyists. They are so pessimistic of the UK’s future. ‘Despite Brexit’ is the term that market commentators and economic ‘experts’ put on any item of good news released in the UK. ‘Because of Brexit’ is slapped on any bad news.
Read the newspapers, listen to LBC, or watch the evening news on the BBC, and you’d be forgiven for thinking that the whole world has lost confidence in the UK. This couldn’t be further from the truth. Inward investment in the UK is booming. About the only ones who aren’t confident of Britain’s future are the Brits!
Don’t believe me? The good news has been flooding in all year.
Buffett seeks UK investment despite Brexit
5th May 2019
Warren Buffett, probably the best-known investor in the world, is targeting the UK for investment. And when he invests, he tends to invest big. He invests for value and the long term. One of his investment mantras is ‘Buy and hold. Never sell.’
How big is Buffett? His investment vehicle, Berkshire Hathaway, is valued at around £390 billion. He may “have a feeling” that the UK vote to leave the EU was a mistake, but he has said, “It doesn’t destroy my appetite in the least for making a very large acquisition in the UK.” (Read more at BBC)
Indian investment in the UK rising despite Brexit
25th April 2019
The annual ‘India meets Britain Tracker’ has found that the number of Indian companies doing business in the UK has increased by more than 5% between 2018 and 2019.
842 Indian companies are now operating in Britain, with a combined turnover of £48 billion. The corporation tax that they paid last year almost doubled, to £684 million. The UK Minister for Investment Graham Stuart expects another leap next year, as a greater inward investment is spurred by a further reduction in corporation tax rates. (Read more at The Economic Times)
The UK tops the global ranking as the best investment destination despite Brexit uncertainty
19th April 2019
Despite ‘continued uncertainty stemming from its intention to leave the European Union’, the UK snatched the top spot in the annual EY survey. This is the first time it has been placed top in the 10-year history of the survey. The UK accounted for 10% of global M&A activity. That’s huge. (Read more at City A.M.)
Norway wealth fund shrugs off Brexit plans rise in UK investments
27th February 2019
You think Buffett’s fund is big? Then look at Norway’s sovereign wealth fund. It is the world’s largest, with assets valued at more than £750 billion. And it is planning to increase its investments in the UK, which currently include being a co-owner of Regent Street, and large shareholdings in companies that include HSBC and BP. And it says it will invest more, even if the UK leaves the EU with ‘no deal’. It has 250 employees in London and has said that Brexit will not affect this. (Read more at Reuters)
Technology investment cash continues to flood into the UK despite Brexit
5th February 2019
UK’s tech sector attracted more venture capital investment than any other European hub in 2018. Way more. This has got to hurt London Mayor Sadiq Khan. He’s been banging on about how damaging Brexit is to London since the referendum in 2016.
It’s especially humiliating for Mayor Khan because the report uses data published by London & Partners (his promotional agency) and PitchBook. According to their figures, Britain’s tech firms raised almost £2.5 billion in 2018. £1.8 billion was raised by companies in the capital.
In 2018, London’s tech companies raised twice that of Berlin’s, almost 2.5 times that of Paris’s, and eight times that of Stockholm’s – the three European cities that raised closest to London’s tech sector. (Read more at Data Economy)
European investment into UK tech reaches an all-time high
9th May 2019
Here’s one to put in your scrapbook. European funds are flooding into the UK, especially in the UK’s tech ecosystem. In this sector, European funds invested more than they have ever done in 2018 – a whopping £1.89 billion. Up from £1.66 billion in 2017.
The Penningtons Manches ‘Golden Triangle: Golden Opportunities’ report found that investment from EU countries is particularly strong. Overall, deals into the golden triangle of London, Oxford and Cambridge made up 70% of all overseas-backed deals. (Read more at UKTech News)
London overtakes Hong Kong in Schroders Global Cities Investment Index
14th May 2019
The second-best city for investment in the world. The highest-ranked city in Europe, with Paris its closest competitor at number 17. Munich is in 28th spot. Only Los Angeles ranks higher. This is London, despite ‘the economic and political uncertainty in the UK, especially surrounding Brexit.’ (Read more at IR Magazine)
The UK economy is strong, despite Brexit
There is something compelling about these news stories. They all have something in common: foreign investment. Why are foreigners so confident in the UK, and Brits so pessimistic? Could it be because Brits are so close to the situation that they can’t see the wood for the trees? Could it be that foreign investors are more inclined to look at the evidence than react to emotive headlines?
Look at what is really happening in the UK since the EU referendum in 2016:
- The UK economy is around 4.8% larger
- Employment is at record highs
- The unemployment rate is at a 45-year low
- The number of job vacancies is at a record high
- Inflation is below the 2% target
- Wages are rising at 3.4%
I could go on.
The IMF now forecasts that the UK economy will grow almost three times faster than Germany, and faster than France and Italy. Not one of the doom-and-gloom forecasts made before the referendum has come true. My message is this:
Forget what the economic experts say. Ignore the newspaper headlines. Take less notice of the CBI, the Treasury, and others. Focus on what is really happening. Businesses in the UK have created more than 1.1 million new jobs since June 2016. Despite Brexit. Business investment in the UK increased by 0.5% in the first quarter of 2019 compared to the fourth quarter in 2018. Despite Brexit.
Businesses don’t hire new people and invest in new machinery if they think the future is black. The truth is that the UK economy is robust and resilient. It is fundamentally strong.
Brexit uncertainty has created an opportunity that the world’s biggest investors, largest sovereign funds, most dynamic venture funds, and fastest-growing businesses from around the globe are exploiting. It’s a tsunami of investment.
For me, the most interesting of all the above headlines to me is the declaration from Warren Buffett.
The 88-year-old veteran investor has said he’s actively looking to make a large investment into both the UK and the European economies, despite all the uncertainty currently surrounding the future relationship. Over the years, Buffett has built a reputation for being an extremely well-measured investor, not least because of the vast amount of information that he gathers on a company/sector before investing in it.
His announcement at this year’s Berkshire Hathaway Annual Shareholders event should be a positive sign for investor confidence, especially amongst the negative headlines we have grown used to seeing day in, day out.
My advice is to act like Warren Buffett’s example. Take the emotions out of your decision-making and invest with the fundamentals. To learn how to do this, contact the team at Gladfish today.