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1st July 2016
Thoughts from our Chairman, Simon Boardman-Weston

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At the time of our last newsletter, we all knew that there was to be a referendum on 23 June about the United Kingdom’s membership of the EU. Many people had strong views about what the outcome should be but no one could say with any certainty what would actually happen on the day. Even those who predicted that we would vote to leave would have found it hard to imagine what would happen in the days that followed.

Whilst stock markets and sterling exchange rates fell sharply in the immediate aftermath of the referendum, there was not the severity of market reaction that many commentators thought there would be. Indeed, who would have predicted that the top 100 UK companies would quickly go on to have their best week for eight years? Media headlines looked as if they had been written in advance and in the expectation of the reaction to a leave vote, not based on what actually unfolded. Perhaps they should have read: “Stockmarkets are hit hard by the vote to leave (but less so than had been anticipated) but recover remarkably quickly”. Not very pithy, I agree, but less alarmist than much of what was actually written and said.

By now you may have had your fill of post-referendum analysis, but I mention it here for good reason: investment managers like BRI could not indulge in idle speculation about what might happen but had to make hard decisions about what to do to position portfolios sensibly for whatever outcome emerged. As tempting as it often is to look back with the benefit of hindsight and say what should have been sold or bought, in practice we have to act carefully and thoughtfully and take account of different possible outcomes. Taking a gamble by betting on a particular outcome is unacceptable. Even if one had predicted the referendum result correctly, who could have foreseen the way markets reacted afterwards?

In the months leading up to 23 June, many business leaders made their preferences quite clear and their views were cited by politicians on both sides of the argument. However, while politicians, the media and other pundits continue to talk about what might or should have happened, businesses quickly put that aside and focus on what they need to do to prosper in the environment that emerges. As is always the case, some will fare better than others but all will do their best to succeed, whatever their view prior to the referendum. They will adapt and they will be determined to deliver good long term results for their shareholders.

Just as businesses look to deliver good returns for their shareholders, investment managers and financial planners aim to do the same for their clients. Some firms concentrate on short term performance but at BRI we are more concerned about doing what is in the best long term interests of our clients. Of course, there may be short term gains to be had and we keep a close watch on markets, taking action where we need to; but the medium and long term are more important to most clients. What this means in terms of investment decisions and financial advice will be determined by what unfolds politically, in the economy and in world markets.

The detailed process for the UK to leave the EU and the negotiations that accompany it have not yet been made clear. At the moment we are getting used to the idea of having a new Prime Minister and perhaps too a new Leader of the Opposition. Many other factors must be resolved before we achieve a new status quo and this will take years, not months. Each piece of the jigsaw puzzle must be positioned before we can see the new picture; and as each one is put in place, markets will respond.

Our client relationship managers, financial planners and portfolio managers follow events as they unfold on a daily basis and are available to talk to you about what this means for your own investments and financial plans whenever you want. Please do not hesitate to speak to us and we will be happy to explore the implications for you and explain how we are planning for what may happen and responding when circumstances change.

BRI does not take a political view; nor did we back one side of the Brexit campaign over another. I have to say though that, from a personal perspective, I am optimistic about the future and the opportunities we now have to prosper in a rather different world.