The United Kingdom voted to leave the European Union this Thursday. At Valdour we do not talk politics but we talk about financial freedom, and this situation opens a lot of investment opportunities in the long term in stocks, forex and real estate.
Before getting into the Brexit, let’s talk about trading.
First, we need to measure the timeframe in which we are trading.
I position most of my trades long term, so my average hold duration for stocks and ETFs is 7 months. This is the only way I know to make money in the financial markets. With the current levels of volatility, and the increasing use of computers that trade by themselves in a high frequency manner, it is almost impossible to have a true edge day-trading.
- Short term (1 day-1 month): More like gambling. Playing Russian roulette would be more profitable.
- Medium term (1-6 months): Good edge.
- Long term (6 months +): Very good edge, this is the game we want to play.
Remember: The whole point is looking for a way to make money consistently over the long term. The components of successful trading are:
- Trade Management 20%. signals on what and when to buy/sell. This is made by a quantitative trading system based on technical analysis with measurable indicators. Believe it or not, the easiest part.
- Risk Management 30% Plan the trade, trade the plan. Manage your exposure to the market. Set up your stop losses and stop profit.
- Trading Psychology 50% Control of emotions, discipline. The biggest obstacle in trading is our own fear, greed, ego and opinions.
That being said, we should approach this situation as an opportunity to invest with discount prices.
BREXIT: WHAT DID I BUY TODAY?
Disclosure: The overview below is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any of the securities listed.
1. DAMAGED SECTORS: FINANCIALS
This morning I started with sectors that plunged the most, like financials. The $EUFN ETF will give you exposure to european banks in USD. It is an ETF (low commission, high liquidity), it is in USD (much preferably than EUR or GBP) and it has exposure to the most damaged sector, a winner over the long term.
2. INCREASE GOLD / BITCOIN EXPOSURE
My overall exposure was in stocks and ETF in USD,, I closed a few positions last week and had some cash to invest. I bought some Gold (ETF) and increased by exposure in Bitcoin to protect the value of my liquidity.
*Edit October, 2017: Holy s*** BITCOIN!
3. REAL ESTATE
I am not a rich Chinese citizen who flew from Beijing this morning to buy flats in London taking advantage of the damaged GBP, but we have ETFs for that, this ETF with input in GBP is the one you need for exposure to the Real Estate in the UK, also a damaged sector.
4. ALL-TIME FAVORITES AT A DISCOUNT
I bought ITX (Inditex, EUR) and SAN (Santander, EUR).
The first one is a company that I love and is a good value stock over the long term, a 7% discount at the opening was much better than Zara sales.
The second one is the biggest bank in Europe, biggest bank in the UK, biggest bank in Spain, a big player that a 3€/share is a steal.
*Edit: We closed $EUFN, $SAN and $ITX with a 19.89%, 17.58% and 13.32% respectively.
All of the trades that I made today are long term plays engaged by a macroeconomic momentum.
I used technical indicators like the RSI and major support from previous months to enter (trade management), and set up my automatic stop losses at levels in which my overall portfolio will not lose more than 2% at any given moment (risk management) and I will respect the levels and will not trade with ego or opinions (trading psychology).
Please feel free to email me at firstname.lastname@example.org with any question or feedback, I answer all the emails.