Respected fund manager Neil Woodford thinks Brexit is a bit of a sideshow for Britain, arguing that global events will shape the country’s medium- to-longer term prospects.

I think Neil Woodford is one of the main voices of reason regarding Britain’s relationship with the EU, and he influenced my decision on which way to vote in the referendum when he commissioned and published a study suggesting the economic consequences of Brexit would be neutral.

Viewed in that way, market madness around the world now looks like more of an opportunity than a threat and as things settle down I reckon the FTSE 100 will surge to 7,000 and beyond, perhaps by Christmas.

Strong defensives

One prominent effect of Britain’s vote to leave the EU is the way the pound crashed when measured against other currencies such as the US dollar and the euro. That pushed share prices up for firms trading internationally because foreign earnings are worth more when converted back to pounds. Many of the companies populating the FTSE 100, for example, report their revenues and earnings in sterling, so they’ve benefited from this perhaps-one-off currency conversion boost.

However, I think there’s more to recent share price rises than mere currency advantage. We seem to be witnessing a flight to quality. many of the firms shooting up on the London stock market now are internationally-facing, true, but they also tend to operate in defensive sectors such as consumer goods, pharmaceuticals and utilities. In times of economic uncertainty, such sectors look like safer places and I reckon share prices are likely to continue their move in those areas for a while yet, driving the FTSE 100 upwards.

Resurgent cyclicals

Meanwhile, it will probably dawn on investors that the fallen UK-facing cyclical sectors are looking oversold if Neil Woodford’s theory about Sideshow Brexit proves correct, as I believe it will. The Brexit process seems likely to grind on for years and, as it does so, uncertainty will diminish. After all, Britain’s trading terms with Europe will remain the same as they are now until the two-year renegotiation process is complete — and the government has yet to trigger Article 50 of the European Union’s Treaty of Lisbon to get the countdown started. Investors will likely re-buy UK-facing cyclicals driving them back up for at least part of the ground lost in the recent sell-off.

Good liquidity

The combined effect of rising defensives and resurgent cyclicals should power the FTSE 100 to 7,000 and beyond as long as nothing detrimental happens in wider world events and macroeconomics.

One reason I’m confident is the situation with regard to investor liquidity. During the global financial crisis of 2008/09, the flow of money in the economy seized up. That’s why shares crashed so far — nobody could put their hands on any money to invest. Today, the situation is different. Companies, investment institutions, rich private investors, and banks are all awash with capital free to invest.

Liquidity is high and I think investors will likely snap up cheap-looking assets such as shares, property, bonds and commodities, thus snuffing out any momentum that might gather on the downside. To me, this is a market you don’t want to be sitting out of.

How to get involved

You could look at tracker funds, the managed funds of well-respected fund managers such as Neil Woodford and Mark Slater, or other investment vehicles. But for me, the best solution is individual share picking.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.