What’s the point of a referendum? Is there any point? Surely if a government is elected for a five-year term, then its role is to govern?
A referendum can be a focal point for anger, mistrust, hatred and irrational gut reflexes. I believe Britain is actually doing very well as part of the European project. It’s growing, house prices are booming, and the employment rate is the highest it has ever been. This country gains hugely from being part of the European network.
Will you really side with Marine Le Pen and Donald Trump?
Worries about the vote have already led to the UK’s growth slowing. And we’re seeing an impact on Britain’s reputation abroad. I haven’t heard one single overseas politician support Britain leaving the EU, apart from Marine Le Pen and Donald Trump. Surely that says enough?
Yet the EU debate has been dominated by fears about immigration and bureaucracy. And that has led to the opinion polls being tied 50:50. That’s why I think Brexit really could happen. And if it does, I fear for this country.
Just how likely is Brexit? Well, bookmakers think it’s twice as likely that we will stay in the EU, rather than leave. They suspect that something similar to what happened in the Scottish referendum will happen here.
Yet what has surprised me is that despite the fact that the vast majority of politicians, business leaders, union leaders, and even actors and musicians, have backed the Remain camp, the 50:50 split has hardly budged.
The Leave campaign has called the Remain camp’s strategy ‘Project Fear’, yet it’s the Brexiteers who, instead of looking to the future with renewed hope, are playing on all of Britain’s worst fears.
Investors should just sit this out
The question is, what should investors do? Could a vote to leave cause the FTSE 100 to crash? Well, I think it could. I think the effect could be similar to what happened during the Eurozone crisis, and shares across the board, from blue chips to small-caps, would be hit.
For long-suffering investors, who are just emerging, bruised and battered from a 17-year bear market, that would be hard to take.
But I, personally, am not planning to sell any of my investments. Why? Because I’m investing for the long term, and my time horizons are decades ahead. If you try selling ahead of the referendum vote, then you’re reduced to trading in and out of shares instead of keeping your eyes fixed on the road ahead of you.
I suspect share prices would fall, but then, as the shock subsides, they would recover again. Anyone who had invested before the 2011 Eurozone crisis and held on to their shares all the way through would now have made a profit.
That’s why I’ll watch the unfolding drama of the EU referendum vote carefully. But I won’t let it affect my investing decisions.
