Readers would be surprised to think that investment can sometimes be so similar to gambling, but in the case of Brexit, that is the case. When polls cannot deliver a definitive answer on a complex political event that will have profound effects in the world economy, then the best an investor can do is to place a bet, or liquidate everything and sit it out. Over the course of the week, most have been placing their bets. Investors are betting that Britain will remain in the EU.
The markets are clearly reflecting that sentiment, with the value of well-known haven assets ticking down, while assets that are more exposed to the potential downside of a leave decision, ticking upward. European stock indices are up, with Britain’s FTSE erasing much of the losses it has suffered up to now. The British Pound is also gaining some strength, hovering around the $1.47 USD mark. Safe Haven assets like gold have taken a hit this week and are showing a negative trend.
Whichever way the vote goes, Brexit polls have proven to be a major source of market volatility over the last month. Maybe the data that the bookies produce will succeed not only in returning the markets to a path of growth, but might also prove to be more accurate in predicting the outcome of the Brexit vote. For those who do not like speculation, the best thing to do is just sit and watch until the results come in.
