Brexit for profit?

September 30, 2019    Portfolio Idea Brexit United Kingdom Great Britain

When I started thinking about this portfolio idea, October 31st was going to be the absolute, for-sure, set-in-stone date for Brexit. Great Britain would be leaving the European Union, no matter what.

It looks like it will be yet another symbolic date with not much actual change happening, however, one things is fore sure: Brexit is happening and it will impact companies.

So this month, I’m taking a look at the companies on the London Stock Exchange.

Brexit

It’s widely believed that a Brexit, deal or no-deal, will have a negative impact on British companies.

One could argue that this is already calculated into the value of many companies.

However, what if it turns out Brexit is not as bad as people think? Wouldn’t it be interesting to investigate the most oversold British companies at the moment and see if they may be better of than expected.

RSI

The RSI or Relative Strength Index is a number ranging from 0 to 100 that indicates how much the price of a stock has recently changed:

  • Below 30: The stock has been oversold and may be undervalued.
  • Above 70: The may be overvalued.

It is a technical indicator for the momentum, which means how much the stock has been moving up or down lately.

Another indicator that you may want to look into is the Moving Average Convergence Divergence.

This Month’s Portfolio

This month’s criteria is looking for the biggest companies on the London Stock exchange that are oversold:

  • RSI below 30.
  • London Stock Exchange only.
  • Largest enterprise value first.
Symbol Name Current price Enterprise value RSI
TSCO Tesco PLC 2.41 GBP 46.46B USD 24
RBS Royal Bank of Scotland Group PLC 2.08 GBP 592.69B USD 32
GSK GlaxoSmithKline plc 17.45 GBP 143.51B USD 35
STAN Standard Chartered PLC 6.84 GBP 482.83B USD 40
BVA Banco Bilbao Vizcaya Argentaria, S.A. 4.77 EUR 541.80B USD 42
GLEN Glencore plc 2.45 GBP 76.29B USD 45
RIO Rio Tinto Group 42.09 GBP 106.55B USD 46
IBM International Business Machines Corporation 163.14 USD 188.63B USD 50
INVP Investec Group Ltd 4.19 GBP 42.62B USD 62
AAL Anglo American plc 18.71 GBP 40.56B USD 50

Note that limiting to the London Stock Exchange does not guarantee these are British companies. I’m going to leave these in, because it’s hard to create good criteria of when a company is really British or not.

Thanks to Uncle Stock for selecting this diversified portfolio.


My philosophy: If you want to invest and your goal is to try to beat the market, you need a system. You need a system that can decide for you what to buy, when to sell and not to panic when things go down. Everything starts with selecting stock. You should not just select random stock here and there based on whims or things you read. No, create a system that suites your style and follow it. These posts give you example of what such a stock selection could look like.

Unless otherwise noted, I do all my research through the Uncle Stock screener. It's a great tool to have in your belt. (note: this is an affiliate link, if you sign up, I get a commision)

Disclaimer: Don't believe anything I say or write. Always do your own research before making any investment decisions.