- Britain’s decision to leave the European Union means nothing for trading earnings.
- Investors can exploit losses in share values and cash in.
- Gold and gold stocks are particularly bright in the Brexit wake.
Volatility fuels trading opportunities—exploit it for your portfolio.
Perhaps all this interconnectedness isn’t such a good idea after all…
Britain has voted to leave the European Union, turning the tide on last century’s great global experiment.
I never thought I’d see a repeat of “Don’t Tread on Me,” but London’s own tea party comes close. The difference is this time around, the redcoats are American-born and trained hedge fund managers who bet wildly on keeping England in the EU.
“Don’t you dare leave,” they threatened, “or all financial hell will break loose.”
I say bring it on. All this volatility in advance of earnings season is a gift. Stocks gyrating wildly over the last two days sets the table for glorious trading opportunities before results are released.
Will the losses stick? Alas, they probably won’t.
The press and certain financial types were drooling for a four-digit-down day on the Dow. It could still go there, but this is not a crash.
Add in the gains in advance of Brexit, and the selling thus far is pretty tame.
Still, there’s a big bump in that should continue while the markets determine the true impact of England’s decision.
As for earnings, the news means nothing!
Operating results are a look backward, and from that perspective, the numbers should be solid. Second quarter GDP was better than expected, and global economic activity seemingly improved.
Sure, some corporate management teams will use Brexit to massage the numbers looking forward, but I don’t expect too much gamesmanship here.
Where are the best earnings-trading opportunities?
Stay away from financials. Losses there are deserving given the uncertainty, and one-quarter of operations will unlikely change the negative tone for banks.
Instead, look to these 5 names for your monster earnings trades…