Leon Boros talks Brexit and ISA at ShareSoc Richmond 5.7.16
Leon opens, discussing ISAs, and his own success in becoming an ISA millionaire. He covers the key axioms of his success:
1. Compounded income – from capital growth and income reinvested over many years
2. Tax free status of an ISA means none of the drag of tax costs on an ISA
3. Avoid story stocks eg. Globo Keep to quality stocks with a resilient future income stream. He always starts with the numbers, before he listens to the story. Avoid the sales pitch by management. He looks for high margins and high returns on capital and equity.
4. Cut losses and run profits. 60% of his investments were successful – he sold the losers. Listen to company updates, and position accordingly. If you take a 20% loss, you’ve only got to make 25% to be back to be at breakeven. With a 90% loss, you need a 10 bagger to replace. You’re no worse off when you sell a loss-making share – but psychologically you’re much better off.
5. Liquidity is an issue in small caps, so you need to know the company and be assured about it’s balance sheet to have confidence to hold through the inevitable volatility.
He goes on to talk about Brexit, (this was the Tuesday after it happened.)
Summary of the Brexit effect:
• £ = $1.30 from a peak of $1.50
• FTSE250 down 15%, now -9%
• Gold: +$85 @ $1,350
• Scrapped plans to end deficit by 2020
• Total UK debt to continue to rise
• Interest rates likely to go down
• Cameron, Boris Johnson, Farage all left their jobs
• Corbyn, fighting to hold his position
Impact on the market:
• A recession is highly likely – but not clear of its duration … 2-5 years?
• Deals are off: IPOs, property deals
• Political risk is high:
o EU weakness / contagion
o US: Trump?
Leon is trying to balance his portfolio for macro instability. Increasing gold weighting through ETFs. He is negative on corporate brokers, plant hire companies, premium property developers and UK retail.
Q&A from the floor.
• Did Leon sell before Brexit?
• How do you run winners, when it’s tempting to bank profit?
• Which fund managers does Leon respect?