Brexit as Positive Signal

Pfäffikon SZ, Switzerland – Finally, the voting on the Brexit is on the agenda next week. According to the bookmakers, there is nothing to worry about and remains the UK member of the European Union (EU). However, when we listen to the subcutaneous sounds than the British are fed up with the EU. They now have the opportunity to correct a “gigantic and historic error”. Meanwhile, the financial markets hold their breath.

Expensive club
The British are already 43 years part of the EU and they conclude ––rightly–– that the EU is a beautiful but expensive club to belong to. The EU is behaving increasingly greedy and occurs to be breathtaking incompetent according to the islanders. Poignant is the Brussels bureaucracy that goes hand in hand with devouring huge amounts of capital for the benefit of the remotest corners of the Union. Meanwhile, several Member States ignore the budget rules for many years and the monetary policy demolishes the carefully crafted pension. There has been taken a financial advance on the future, which cannot be sustained.

Ice Age
The establishment is now increasing the pressure by stating that the export of the UK will collapse and the country will subsequently end up in a financial ice age. For the short term, the effects of a Brexit will be negative without a doubt. But longer-term, bilateral trade contracts will be closed. Switzerland is a good example of how the UK could function. As non-EU member, Switzerland shows for many years now better economic figures than any country within the EU. The fear that European policymakers are trying to instill is unfounded on the basis of economic considerations.

Weaving flaws
The EU will have to look in the mirror after June 23, 2016. The European experiment is full of weaving flaws, of which the tax is perhaps the greatest flaw. But actually, it all went wrong with the dubious (Greek) spreadsheet in Maastricht in 1992. After a Brexit, the risk increases that the EU will further fall apart. For many Europeans, their confidence in the EU is already waning for some time, not to mention the confidence in the bankers of the ECB. These bankers chase the returns of bonds expertly into the abyss, which is a bad sign.

Several sufficient investors need a wake-up call. A Brexit should awaken and set investors thinking. The current financial assumptions are unhealthy, stretched and unsustainable. Several leading investors warn already longer for impending doom, where the ‘king of bonds,’ Bill Gross, recently even used the word supernova. A Brexit could thus work purifying and positive and put an end to extremely overvalued investment categories.

It remains for me to wish you a good weekend.


Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above mentioned shares and has no intention of doing so in the next 72 hours.