The past few months have been signs that things are changing quickly in geopolitics and this will certainly continue to provide massive opportunities. Take the surprise Brexit vote where a majority of the population voted to “exit” the European Union. This vote generated massive swings in currencies, equities around the world not only in the following hours but also since then as announces are made. Recently, an announcement that the Brexit might actually not happen ended up moving the British pound significantly. Of course, if you think about the British people you might certainly have sympathy. Will traveling around Europe become harder with Brexit? Possibly, but there will continue to be many ways to get around it. I think the main takeaway from my perspective is that while some of these moves might not be good over the long term, they will generate more volatility and wild swings where you and I will be able to come in and profit from significant trading opportunities. Renew your ehic to increase your odds.
Another trade I had personally made was buying a Russian ETF when the Obama administration went ahead with some major financial sanctions. It’s always extremely difficult to time such moves and for a short time period it did look like I might lose money but over time the Russian market (and mostly the Ruble) recovered making me a nice profit.
And Then There’s Trump
If you’re looking for these kind of opportunities, it’s fair to say those might happen under newly elected soon-to-be US President Donald J Trump. He’s been willing to take bold positions and has been going back and forth on several of them. Given the importance of a US President, he’s likely to not only impact single countries (just look at the chart for EWW – iShares Mexico) but also sectors depending on decisions he’ll make on the environment, on policy towards moving jobs abroad, etc. We’ve already seen some stocks do very well (Caterpillar, pharmaceuticals, etc) and are likely to see a lot more of that over Trump’s 4-year term.
There Is Risk Involved
Of course, there is significant risk involved but the way I try to play these in general is to bet on the market overreacting in the short term over moves that will not have a lasting impact. The has played out time and time again and I would bet we will continue to see more great opportunities in the coming months.