Whoever thought the referendum would be this close? Die-hard Brexiteers mayclaimthey knew it all along butmany investors are only just waking up to the fact that Britain really could vote to quit the EUon 23 June as the campaign takes a 7% lead according to some polls.
Remain holds the day
Momentum is with Leave as The Sun newspaper hops on-board and exhausted pro-Remaincampaigners complain that most traditional Labour voters want out, and the FTSE 100(INDEXFTSE: UKX)doesnt like it. The index lost 100bn in four straight days and brokethrough the 6,000 barrier on Tuesday after falling 2.01%. It recovered slightly to end Wednesday on 5,966.80.
Of course, it hasnt really lost 100bn, the misplaced money will be found soon enough if Bremain holds sway andthe index enjoys the mother of all relief rallies.
The tighterthe vote looks set to become, the more volatile share priceswill be in the week ahead. The same goes for sterling, with currency markets only just waking up to how tight the vote is. Wealthy London-centric financial service professionals have been slow to recognise rumblinganti-EU anger in the forgotten provinces.
Im a be-Leaver
I like to underpin my portfolio with passive UK funds that track either the FTSE 100, FTSE 250 orthe All-Share, and Im always looking for a chance to top them up when the market dips. One month ago the FTSE 100 closed at 6,353. At todays starting priceI wouldpick up 7% more stock for the samemoney. The indexis almost 17% lower than inApril 2015, when itpeaked at7,122.So the Brexit buying opportunity is already upon us.
IfBrexit sweeps to victory, the FTSEwill plungeandcould easily breach5,000. Now thatreally would be aonce-in-a-lifetime opportunity, because once we voteout were out for good. Theres no way back in. The shock will be seismic and shares will be far cheaper than they are today.
Will we stay or will we go?
Nobody knowshow the UK will vote next week (if you DOknow, get thee to Paddy Power). If Remain holds the field, the FTSE 100 will soar and youll be delightedyou bought in the days before the referendum. If Leave is triumphant, you could take an instant hit, but at least have an opportunity to buy more stock at the new (much) lower price.
When to buy is a decision that only you can make. Personally, Im looking to split my investment vote and take advantage of pre-referendumvolatility to top up my FTSE All-Share tracker attodays reduced price.That way I can feelsmug if we vote to Remain and the index rebounds.
If we vote to Leave, Ill be bracingmyself to swim against the tideof panic sellers, and buy more. I intend to keep my money invested for at least 20 years, andover such a lengthy timeframe can afford to look beyond political earthquakes like the one heading towards us.
Brexit is a great buying opportunity. Dont waste it.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.