In the longer term, however, he says: “politicians will have to take up the reins and this will involve real spending, Keynes style, and debt moratoriums/write offs.” Adding: “In summary, we have witnessed an unprecedented period of outperformance of financial assets over the real economy and this is going to reverse. The winning strategy in the proper bull market – which is coming – will be economically-sensitive stocks over bond proxies. In this brave new world, bonds are toast. Technology will also win because, while being high growth, the sector is also super cyclical.
Whether the outcome is as extreme as Toogood predicts it to be will only be known in time, but what is for certain is that treating Brexit as just another tail risk stalking markets that needs to be traded through and positioned for tactically risks missing the broader socio-political import of the event, which over the long time will be far more important for how one positions portfolios.
