The UK’s Truss Is Out. Here’s What It Means For Markets.

The UK’s Truss Is Out. Here’s What It Means For Markets.
Paul Allison, CFA

over 1 year ago1 min

And just like that, the UK is saying goodbye to yet another prime minister. Liz Truss’s resignation (after just 45 days in office) is the latest twist in the frankly already comical British political story. But what might it mean for markets?

As you’ve no doubt heard before, markets hate uncertainty, and lately, that’s been the UK’s brand. But investors might ask whether things can get any worse, and spark a knee-jerk buy for those UK assets – like British bonds or sterling – that have been plagued by the political turmoil. After all, it’s logical to assume the ruling Conservative party will seek to avoid repeating mistakes they made only weeks ago.

But this tale has twists and turns and it’s anyone’s guess what comes next so waiting for the dust to settle might be the best move.

If you’re looking at your portfolio, consider this: there’s little evidence to suggest that – in the long run – politics or geopolitics even matter for stocks. See, political cycles come and go but good companies keep churning out cash flows regardless. So before reaching for the stock “sell” button. Ask yourself, will the long run (10 years or more) cash flows of my investments really be impacted by this?

Usually, the answer is no.

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