Stick to old investing wisdom amid Brexit 'lies'

In recent weeks it feels as though I've been drowning in European Union (EU) referendum statistics, as politicians and soothsayers pretending to be lifeguards have been throwing me anvils.

At the start of the Second World War, in his 1939 Christmas broadcast, King George VI was quoting Louise Haskins when he said: "I said to the man who stood at the gate of the year, 'give me a light that I may tread safely into the unknown', and he replied, 'go out into the darkness and put your hand into the hand of God. That shall be to you better than light and safer than a known way'."

This same uncertainty is no less relevant today, even now that the result of the referendum is known.

For many months, and possibly years, to come there is unlikely to be clarity on the post-Brexit economy or on how pensions and savings are going to be affected.

Lies, damned lies and statistics

The same people who previously overloaded us with lies, damned lies and statistics will be at it again. This time around they will still be defending their previous positions and preaching gloom or false optimism to enhance their own standing with the public.

None of which will be the slightest bit helpful in assisting us to make our investment decisions, as we try to defend and enhance our savings and pensions.

Why will these people not realise that Abraham Lincoln was correct when he observed that "prophesying is one of life's less profitable occupations".

Wouldn't it be nice, just for once, to have less sugar and more facts?

As a "saline canine", I intend to continue using the wisdom of Jesse Livermore, the legendary American trader of the late 19th and early 20th centuries.

In 1929, at the height of the American stockmarket collapse, he was worth over $100 million - equivalent to $4 billion (£3 billion) in today's terms.

Livermore established, and left us, a set of momentum investing rules that are as useful today as they were at the turn of the 19th century. Here are some of his sayings:

- When a stock is going up, no elaborate explanation is needed as to why it is going up. It takes continuous buying to make a stock keep going up; as long as it does so with only small and natural reactions from time to time, then it is a buy. After a steady rise this stock levels off and turns down with only occasional rallies; it is obvious that the line of least resistance has changed from upwards to downwards. There is no need for explanations. Now is the time to sell.

- The game of financial speculation is the most uniformly fascinating game in the world. It is not for the stupid, the mentally lazy or the get-rich adventurer. They will all die poor.

- The only thing to do when a man is wrong is to be right by ceasing to be wrong.

- A stock operator has to fight a lot of expensive enemies within himself.

- Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does the damage to the pocket book and the soul.

Do not be greedy

You can see that his message - and the lesson to us - is that it is vital to have accurate current information so that you can recognise an opportunity and step in, or a loss-making situation and step away.

He is also saying that it is not necessary to get rich quickly. After all, what is so bad about getting rich slowly? In other words, do not be greedy. Nor do you have to be super-clever to make a good investor - but importantly you must be prepared to leave your mistakes behind.

Whilst the present Brexit storm rages, I will use a smaller percentage of my savings to step in and out of the funds and sectors as the numbers and graphs demonstrate the action needed.

It is inevitable that we will make some mistakes, so remember not to take life too seriously as you will never get out alive!

In the last month we have increased the cash holding in our portfolio, and now only have a very limited exposure to UK equities.

We knew this would protect us from any falls in the UK economy, and put us in a situation where we could benefit if other currencies strengthened relative to the pound.

In the first few days after the decision to leave the EU, while we have seen the FTSE 100 fall by over 5%, our portfolio has gone up.

This article was originally published by our sister magazineMoney Observer here.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser