Chris Ciovacco

About the Author Chris Ciovacco

Chris Ciovacco is the founder and CEO of Ciovacco Capital Management (CCM), an independent money management firm serving individual investors nationwide. The thoroughly researched and backtested CCM Market Model answers these important questions: (1) How much should we allocate to risk assets?, (2) How much should we allocate to conservative assets?, (3) What are the most attractive risk assets?, and (4) What are the most attractive conservative assets? Chris is an expert in identifying the best ETFs from a wide variety of asset classes, including stocks, bonds, commodities, and precious metals. The CCM Market Model compares over 130 different ETFs to identify the most attractive risk-reward opportunities. Chris graduated summa cum laude from The Georgia Institute of Technology with a co-operative degree in Industrial and Systems Engineering. Prior to founding Ciovacco Capital Management in 1999, Mr. Ciovacco worked as a Financial Advisor for Morgan Stanley in Atlanta for five years earning a strong reputation for his independent research and high integrity. While at Georgia Tech, he gained valuable experience working as a co-op for IBM (1985-1990). During his time with Morgan Stanley, Chris received extensive training which included extended stays in NYC at the World Trade Center. His areas of expertise include technical analysis and market model development. CCM’s popular weekly technical analysis videos on YouTube have been viewed over 700,000 times. Chris’ years of experience and research led to the creation of the thoroughly backtested CCM Market Model, which serves as the foundation for the management of separate accounts for individuals and businesses.

Brexit: Will They Stay Or Will They Go?

Brexit

Polls Lean Go, Markets Lean Stay

A referendum is being held on Thursday, June 23, to decide whether Britain should leave or remain in the European Union (EU). Polls currently indicate a bias for the leave scenario. However, Great Britain’s wagering markets continue to show a bias toward the stay scenario. From CNBC:

“On Friday, a poll for the Independent newspaper gave a massive 10-point lead to the British voting public that want to leave the European Union. Over the weekend, another poll for The Times newspaper gave leave vote a small lead. A Financial Times Poll of Polls gives leave a lead as well — 46 percent, versus stay at 44 percent. Furthermore, while Great Britain’s vibrant wagering markets have shown the momentum build on the leave side, they still show a significant preference for remain. The latest odds on Monday — 4-7 for stay vs. 7-4 for leave — imply a Brexit probability of 36 percent.”

Pros And Cons

The excerpts below from the BBC’s “all you need to know” provide some insight into the case for leaving and the case for staying in the EU:

Why do they want the UK to leave?

They believe Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return. They also want Britain to take back full control of its borders and reduce the number of people coming here to live and/or work. One of the main principles of EU membership is “free movement”, which means you don’t need to get a visa to go and live in another EU country. They also object to the idea of “ever closer union” and what they see as moves towards the creation of a “United States of Europe”.

Why do they want the UK to stay?

Those campaigning for Britain to stay in the EU say it gets a big boost from membership – it makes selling things to other EU countries easier and, they argue, the flow of immigrants, most of whom are young and keen to work, fuels economic growth and helps pay for public services. They also believe Britain’s status in the world would be damaged by leaving and that we are more secure as part of the 28 nation club, rather than going it alone.

Forecasts/Polls Have Been Shifting

Since polls have been shifting in favor of the leave scenario, it may take time for forecasting models to settle down. The graphic shown below comes from Matt Singh’s Number Cruncher Politics. Mr. Singh has stated this referendum will be the “biggest challenge” of a forecaster’s career, meaning markets will most likely be dealing with uncertainty until the June 23 votes are counted.

Market’s Don’t Like Uncertainty

All things being equal, financial markets tend to favor certainty over uncertainty. A vote to leave would raise numerous questions about the future of the EU. From Bloomberg:

With the June 23 referendum now just over a week away, repeated warnings of the economic risks of a Brexit have failed to sway voters… Earlier Tuesday, France’s largest insurer warned that there’s an “extremely high” probability of a Brexit. Neither Britain nor the EU as a whole is prepared for the negotiations that would follow a vote to leave and investors would face “a true landscape of uncertainties,” Axa SA Chief Executive Officer Henri de Castries said at a conference in Paris. Other countries could be encouraged to seek special treatment, threatening “to accelerate the unraveling of Europe,” he warned.