Why Liz Truss Matters to Your Portfolio

Earlier last week Liz Truss, the now former Prime Minister of the United Kingdom, resigned her post. Making her the shortest serving Prime Minister in the country’s history. She held the position for 44 days.

But why does this matter to us here in the states?

A Brief History of Liz Truss and Her Country

The United Kingdom represents the 6th largest economy in the world.

It has long been thought of one of the soundest countries economically.

Since the 44 days that Truss took office, the British Pound has sunk to all-time lows, international stocks have been rocked, and investors are wary of the conflicting signals the country is sending between fiscal and monetary policy.

Inflation in the country was as high as 10%. Similar to here in the United States, the Bank of England was in the process of tightening monetary policy. This was being done through interest rate increases.

Truss’ economic policy was to slash taxes and encourage growth. This was in direct conflict to what the Bank of England was trying to achieve.

Furthermore, as ordinary citizens were combatting decades high inflation, the biggest benefactors to the tax cuts were the wealthy and businesses. This caused dissention among the nation.

All of this led to her eventual resignation.

Why This Matters to You

You might be thinking “what does this have to do with me?”

Most investors have a portion of their funds invested in international stocks. Which likely is invested in companies in the United Kingdom.

Most people will have between 5-20% invested in this sector. Over the last six weeks this has been one of the worst performing sectors.

In other words, your portfolio has likely lost money here.

It is important to keep this money invested in international stock. It helps to take risk out of the overall portfolio. But it is also important that the next Prime Minister takes action that shows it is working with the Bank of England, not against it.

What You Need to Do

Now is the time to review your portfolio.

There is likely an opportunity to buy into the international market at a cheaper price point.

You could rebalance your portfolio to capture this upside. Or you should consider investing more money into this market.

Regardless, the market agrees on one thing. No Truss is a good thing.

If you have questions on how this impacts your portfolio, please reach out to me here.

How are you investing in international stocks?