If you had listened to the most bearish voices at the time of the Brexit vote, you could be forgiven for expecting the UK to be struggling through a sharp recession right now.
And yet the sky did not fall.
Despite an immediate dip in business confidence – believed to be something of a self-fulfilling prophecy – the UK’s economy and markets have held up well since last June.
Psychologically, it is much better to prepare for the worst – only to find the situation isn’t really that bad – than the reverse. The former approach can trigger bouts of relief and enthusiasm that lay fertile ground for rallies.
Markets are waking up to the fact that, for all the sound and fury we’ve seen over the last year, a lot of good, solid UK companies are not all that affected by EU membership one way or another.
Looking past the as-yet-unfounded assumption that Brexit will be an economic disaster, it is clear UK equities are in good shape. Dare we say even anticipating a bull run in 2017?
Generally speaking, companies are much better shape these days, thanks to broad belt-tightening we witnessed in the wake of the financial crisis.
History teaches us that markets tend to get very cheap or very expensive just before a correction, and UK markets are currently a long way from either point.
While one unmistakable effect of the referendum has been the fall in sterling, it has proven a boon for exporters, and those with overseas earnings. As the cost of investing in the UK has come down, we should expect an influx of foreign capital.
The flipside here, of course, is the pain caused to domestic brands, such as UK retailers, yet many are still worth holding.
Even fairly staid retail brands such as Debenhams and Laura Ashley – not typically seen as growth stocks – are currently delivering attractive yields.
Paul Mumford is senior investment manager at Cavendish Asset Management