5 BREXIT Takeaways for U.S. Investors
October 14, 2016 | By Steven DiGregorio
5 Brexit Takeaways for U.S. Investors
Great Britain shocked the world by voting to exit the European Union (EU) on June 23rd. This ‘Brexit’ is unprecedented, and the anxiety around what happens next is stoking volatility in global financial markets. Here are five guidelines to help U.S. investors chart a course through the uncertainty:
- Markets often overreact to headlines. In the long term, stock movements tend to mirror economic and financial fundamentals. However, in the short-term, events like the Brexit can cause markets to whipsaw in response to fear and uncertainty. These short-term reactions don’t tell us much about what lasting effects the Brexit might have on markets and the global economy.As an investor, it’s important to keep calm and avoid becoming part of the overreaction.
- Things may get worse before they get better. Historically, markets have often oversold after a geopolitical shock and then regained ground in the weeks and months that followed. We don’t know if that will happen now, but expect plenty of volatility and exaggerated headlines as Britain negotiates its messy divorce.Tune out the noise and be ready to ignore the barrage of Brexit-related headlines in the coming weeks and months.
- It’s too soon to make predictions. Right now, there are too many unknowns in Britain and Europe to make accurate predictions. That doesn’t mean you won’t see pundits predicting everything from a glorious new day to the apocalypse. Most of these predictions will turn out to be wrong.Instead of worrying about predictions and polls, we focus on market and economic fundamentals when making investment decisions.
- Expect surprises along the way. Britain’s vote was just the first of several key elections in Europe, and it’s unclear how the Brexit will affect those votes. We also have no official timeline for the exit, and there’s a very small possibility that a Brexit may not happen at all since the referendum result isn’t binding. Markets will likely experience continued volatility as investors digest possible outcomes.Savvy investors stay flexible and look for opportunities amid the turmoil.
- Ask yourself: Have my financial goals actually changed? In and of itself, a market event isn’t a reason to change strategies. Though market pullbacks can provoke anxiety, it’s important not to make emotional decisions. No one can say how the Brexit will play out, but prudent investors who keep their cool can pursue their goals regardless of what happens.We position our clients to pursue success in a wide variety of market conditions and are carefully analyzing the data to determine whether to make prudent adjustments to our strategies.
To download the entire White Paper, 5 BREXIT Takeaways for U.S. Investors click here.
The content of this article is for informational purposes only and is not intended as an offer of investment advice, investment strategy or to buy, transfer or sell any security or other investment vehicle. Information contained herein has been obtained from sources deemed reliable but Spire Wealth Management LLC, Spire Securities LLC and their affiliates, including Compass Asset Management Group LLC, do not guarantee its accuracy. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management LLC, Spire Securities LLC or its affiliates.
Spire Wealth Management LLC is a federally Registered Investment Advisor. Securities offered through an affiliate, Spire Securities LLC. Member FINRA/SIPC.
STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
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