BREXIT Before and After
By now you have probably seen enough media coverage of “Brexit”, but I felt it necessary to add a few comments of my own.
Here is what you need to know…
As investors, the knee-jerk market reaction can be unsettling. There were a lot of big money investors who positioned their portfolios to profit on what they believed would be a vote to stay in the EU. Now those traders are scrambling to unwind their positions and it is creating volatility and repositioning around the world.
We need to keep an eye towards what is likely to be temporary factors and what is liable to be more lasting effects from this change.
From a near-term perspective, events like this cause meaningful risk aversion. The challenge is to determine how much, if any, portfolio adjustments are warranted. To give you some perspective, here are a few comments from Brian Westbury and Robert Stein of First Trust:
Short term, the markets will be volatile. Currencies will rise and fall. To us, this looks like a buying opportunity.
When the Shanghai Composite plummeted back in late August 2015, the Dow fell almost 800 points and oil prices dropped 5.5% in a span of just two days on fears that the world’s second largest economy was headed for collapse. But before the end of that week, the markets had made it all back (and then some) while oil ticked higher. It was yesterday’s news almost as quickly as it appeared.
Now the pouting pundits of pessimism are once again crying that the sky is falling. It was an overreaction then and we think it’s the same thing now.
While there is no way to be certain what the future holds, we know that we have a disciplined investment process that actively measures the market and each of the holdings in our managed accounts on a daily basis. As new data comes available, we will continue to analyze the data and make adjustments as needed. As of right now (7.06.2016), the stock market trend here in the US is “neutral”. In this environment, most investors should maintain a wait and see approach before making drastic changes to their investments.
Here is a chart showing the days before, and the days after the BREXIT vote:
As always,” if and when the facts change – so shall we!”
#S&P500, #StockMarket, #Investing, #BREXIT