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In what I find to be a completely shocking outcome, the UK has voted to remove itself from the European Union after more than 40 years. That result has caused Prime Minister David Cameron to resign, and has sent shock waves through financial markets all around the globe. Asian markets sold off between 3% and 8%, European markets are down between 3% and 7%, and the US markets are off (at the time of this writing) between 2% and 3%, after opening down between 3% and 4%.
It is premature to speculate exactly what all of this means and what impact it will have on global markets and economies, and I believe it’s premature to make decisions on buying or selling in portfolios. We don’t want to join the many investors that are selling first and asking questions after. Rather, we will digest the information and act prudently from there.
How we react to events like yesterday’s Brexit vote are what differentiate traders from investors. While all investors should not act in the same way, I do believe that all investors should react similarly. In other words, the days to follow may create opportunity for investors to rebalance with buying or selling, depending on each individual's objectives, time horizon, and risk tolerance. Whether buy or sell, the act should be consistent with overall goals in mind and not simply as a reaction to this morning’s news.
As I mentioned in a blog post late last year, we’re likely in the later stages of the Bull market, but we look for more room to run. With that in mind, monitoring quality and risk is important in times like this. Markets can’t be timed, so be prudent and be aware of the risk associated with your portfolio. I invite and encourage you to reach out to us if you have any questions or concerns.