The Post-Brexit Impact


You were scared for at least a minute.

We’ll maybe you still are.  Brexit is not over yet.

The backstory — the U.K. was considering leaving the European Union because of their inability to control their borders, trade, and power.

It’s easy to understand their stance considering the rampant terrorism that’s going on in the world right now. But the consensus on the pre-referendum polls was for the U.K. to stay.

Fast forward, that obviously didn’t happen — they’re leaving.

The volatility in the market over the last week was caused mainly by one thing, uncertainty. The U.K. is the 5th largest economy in the world and it’s going to affect business operations in some way.

Prime Minister David Cameron resigned. He was against leaving the E.U. The transition is a huge undertaking and not much of a shock that he doesn’t want to stay in the position.

It’s never comfortable during periods of volatility. It’s okay to feel angst, but not when making changes based on those feelings.

Here is what you do. Revisit your plan, go back to the beginning. What are your goals and the steps to achieving them?

There are things within your control and those that are not.

You can control saving more, spending less and making smart financial decisions. You can’t control the market. Neither can your financial advisor, CPA, lawyer, doctor, psychologist or Harry Potter.

When it comes to your portfolio, take a look at how and why it’s invested the way it is.

Remember that conversation about diversification? Fundamentals? Goal achievement?

Diversification makes changes systematically or when there are shifts in the portfolio. Typically large ones. It removes the emotion and poor judgment — like how you may have felt over the last week.

There may be buying opportunities with individual stocks. Remember that you have to separate price from value. As Warren Buffett said, “Price is what you pay; value is what you get.” Sometimes, not always, these opportunities present themselves during these uncertain times.

The post-Brexit impact is still unclear. Over the last several days the market has been digesting the changes positively. That’s not to say it couldn’t turn worse quickly. You can find analysts on both sides of the argument.

There will be a lot of decisions around what’s going to happen with immigration and commerce. There could be deals with each nation, industry or the E.U. as a whole.

The E.U. was formed to help reduce these barriers, which would likely point to an economic slowdown.

On the other hand, the U.K. doesn’t have to contribute to the E.U. budget — cost savings.

Trade tariffs can also be levied. It’s a bigger deal since a large portion of their trade when to members of the E.U..

It’s going to take some time so don’t expect any answers soon.

If you’re completely sick to your stomach about your portfolio volatility, consider revisiting your risk tolerance first.

At the end of the day, if your portfolio is invested correctly and causes you to make poor financial decisions — it’s time for a review.

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