Brexit: the deed is done…what now? July 2016

Brexit: the deed is done…what now?

The outcome of the Referendum confounded the predictions of the opinion polls, the bookies and the markets. All three ended the working day on 23rd June with the assumption that the Remain side would win by a small margin.  As we know now…they were all wrong!

The surprise nature of the result is one reason why the markets moved so sharply when the results emerged. Initial falls in the pound and the world stock markets were a knee-jerk reaction of a near instantaneous change of view. The resignation of the Prime Minister merely added to the short term concerns, even though it was always likely soon after a Leave vote.

Pause and take stock

At such times, it is worth pausing for breath before taking any rash or impulsive action. History suggests that trying to exploit the unavoidable turbulence carries considerable risks. As the Governor of the Bank of England said in his statement on 24 June:

“Inevitably, there will be a period of uncertainty and adjustment following this result.

There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold.

And it will take some time for the United Kingdom to establish new relationships with Europe and the rest of the world.”

The next few days and weeks will see sharp market movements, probably in both directions, as the markets find a new equilibrium. Speculators will attempt to exploit these market conditions (some will succeed, but many will fail), however, for long-term investors a wait-and-see approach will generally make more sense.

You have a long-term financial plan and, unless your own personal aims and objectives have changed, any short-term turbulence caused by the result of the referendum should not be a reason to take any action or deviate from the plan.

If you have any concerns around your investments or other questions, please don’t hesitate to get in touch with us.

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Independent Financial Advisors