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.1 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.
 
 

Sources

1
The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC
© Mahoney Asset Management

INVESTING RISK DISCLOSURE
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

IMPORTANT CONSUMER INFORMATION
This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.

Representatives of a broker-dealer or investment adviser may only conduct business in a state if the representatives and the broker-dealer or investment adviser they represent: (a) satisfy the qualification requirements of, and are approved to do business by, the state; or (b) are excluded or exempted from the state’s licenser requirements.

An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.

SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUE
This information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Securities-related services may not be provided to individuals residing in any state not listed above.

The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.

Securities offered through
Newbridge Securities Corporation,
member FINRA / SIPC

Investment Advisory Services offered through
Newbridge Financial Services Group Inc.,
an SEC Registered Investment Adviser.

Office of Supervisory Jurisdiction
5200 Town Center Circle, Tower One, Suite 306
Boca Raton, FL 33486

Toll-Free: 877-447-9625
Phone: 954-334-3450
Fax: 954-489-2390

Leave a Reply