Yesterday Britain voted to leave the European Union. Called BREXIT, the vote sent stock markets into turmoil. As of this writing, markets are down as much as nearly 8%:
- FTSE 100 (London): -4.24%
- NIKKEI (Japan): -7.92%
- DAX (Germany): -7.22%
- HANG SENG (Hong Kong): -2.95%
The U.S. futures are also lower, with the DOW down nearly 3% and the S&P futures down more than 3.4%. Oh, and PM David Cameron announced his resignation.
The Tabloids and newspapers are having a field day with the news. Here are some of the headlines:
- ‘Damn! A bad day for Europe’: Shockwaves spread across the continent as politicians and newspapers react to Brexit (Daily Mail)
- Britan is Quittin’ (Daily News)
- Stocks, Sterling Plunge on ‘Brexit’ Vote (WSJ)
- BRITONS VOTE TO LEAVE E.U.; PRIME MINISTER TO RESIGN (Washington Post)
Investors are nervous. Here’s an email I reviewed from a reader named Barbara just hours after the vote:
One more thing – might you also discuss the UK’s BREXIT and how / why it impacts the markets? (obviously, they are /will be down) I have YET to invest most of the funds I mentioned below (awaiting your next podcast) – and not sure how the BREXIT might impact my asset allocation, investments and/or timing.
Thanks so much again!!
It’s a great question. My answer is simple. BREXIT is irrelevant for long-term investors. Or put another way, BREXIT will be as relevant to long-term investors 10 or more years from now as the following are relevant to markets today:
- the Great Recession of 2008-09
- the tech bubble
- the 1987 stock market crash
- Stagflation of the late 70s and early 80s
- the list could go on
It may be tempting to make a move in panic as markets react to the news. For long term investors, however, the best move is no move at all.
You can listen to today’s podcast for more thoughts on this historic vote.