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Special Edition Investment Newsletter: Our (and others) views on Brexit  

Stocks had been up earlier this week, as many polls and analysts were showing that while the Brexit vote would be close, that it appeared that the vote would be in favor of the United Kingdom remaining with the European Union. As everyone awoke this morning, we were able to see the final results, and that while it was extremely close, it was decided in favor or leaving the EU. As then expected with this result, stocks world-wide have been selling off. Even though the stock market was down about 500 points at the open of trading (the Dow), the market was up over 330 points since last Friday's close through yesterday, at near record highs. 

As of noon today, the Dow is down 448 points (2.49%), S&P 500 down 55 points (2.6%), and NASDAQ down 150 points (3.07%).

As this is an economic and investment subject of note, we wanted to get our thoughts to you on the ramifications of this, as well as some thoughts of a number of financial institutions. On the right, you will see links to a number of articles online. Following a brief piece below, is our high-level overview of this subject.

Please keep in mind...

The following is at the bottom of Vanguard's report on this ( Brexit: What does Vanguard think?), which we thought is important enough for everyone to keep in mind, so we are also placing a piece of it here:

Although it is certainly worthwhile to keep abreast of global events such as the Brexit referendum, we caution investors against making tactical or short-term changes to their portfolios. Instead, we recommend following Vanguard's four core investment principles
  1. Create clear, appropriate goals
  2. Develop a suitable asset allocation using broadly diversified funds
  3. Minimize cost
  4. Maintain perspective and long-term discipline

Our Perspective on the Brexit vote

Our synopsis of what this means, and putting it all in perspective:

First, some quick facts: 

Prime Minister David Cameron, who campaigned against an exit, has announced that he will resign. Without offering a detailed timetable, Cameron said a new leader would be installed by October.
The Bank of England said it would "take all necessary steps to meet its responsibilities for monetary and financial stability."
Officials and regulators in other countries around the world are also preparing for fallout.  The U.S. Federal Reserve said it was standing by to help as necessary.
A decline in bank shares helped push London stocks down by 8% at the open. The FTSE 100 has since clawed back and finished their trading day today down about 2.72%.
The pound fell close to $1.33, its lowest level in more than 30 years, as the results of the referendum became clear. It's now trading down 9% at below $1.37.
The Dow dropped 500 points (less than 3%) as markets opened in New York. In Asia, Japan's Nikkei tanked 7.9%, and Hong Kong's main index dropped 2.9%.
A search for safety: The price of gold has spiked as investors pour money into perceived safe havens. Others to watch include U.S. Treasuries, the Japanese yen and Swiss franc.
Short-term, Britain's decision to exit the EU has injected uncertainty into markets, such as how long will it take the UK to negotiate new trade deals and how will those look? How will this affect the UK economy, as well as the the EU and the rest of the global economy? Will other countries follow suit out and leave the EU? Plus, there a number of other questions. 

To sum up, the stock markets generally do not like uncertainty, and that is what we have. However, with interest rates at all time lows, and now with this event making it a challenge to see any significant raise, that does not leave investors with  many options. Looking at the long-term perspective, this will be "absorbed" as all other events have been. This is also not a complete shock, as there was a real possibility that this could happen.  

On a related subject, we have an election here in the US on the horizon, that we already know about half of the population will be extremely unhappy with the results regardless of who wins. That too, will be an event that we expect volatility leading up to and after the event, but also will be ultimately "absorbed" as well. 

In closing, their is an article on the side which you can also access here, which is from one of the financial writer's of the NY Times, Ron Lieber that we would encourage people to read: Advice as markets react to 'Brexit': Take some deep breaths and don't do a thing 

Stay Connected

If you have any concerns about this, or any other financial subjects may relate to your own financial circumstance, please reach out to us at the contact information below:






Brian Cohen, CCO; email:; phone: 631-923-2487
Joe Favorito, CFP®; email:; phone: 631-930-5336

Direct office email: 

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