We’ve now had the weekend to try and take in the fact that we, as a nation, have voted to leave the EU. Whilst over the last few days I’ve listened and read a wide variety of political input to try and understand what happens next, we are in uncharted waters and with this comes uncertainty.
The falls in the markets we experienced on Friday were only minor by close of trading, the markets bounced back a little by the end of the trading day. This might not be representative of the future.
The politics and the rationale for voting Leave are interesting but I’m more concerned with our investments and therefore what happens next.
These uncertain times are likely to lead to ongoing volatility in the markets and in the circumstances I think it’s really important that we do ‘keep calm and carry on’.
History and experience has shown that any knee jerk reaction such as moving into cash with our investments now would be a mistake. We are medium to long term investors, not traders.
If you remain invested in growth assets you will experience some volatility but when the market corrects you will still be invested and therefore able to benefit from any correction. The issue will be the time that you are in the market (not trying to time the market).
While the UK and the EU start to get to grips with trying to sort out the Brexit some news around the world is more supportive of global growth. The Fed Chair Janet Yellen is optimistic about the longer term growth prospects for the US and is carefully monitoring the US and global events and will tread carefully as she gauges when to lift short term interest rates there.
How the US economy grows is a significant pointer for the rest of the world.
With the new risks and uncertainties e.g. politics at home and the roadmap to Brexit etc. the immediate outlook is for ongoing volatility.
The fact that we diversify investments by asset class and geographically should help reduce volatility if you compare against holding just UK equities.
Your risk profile and objectives – focus on income or growth etc. will also impact on the assets you hold; these are tailored to you. Should you have any questions on your own situation please get in touch.
Steve Speed