Brexit Fears and the Capital Markets

Posted by:


As a kid in school we learned the “sun never sets on the British empire”; fast forward this coming week we await a Brexit vote for secession from the European Union (EU). The opinion polls show a slight edge to the British exit while the bookies favor continued membership. While no one knows how the vote will turn out one of our responsibilities as your investment advisor is to help you put market news in its proper perspective, especially when the media, brokerage firms and financial advisors are fixated on short term trading.

If you are okay, like we are, with ignoring the current headlines we recommend continuing with the investment portfolio we recommended. If, on the other hand, you are wondering whether you should adjust your investments in light of the unknown Brexit implications, we’d like to offer some context on why withstanding today’s bad market news can actually translate into good news for you and your investments, at least in the long run.

Remember those conversations we’ve had about your willingness, ability and need to tolerate market risks in pursuit of expected rewards? This week’s market performance serves as an excellent illustration of just what that risk feels like when it happens. It hurts, it can be scary and it’s not any fun at all. But if these sorts of realized risks never occurred, sometimes severely, the market could not be expected to deliver long-term premium returns to those who are willing to ride out the pain.

And yet, withstand the risk we must do – together – because it’s exactly this type of market risk that we have deliberately built into your portfolio, and globally diversified among stocks and bonds alike, in pursuit of achieving the expected returns defined within your investment portfolio.

While we don’t let breaking financial and economic news overly influence our long-term advice, we do find it informative as it continues to contribute to our ongoing understanding of how markets operate over time.

By ignoring current headlines and the temptation to react to the bad news with active trades you will find that:

  1. By the time you’re aware of good or bad news, the rest of the market knows it too, and already has incorporated it into existing prices.
  2. It’s unexpected news that alters future pricing, and by definition, the unexpected is impossible to predict.
  3. Any trades, whether they work or not, cost real money.

Rather than try to out time the markets based on information over which we have little control, we continue to recommend investing according to market factors that we can expect to control, such as:

  1. Minimizing costs
  2. Forming an investment plan to guide your way – and sticking with that plan
  3. Capturing returns available by participating in expected long-term market growth
  4. Maintaining diversified holdings to dampen market risks

In short, if current news is causing anxiety, let us know. We’ll be happy to talk over the particulars with you and answer any questions you may have. Remember, stick to your long-range plans unless you would like to revisit your own risk tolerances or individual financial goals. None of our advice about how to manage your personal portfolio has changed.


Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author on the date of publication and are subject to change. Content should not be viewed as personalized investment advice or as an offer to buy or sell the securities mentioned. A professional advisor should be consulted before implementing any of the strategies presented.
Hyperlinks on this website are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto. Any links to third party websites are offered only for use at your own discretion.
Tobin Investment Planning LLC is registered as an investment advisor and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability. The firm is not engaged in the practice of law or accounting.
All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. There are no assurances that a portfolio will match or outperform any particular benchmark. Past performance is not an indicator of future results.

  Related Posts