Brexit! Wild Markets, Tame Returns

Note: This market review was published on July 14th, 2016 and may not be reflective of current market or investing issues.

As investors, I don’t have to tell you how difficult the investing environment has been over the last eighteen months. Investors, and as such, stock markets are more correlated and interdependent than ever, and the “wisdom of crowds” has an extremely high betting average.  Rarely have I seen a strike out as bad as their collective miss on the Brexit vote.  The “markets” despise uncertainly, so after the vote we saw global stock, bond, and currency markets gyrate like they did last August (2015) and again in January of this year (2016).

As American investors, we are having trouble seeing the global market positives for Great Britain going it alone, although we understand it is not our decision.  Markets thrive on trade and we feel this will, at least in the short-term, make trading between the United States, the European Union, and a now independent Britain more difficult, hence less profitable for all, including us as investors.  Also, we now feel sure other countries within the European Union will be tempted to break away, so the EU will try to make a harsh example of Britain in negotiating new trade agreements to discourage this behavior.  Long-term thinking has the world considering the very future of the European Union and the potential market calamities every time another country holds a succession vote.

As the title suggests, we can expect wild markets and tame returns.

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