UK’s EU Referendum Result
Last Thursday the U.K. voted to quit the European Union after more than four decades in a stunning rejection of the Remain campaign’s arguments. While there has been much speculation leading up to and since the vote, many of the longer-term implications of the referendum remain unclear, as the process for negotiating what a UK exit may look like are just beginning.
Undoubtedly over the coming weeks and months we will see market turmoil (as markets react to this uncertainty) but as ever I would urge caution in altering your long-term asset allocation. We have seen markets fall in times of uncertainty before but they have always recovered (we expect this time to be no different). It remains difficult to know when these good outcomes will actually happen but by attempting to try and time the right moment to invest or redeem, one risks not enjoying the potential benefits of an eventual market recovery. Many of those who exit the markets miss the recoveries. What we have often seen in the past is that investors who remained in well-diversified portfolios have been rewarded over time.
History has shown us in times of uncertainty that doing nothing is nearly always the right thing to do. In a speech he gave in 1963 the great financial analyst Benjamin Graham said: “In my nearly fifty years of experience in Wall Street I’ve found that I know less and less about what the stock market is going to do but I know more and more about what investors ought to do.”
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Source: Securities In An Insecure World, A Lecture by Benjamin Graham,” delivered at Town Hall, St. Francis Hotel, San Francisco, CA, November 15, 1963: