The immediate short term impact on financial markets is clearly negative, as demonstrated by the exchange rate movements overnight and the opening of the London stock market this morning. Uncertainty will continue in the coming months whilst the various renegotiations take place, and markets do not like uncertainty.
Many people will be concerned about the impact on their investments, and may even be asking if they should "do something". However, it is at times like these that it is critical to remember that investment is a medium to long term activity, and the rationale for that is that it allows you to ride out the rougher periods such as just now.
Historically the worst thing an investor can do is to liquidate their investment at the time of maximum fear. Even if this was done with the intention of getting "back into the market" in the future, history shows that predicting when best to do this is very difficult, and that much of the market recovery comes in a small number of days, and that the key thing is to remain invested so that you are there to capture these good days. History also shows that markets are prone to over-reaction when unexpected bad news is received.
Days such as today are when our clients benefit from the protection given by the diversification within their portfolios, both across the geographies of the world and across a wide range of different asset classes (not just stock market investments).
All of our advised clients' investments are proactively held and managed by an investment company. Each of them has a team of investment managers who work daily to mange the risk within the funds and portfolios. Ahead of the referendum they took positions, as much as they could, that would moderate the downside of either Brexit or Remain. And today they will be dealing with the referendum result, but without panic and retaining a long term perspective.
We will continue to monitor markets and the political and economic backdrop as it evolves in the coming months, and whilst it doesn't necessarily feel comfortable, today is a day to sit tight.
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