Skip to main content

Despite polls predicting British citizens would vote to remain in the European Union this past Thursday, they voted to end 43 years of EU membership by a narrow margin of 52 to 48 percent.1 Market volatility and Wall Street’s immediate, negative reaction to this historic event wasn’t surprising. Investors typically don’t respond favorably to significant change or uncertainty.

While the long-term effects of the vote remain to be seen, an article in Friday’s New York Times said few expect Britain’s departure to set off a long-term financial crisis like the one that began when investment banking giant Lehman Brothers collapsed in 2008.2  The United Kingdom is still part of the EU. It has two years to negotiate the terms of its exit from the time it notifies the EU it intends to leave. If Britain strongly disapproves of the deal, it could seek a second vote about leaving and potentially reverse its decision. If the deal stands, trade and financial agreements would likely be phased out rather than terminated.

Britain may face a recession. But the effect of such a decline on other nations is difficult to predict. Although Britain’s economy is ranked fifth globally, it accounts for less than 4 percent of total global GDP.3 The impact on international corporations also remains to be seen. To discourage such departures, Continental Europe is warning of ramifications on British exports. But it should be noted Continental companies will still want to trade with Britain’s large, wealthy market.

The referendum’s outcome may reflect a populist movement toward more protectionism and less global integration. How Britain fares in the coming months and years may influence whether this movement grows. On the flip side, Scotland’s leaders have warned of a potential renewed bid for independence so it can remain with the EU.

When the markets react emotionally, it’s imperative to think rationally. It may be a good time to review your portfolio, assess your current situation and evaluate your risk level. As always, I am monitoring the market conditions. Please feel free to contact me if you have concerns you want to discuss.

1.  USA Today, June 24, 2016, www.usatoday.com/story/news/world/2016/06/24/britainvotesleaveeuropeanunion/86324662/
2.  New York Times, June 23, 2016, www.nytimes.com/2016/06/25/business/international/brexit-financial-economic-impact-leave.html?_r=1
3.  The Economist, June 24, 2016, www.economist.com/news/finance-and-economics/21701292-uncertainty-abounds-expect-global-chilling-effect-investment-why-brexit

Important Disclosure Information

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Dechtman Wealth Management, LLC [“DWM”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from DWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. DWM is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the DWM’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.dechtmanwealth.com.

Please Note: DWM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to DWM’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please Remember: If you are a DWM client, please contact DWM, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently.

Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Join our newsletter

"*" indicates required fields

Name*
This field is for validation purposes and should be left unchanged.