In breaking news today, the UK pulled out of the EU as a result of the Brexit Vote and of course markets are freaking out.
As I watch the dramatic coverage I can’t help but feel sorry for investors that don’t have the guidance of a behavioral financial advisor to guide and manage their concerns. Panic inspiring headlines are no shortage this morning as red “BREAKING NEWS” banners cover investor’s television screens and market analyst everywhere predict “political and economic chaos.” We’re all bombarded with headlines that read:
“BREAKING NEWS: GLOBAL MARKETS ARE IN CHAOS AFTER UK VOTES TO LEAVE EU.”
“Wall Street is joining the global selloff, as the shockwaves from the Britain’s Brexit vote reach the other side of the Atlantic.”
“Wall Street is joining the global selloff, as the shockwaves from the Britain’s Brexit vote reach the other side of the Atlantic.”
You may think that as a wealth manager I’d be more panicked about what the market is doing this morning but to be honest, I’m not. Why am I so calm and why don’t I appreciate the news coverage we’re receiving on the Brexit Vote? Because in the grand scheme of things, it doesn’t matter much if you can control your behavior. Let me put it in perspective: The market was at an all time high before this morning. The market fluctuates on a daily basis and today it’s down 2.5%. Does that sound like chaos to you?
The news is always going to inspire investors to panic. These types of sound bytes are designed to really stir the emotions and these types of stirrings can create an action that is absolutely the wrong choice to make in the moment. People are going to be inundated with these types of headings in the coming weeks. It’s going to take months and months to figure out how to unwind the United Kingdom from the EU, and unfortunately, the news coverage and the panic inspiring noise is going to cause many investors to deviate from their long-term plan. As an Investor, you should really try and think positively about the Brexit Vote and your investment accounts.
How will the Brexit Vote Impact Your Retirement?
If you can manage your behavior, the Brexit vote shouldn’t affect your long-term financial plan. I read one particular article that stated “The Dow Jones Industrial Average has tumbled by 505 points in the first few minutes, a plunge of 2.8%. That looks like it’s biggest intraday fall since January.” Well when you have a 30-year retirement, do six months matter much? When you have a 30-year retirement you have to think about the long-term impact of your retirement accounts. The impact we’re seeing today is only short-term and really just noise.
The Companies that are down today are still great companies
The value that these companies provide will continue whether or not the UK is part of the EU. At the end of the day, this is just a monetary policy that will be figured out by the federal banks around the planet and won’t affect these companies who are experiencing stock drops, long-term.
Positive Impact
In all honesty, the Brexit Vote is an opportunity for investors. Those who can manage their behavior have a chance to acquire more wealth today or in the coming days as the Brexit Vote shakes itself out. This isn’t an opportunity to panic, sell, or trade. This is an opportunity to buy!
I know it can be easy to let yourself be affected by market noise that inspires investors to make choices that have a significantly negative impact that could have been easily avoided if their behaviors and emotions weren’t hijacked by the market news. So if you find yourself obsessing over the market this morning or worrying about your investment choices, calm down and take a deep breath. Think about how the Brexit Vote can work in your favor. Oh and also, turn off your TV.
If you found this article helpful, do us a favor and share this positive news with fellow investors!
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