The pundits are giving their opinion on the impact of Brexit on the European economy and it’s secondary effect on the global economy. So what is the common person to do?
Now is as good a time as any to rebalance. Europe has been cheaper than US. A week back it had dropped 5 days in a row. Only to recover mon thru Thursday of this week.
Today it is down circa 4 pct. Why not put some money to work by dipping onto a European stock fund if you are underexposed.
Personally, I have been buying whenever Europe gets hit. Bought some during last 3 days of recent drop. So staying put today. But if there is further drop on Monday, will buy some more. If not, so what. Let someone else make money.
not so familiar with good EU stock funds, any particular ones? With US dollar taking a surge, US stocks will get a hit as well (markets already down 2.8-3.4%) and could continue next week???
What’s Next After Brexit for Businesses
What happens after Brexit? Here are some possibilities.
No one thought it could happen. No one thought the voters could really be that unpredictable. But they were and it did. For once, I’m not talking about Donald Trumpwinning the Republication nomination. I’m talking about “Brexit”–the United Kingdom’s departure from the European Union. That decision was voted in by a slim majority of British voters on Thursday. With all but a handful of towns counted, victory was declared for the Leave campaign shortly after 4 a.m. local time Friday morning, or about 11 p.m. Eastern time. Shortly thereafter, British Prime Minister David Cameron, who had campaigned for Britain to remain in the E.U., announced that he would resign.
What happens now? No one really knows, since no nation has ever departed from the European Union before. But here are a few things you can expect.
Britain won’t actually leave the EU–at least not for two years.
Although no one is fully certain of what the process is for leaving the European Union, E.U. rules require two years’ notice for a nation to leave. So–even though everything has changed–nothing will actually change for quite a while.
Markets will plunge.
This is already happening in Asia and Europe and the U.S. are likely to follow suit. Whether we’re likely to see a temporary drop or another 2008 is very much open to question, though most experts believe the former is likelier than the latter.
Britain’s economy will suffer.
This is also already happening, with the pound dropping 9 percent since the vote, hitting its lowest levels against the U.S. dollar since 1985. That may put the British government in the odd position of having to raise interest rates in a badly weakened economy–the opposite of what central banks usually do–to slow the pound’s fall.
Several large international banks had warned before the vote that they would have to move some operations out of Britain if it were no longer an E.U. member. And trade between Britain and E.U. will certainly more constrained than it was before, though no one knows for sure what the new rules will be.
Investment money will head to the U.S.
The U.S. economy has been stronger over the past few years than that of most other nations. Tonight’s vote means an already troubled Europe is only heading for more headaches (the euro also fell, though not as badly as the pound). The Asian economy is rattled by a slowdown in China and once-mighty Brazil is in crisis. There just aren’t that many stable places left for investors to put their money and a lot of it will come here, perhaps heading to the bond markets, driving yields down.
There will be opportunities for smart entrepreneurs.
Change and confusion always create opportunities for companies that can step in and help customers navigate a shifting landscape. In particular, financial tech solutions will be needed to reflect Britain’s altered relationship with the E.U., and with every other nation. Founders who create companies that address any of these needs are likely to do well.
It could conceivably affect the U.S. presidential election.
Some observers believe the Brexit vote portends victory for Donald Trump in November. Why? Because the Leave movement was fueled in large part by surprisingly strong anti-immigrant sentiment, and Trump’s vocal anti-immigrant positions are at the center of his campaign.
I’m skeptical. Europe is struggling to absorb massive numbers of Syrian refugees. If Turkey joins the E.U., as it wants to do, then the E.U. will actually border Syria. Once in the E.U., immigrants can head where they like and Britain has seen an influx of about 330,000 people last year, most of them from the E.U. Immigration is certainly a hot-button topic here, but I believe it is a different topic than it is in Europe.
Then again you never know. Nobody really believed Brexit would happen. Now that it has, no one really knows what’s next.
not so familiar with good EU stock funds, any particular ones? With US dollar taking a surge, US stocks will get a hit as well (markets already down 2.8-3.4%) and could continue next week???
One can get into European market using mutual funds. That is how I allocate to Europe mainly.
About 7 business days ago, bought Sanofi SNY at 38.3. Today placed limit order for AZN , GSK, and Barclay's (BCS I think).
But the limit was placed at about 10 pct BELOW today's lows. FO4 Barclay's I am asking 7.2 (price was 8.64 today low was 8.2).
Siemens schumberger are the only other companies I know in Eilurope. I mainly get in thru mutual funds. Started dipping in 9 days ago when stuff was down. Got a little more today. Each day it goes down will buy little.more.
US if snp500 goes to 1900, will start dipping in. Right now am 40 pct stock and 60 pct cash.
In last Monday or Tuesday wsj, there was an article on us junk bonds. Started off the year at 8 pct yiled. Rose to 10 pct in mid feb. And as of last Monday was at 7.6 pct.
The article went on to state that the average yiled is circa 6.5 pct for junk bonds. So may he still good buy.
I don't quite buy that. Clearly at 10 pct it is a much better buy.
With Brexit, if junk bond yields soar, they could get attractive. Maybe start dipping at 10 pct?
Personally I don't dabble in bonds. But something to keep an eye on.
The Sat Intelligent Investor column by Jason Zweig (who is one of my favorite pundits), puts the Brexit In perspective. He states and I paraphrase from memory -
If you bought some European fund earlier this year at higher prices and are now questioning your sanity after Fridays fall, you probably don't belong in the stock market.
If, on the other hand, after the Friday loss, you look at the fall as an opportunity to increase your position with an eye for the long term, you have the correct outlook.
In other words, no one can predict what would happen in the short term. Europe was cheaper than US by far. And it just got cheaper still.
The BCS limit kicked in. Got it at 7.05. Now at 6.94. Or 1.6 pct loss.
AZN has about a 20 cent gain.
Picked up twice the amount in the European fund today as I did on Friday (and in each of 3 days about 8 business days earlier when they were down).
By the time this is done, want to bring stocks to 65 pct from the current 40 pct and cash to 35 pct. And let that ratio stay till there is another spike.
Unfortunately the markets in Europe and us rose circa 3 pct today. So limit orders on several Financials didn't kick in. Got azn and bcs post brexit. And sny at 52 wk low 7 days pre brexit.
Plus added to European mutual fund Friday Monday and 1 week before brexit.