For those waking up this morning, the media is full of the referendum result. Alongside this news is a constant stream of negative headlines about dramatic drops in various stock market indices and the plummeting pound.
I thought it important to send out a quick note, to say to our clients “Don’t Panic!”.
For the past four months’ financial markets around the world have been waiting for today. Over that time investors and investment funds have positioned themselves to, both, ride out any dramatic turbulence and take advantage of that same volatility.
A good example of this is the shares in banks. For the past year they have fallen in value in anticipation of a vote, and although their share price will suffer another fall today Banks will continue to make money. As such their share price will recover in time.
Equally, as a country our need for utilities and food will continue unchanged. Therefore, these defensive stocks should continue to also pay steady dividends and their share price should ride out any volatility.
It’s worth taking a breather and remembering that today’s vote will take at least two years to enact. Over that time the markets and economy will operate fairly unchanged. This means that investments which made sense over the past year will largely continue to make sense going forward.
As Fidelity’s Head of European Equities announced “…we certainly do not expect a Doomsday scenario and sharp declines should increase investment opportunities.”
In the short term, especially the next few days, there will be plenty of ups and downs in both exchange rates and stock market announcements but a large proportion of this is driven by investors looking to ‘play’ the markets and take advantage of these fluctuations.
For most of our clients we have helped create very balanced and diversified portfolios, focused on achieving growth over the medium to longer term. Currently we see no reason to change our strategy.
In the short term we would simply offer reassurance that our clients’ portfolios are structured to cover a vast range of asset classes, sectors, geography and fund managers. This means a medium term focus should allow our clients to ride out any turbulence.
As always, we are here to help. Should you have any queries or concerns regarding your plans and investments please do not hesitate to get in touch.