The dust is finally settling on the EU referendum result, but the future of the UK economy and the nation’s position in Europe is more uncertain than ever – in short, no one who advocated an EU exit has actually come up with a suitable exit strategy.
Not only that, the whole political party system has been thrown into disarray, with both major players undergoing leadership change and challenges.
None of which is good news for British business or anyone looking to invest in British business – so here are three things the boss of one of the world’s largest independent financial advisory organisations thinks investors need to consider in the immediate aftermath of the leave vote.
Speaking on the UK’s decision to leave the EU, Nigel Green, founder and CEO of deVere Group, has said: “Britain’s decision to drop the Brexit bomb and abandon its four decades of EU membership has, of course, been fuelling turbulence in the global financial markets since even before the outcome was officially announced.
“Against a backdrop of reeling markets and uncertainty, individual investors are, understandably, feeling nervous about their future financial security.”
Here are the three things Nigel Green suggests investors need to now do…
Keep calm and carry on
“Hasty decisions are typically not the wisest ones. There remains too much uncertainty around at the moment to take strong bets on any particular asset class, sector or region.
“The market volatility may indeed be an indicator of storm clouds ahead, but equally, and perhaps even more likely, it will present a positive buying opportunity. But we need to wait for the fog to lift a little first.
“A buy-and-hold strategy of quality multi-asset funds is as valid a strategy today as it has ever been.”
Focus on the longer term
“Yes, the political landscape has changed overnight, but your financial objectives have not.
“Markets are, by their very nature, turbulent but stock market performance is fairly predictable over the longer-term – they usually go up. For this reason, investing in equities is recognised globally as one of the optimum ways to accumulate wealth over long periods.
“All too often even experienced investors focus on the short term too heavily in times of market volatility of the kind we are now seeing, and there are many disadvantages to this.
“For instance, a short-term investment strategy involves considerably higher risks, compared to investing over a longer period. Other pitfalls of a short horizon include that investors can often sell a quality investment too early due to over focusing on short-term valuation metrics.
Keep an eye on other important geopolitical factors
“Keep an eye on other important geopolitical factors that will influence markets and therefore impact your finances. These include China’s economic growth, the possibility of Brexit contagion as other countries seek to exit the EU, the U.S. election, the failure of negative interest rates in Japan and the Eurozone to stimulate sustainable recovery, and the Fed’s nervousness over the U.S. economy.”
“In these times of increased volatility, a good fund manager will prove to be invaluable to help capitalise on the enormous opportunities that will be coming along and to sidestep the risks.”
What do you make of Mr Green’s comments? And do you have your own thoughts on how investors should operate in post-Brexit Britain? Let us know…
Image via Moyan Brenn on Flickr.
