When you woke up this morning, chances are you didn’t make it long in flipping through the television, or listening to the radio before learning that Britain has voted to leave the European Union. “Brexit,” as it is commonly being referred to as, is the result of a 52-48 referendum vote to sever ties with the European Union, a bloc they joined over 40 year ago.
Various headlines rung throughout international media. Yes, Brexit is the first departure from the alliance since the EU was formed 43 years ago. Yes, Britain’s Prime Minister, David Cameron, has
announced his plan to step down later this year. Yes, this will cause short-term market volatility. And yes, we have seen events like this before, and will certainly see events like this again.
Let’s step back from today’s headlines, and look at a broader picture of historic events and how the market has reacted to them over both short-term and long-term holding periods:
Source: Markets Recover From Crises. Putnam Investment. January 2016.
In looking at more recent events, the same holds true:
The above results might surprise many, but not us. We understand that although unsettling, such events do not spell the end for markets or your long-term investment strategy. History has demonstrated that markets can correct themselves, and can reward investors who adhere to their long-term investment approach and remain invested during such market cycles.
As always, we stand ready to answer any questions you may have.