Riding the Brexit Buying Opportunity

Political drama is the spice of the markets, and when times like these come (and they come all the time!), the most important thing is to remember is that the world is not ending, and that panicking is a bad idea.

Everyone’s first reaction to change and the unknown is fear. The second reaction should be an assessment of likely trajectories and a risk/reward analysis.

My short version conclusion is that the Brexit vote result will produce a buying opportunity for stocks in general and European (including UK) stocks in particular. Because our new AIMS™ empathizes the latter as being better value deals in the current environment, that means that the days and weeks to come are a great time to switch from ISIS™ to AIMS™, as we recommend and as many clients have begun doing. Call your Camarda Wealth Advisor to discuss any questions you may have, and we will be calling you soon.

The financial drama du jour is the recently-approved succession of the UK from the EU or “Brexit,” which we believe will ultimately be a non-event either way it eventually settles in; for now, we believe it represents a buying opportunity for stocks in general and European (especially including UK) stocks in particular. The UK’s recently-approved referendum to leave the European Union, and restore Britain’s economic independence—even if eventually ratified by Parliament, a necessary step—will be no quick thing to implement. While a simpler process for the Brits as they’re the only major country not to have exchanged their sovereign currency for Euros, it is still a vastly complex task to negotiate and untangle a major nation’s political and economic entanglements which span decades. While Camarda believes that a Brexit will be somewhat disruptive to the markets, we don’t think it will be devastating. Some financial pundits have likened the fear associated with Brexit to Y2K, which many readers will recall to have been an overblown non-event. It is important to again note that the referendum is non-binding, and while it is likely that Parliament will ratify and begin to implement the people’s will, it is far from a certain thing. It is also important to emphasize that declaring one wants a divorce is one thing, but that the mechanics of separation and division of marital assets and obligations another. The latter is typically a messy and protracted process, far more so for a nation than a couple. Expect a long, drawn-out affair that will eventually fade into the drone of more newsworthy topics. Regardless of which way the Brexit bus goes, we believe Europe (including the UK) to on the mend, and a very undervalued place to invest right now, which is what it is a prime area targeted by the new AIMS™.

Our bottom line forecast? A dip and buying opportunity in the markets, and a shrewd time to switch the investment mix to less U.S. and more non-U.S., as the ISIS™-to-AIMS™ process will do. We still expect a big correction or bear market down the road, but not this year and not caused by Brexit. As a final note, while the Dow is down 400+ points in early trading, it is still higher that it traded a week ago—and the drums of Brexit Doom have been beating longer than that! Keeping perspective is key, my friends!

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