Breaking Up is Really Hard to Do


Six lbs of fury over Brexit

The world over is talking about the British exit and I feel compelled to express my woes.  It’s official, the UK voted to break up from the EU. A wise friend once told me that in a breakup, the one who decides to leave first wins; they’re emotionally prepared and very likely already have their exit strategy planned out.

So what does this all mean? Does Britain win and the rest of the EU lose? And when the rest of the EU loses, then economically do the rest of us lose too? What is Britain’s exit strategy? How long will this take?

We all have many questions, most of which will take years to answer. The big thing is the uncertainty that comes with all this. The best play is to be defensive. Maybe wait until the markets settle down over the next week or so. In the meantime, look at other investment opportunities. Look for stocks that barely reacted to the news. Did their sectors do the same? If the market moves sideways or goes up, you can take your position. If the market goes down, just be ready for when there is a reversal. If your choices display alpha behaviour in that it does not care what the markets are doing and wants to advance on their own, I say consider going for it, maybe just take fewer shares than you normally would to reduce your risk. The macroeconomic conditions have now changed and makes anything you invest in riskier.

There’s always risk in investing; sometimes there is wisdom in the strategy of sitting on your hands until economic uncertainty and market volatility cool off. Sitting on your hands for too long and not being pro-active in the interim poses another kind of risk: the risk of doing nothing and taking action when it’s too late. The best opportunities occur in the places where you anticipate the start of change, the beginning of a potential shift in trends. Watch the world markets, observe the different sectors and industries, wait for currencies to stop falling, and look for promising changes in employment and housing.

Keep your eye on the EU, and if there is instability for a while, look for signs of recovery. My only hope is that the EU has a plan in place to deal with the exit of a major member. I will now join my newborn niece and weep over this major breakup.