Return to Blog

What Britain Leaving The EU Means

The EU (European Union) was established following the end of WW II in order to offer financial and structural stability for European countries. Since its establishment, the EU has grown to a membership of 28 countries, abiding by various rules and policies set forth by the EU Council.

One of the responsibilities of member EU countries is to accept and honor immigrants and citizens from other EU countries as part of the human rights initiatives recognized by the EU. Immigration has been a topic of contention among various EU countries for sometime. This was a decisive factor for Britain leaving the EU since its economy and cities have been inundated by foreign-born immigrants seeking jobs and a better quality of life.

The markets have reacted negatively to the announcement, pushing down stocks, the British pound, and bond yields as investors seek the perceived stability of bonds as markets worldwide acclimate.

Since Britain has been part of the EU since 1973, it is expected that the unraveling of British ties from the EU could take years. Contracts, employees, and laws will all have to be revised, reshuffled, and rewritten in order to accommodate the divorce between the two.

Now that the British have decided on leaving the EU, many believe that another referendum could possibly be presented in France and other EU countries. The concern of a domino affect is very realistic, as several other EU members are experiencing similar frustrations as Britain.

Expected effects in the U.S. include:
Prolonged low interest rates
More assets flowing into the U.S. from abroad
U.S. companies altering European contracts
Stronger U.S. dollar versus the British pound and euro

Todays market reaction to Britain voting to leave the EU is very nerve racking. Today reminds me of one of my favorite investing quotes by William Bernstein; "In the short term markets are a voting machine, in the long term they are a weighing machine." This means that healthy companies will always win despite short term news cycles. Professor Shiller of Yale also reminds us that the value of a stock is the present value of future cash flows (dividends). Market volatility is just short term noise based on news cycles, not actual company performance. Todays emotional market reaction causes short term volatility, but not long term losses, especially the way invest focus on building portfolios using long term healthy asset classes.

Casey T. Smith
President

Also, see Vanguard's response to the British exit here.

Have more questions? Email me at [email protected] or use the Contact Us page.

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Happy Birthday to Kylie, our Marketing Assistant! Kylie works hard behind the scenes on our website, podcast, social media, and so much more.

Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

https://conta.cc/3Ov1Fub

Your Medicare premium is affected based on which tax bracket you fall within after age 63. IRMAA is your income-related monthly adjustment amount. Watch today's video to learn more about how IRMAA works.

https://conta.cc/3zK9WGw #irmaa #medicare

The big question is, will we have a recession in 2022? Watch this video to find out!

https://conta.cc/3Mz2z7D #recession2022 #recession
https://youtu.be/45TvHaZf4z4#recession2022

Happy birthday to LJ our Video Production Manager! LJ works behind the scenes producing all of our podcasts and videos that we post every week. 🎉

Company

Services

Client Access

Firm Information

Schedule a Meeting
678-905-4450[email protected]
Google Rating
5.0
Based on 71 reviews
js_loader