Friday, June 24, 2016


Will the unexpected Brexit lead to a financial crisis of 2008 magnitude?   While I wasn't concerned yesterday, the unfolding of events today have caused me to revise my thinking.   Not unlike 2008, there has been a lot of complacency in the market, despite ominous signs of potential issues and then a critical event which led to an unstoppable downfall of the market.  

At this point, the Brexit vote may be that critical event in 2016.   The next few weeks will be telling.   For now, I will be maintaining our current investment holdings,which is, unfortunately, what I also did in 2008.     However, during that time, I will be evaluating whether to increase our investments in equities or to sell some positions in our trading account to lock in profits.

For more on Reaping the Rewards, check back Fridays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2016 Achievement Catalyst, LLC


Brent said...

My guess (and it's just that, a guess) is that this is just the market throwing a large hissy fit. We've seen the world coming to an end a few times in the last year and each time the market rebounds. The markets took about a 4% dive but we've been due for a correction. Maybe another 2-3% drop over the next few weeks and then we'll start to climb back. I think we'll be back to pre-brexit levels some time in the fall.

Super Saver said...

I agree that the market over reacted. But as you point out, the market was due for a correction and Brexit was a good reason. Hopefully, the markets will recover quickly as they have in the past few corrections.

Super Saver said...

Still, I wonder if Brexit may have the same unintended consequences that the Lehman had on financial markets in 2008. The next couple weeks should give an indication.

Super Saver said...

@Brent, Looks like you were right, but at a shorter time frame of only a week. I am pleasantly surprised. However, I'm still not confident about the strength of this rally.