Keep Calm and Carry On

Keep Calm and Carry On was a motivational poster produced by the British government in 1939 in preparation for WWII.

Considering the short lived furor over Brexit, and all of the disquieting news from around the world, this may still be good advice.

Prior to the actual Brexit vote, nearly all of the pundits, pollsters, and book makers, were convinced that Brexit would be rejected.  Once the actual results were in, markets took a hit, for all of two days, and subsequently many indices traded at new highs.

The longer term impact of Brexit remains largely unknown, not that there aren’t a wide range of opinions and a seemingly endless number of predictions.  There appear to be four possible paths towards the implementation of Brexit.  1.  A hostile divorce with adverse implications for both Britain and the EU.  2.  A clean break.  3.  An amicable transition, which should limit the damage.  4.  A decision to not go forward.

Any final determination of the details and the economic outcome is years away.  There will almost certainly be winners and losers, but who and to what extent, is not going to be clear for some time.

Over the 90 year history of the S&P 500 index, there have been all kinds of major events, including a depression, World War II, a number of lesser wars, and a wide range of turmoil in different parts of the world.  Despite all of this, stock markets, on average, have, over time, gone up.

This is not to suggest that investors simply ignore the news, but rather, take a moment for calm reflection before taking precipitous action.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®