The stunning outcome of the Brexit vote yesterday has roiled global capital markets and that impact is very likely being felt in your portfolio today. But there is nothing abnormal about what is going on here. This is what markets do from time to time when an event that was not expected unfolds. But capitalism has its ways of working these situations out but it takes time and time for sure is our friend. Because if you are working and are in the accumulation stage of your life, these times are exciting as you continue to add to your portfolio at lower and lower prices. If you are in retirement or in the distribution phase of your life, you are likely not fretting as the impact of this event and other such future events on your portfolio is expected to be minimal. Why? Because as you aged and as you neared retirement, you tweaked and tuned your portfolio to the point that these types of events do not upend your portfolio or your plan a bit.
An excerpt from one of the write-ups by Morgan Housel of the Motley Fool summarizes precisely how we approach market events like these…
My litmus test for whether the world economy will create value over time is asking the question – Did more people wake up this morning seeking to solve problems and make life better for others than do the opposite? And the answer is still firmly “yes”.
And if the answer is yes, who cares what happens today or the next week or the next month or even the next year. This is a game that needs to be measured in decades because the outcome of this game will decide whether you meet your goals with comfort or you are left trying.
So what am I doing? I am strategically buying and filling all the gaps there are in our portfolios. I am buying for our clients and I am buying in our personal portfolios. I also used this event as a lesson and made my daughter buy in her portfolio as well.
And if my daughter can do it, you can too.
Image credit – H. Michael Karshis, Flickr