From Bill's Perspective

I am sure you have heard of Brexit by now; through the rest of summer and fall you will be inundated by Trump-it and Clinton-ette also.  There will be other it’s and ette’s during the rest of the year that will cause the market to go down and up.

It seems that each news agency needs to amp up its delivery of the news to top off what the previous agency said.  They try to make an impact and with so many different mediums for the release of news, that facts can sometimes take a backseat to rhetoric.  By the end of day (Friday June 24) I would have thought that the Brexit vote could ruin our total economic system.  Here are some facts, and my attempt to put things into perspective.

  1. The cumulative loss on the S&P 500 4 days after the news of Brexit was only -1.6%, while the international index (EAFE) tracked by an ETF was down -6.3%.
  2. The S&P 500 closed at 2070 on Wed, June 29. It also closed at 2069 on June 15. It was actually about even for that 2 week stretch.During this same 2 week stretch the ETF that tracks the EAFE was only down -1.4%.There had been a sizeable run up in anticipation of Brexit passing the two weeks prior to the vote.So the net damage was minimal.

Oh the things that the news world didn’t report.  We need to be reminded that the S&P 500 has had a great run since the 2007-08 housing crisis.  When will it come to end?  What will cause it to come to an end?  How long will the next downswing last?  How deep of a downswing will it be?  These are all items that nobody knows for certain. 

I am not saying that the Brexit vote was a non-event; it might eventually impact the market along with the other it’s and ette’s.  Let’s not get sidetracked by the short term news cycle, but rather focus on a long term goal of spending less money than you make, so that you can fund your retirement income, help your kids (or grandkids) with education, improve your home, help your church send kids on missions trips, assist the less fortunate, etc. 

We don’t drive a car looking 10 feet in front of it.  Down the road is where your focus is.  You kind of see the closeness in your peripheral vision but it isn’t the main focus. 

If your goals have changed or if we haven’t addressed them appropriately please let us know.  It is your long term goals that we want to be focused on.

Bill Reno CFP®

Data is from Morningstar Direct.

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