As an investor, it’s not unusual to bristle when the stock market takes a dive then fight the impulse to cut and run. In the wake of Brexit, The New York Times “Your Money” columnist Ron Lieber offers the following words of wisdom:
- Your portfolio is probably made up of a diverse group of assets, so all of your eggs are not in the stock market basket.
- If you have been investing in a global stock portfolio in the last seven years, you have most likely made gains.
- When you invested in stocks, you knew there were risks and whatever returns you earned were the reward for your willingness to bear that risk. Lieber says, “Nothing about the vote for Britain to leave the European Union suggests that the fundamentals of capitalism have changed.” Therefore, he argues, you shouldn’t lose confidence in owning stocks for the long-term.
- Long term investors have time to recover losses.
- “Try to give the situation in Europe some time to work itself out, and consider the alternatives,” Lieber says, adding that few investments can deliver the kinds of returns that global stocks can (without their own levels of anxiety and uncertainty).
- Beware of predictions, because no one knows what happens next.
- Consider the optimistic outlook, that Britain and Europe will split amicably and no other country will decide to leave the EU.
- Lieber emphasizes, “This is what markets do.” He says there is nothing “abnormal” about the market’s reaction to Brexit, and argues that stocks are the most accessible route to get the “returns you’ll need to retire someday.”