Wow, what a day in the markets! British voters unexpectedly delivered “Leave” verdict and threw global financial markets into chaos. Before we get into any analysis, I would like to note that we didn’t make any trades for our clients today and I would caution investors to avoid knee-jerk reaction. Yes, the markets had a VERY bad day Yes, the selloff might continue over the next weeks/months. However, investors should focus on their personal situation and not let the headlines lead them to decisions they might later regret. For context, a typical diversified 60/40 portfolio represented by Vanguard LifeStrategy Moderate Growth Fund (VSMGX) was down 2.81% today and down 2.03% for the week.
Let’s commemorate this momentous occasion by updating the performance tables we looked at couple of weeks ago:
- European stocks got clobbered today. However, the weekly number is not as bad given a big run up into the vote based on “Remain” speculation.
- Weakness in foreign stock ETFs was exacerbated by weak currency. British Pound dropped 8.5% to a 30-year low against the dollar.
- Oil was down 5% but “only” 2% on the week.
- Safe heavens in bonds had a good day as did the dollar.
- Gold bugs finally have something to crow about wit a 5% rise.
- Decliners on the country level are led by European nations.
- Interestingly, the weaker countries suffered the most (speculation on more EU exits?).
- Again, weekly numbers are tempered by run up prior to vote.
- U.S. did quite well by comparison. This was only fourth worst week of 2016, pretty ho-hum!
- Economically sensitive sectors got hit pretty hard today.
- Gold miners and income-oriented investments did well.
- Finally, here is a list of biggest decliners on London Stock Exchange today.
- Anything to do with real estate, construction and building material got absolutely crushed.
- Large banks had a terrible day as well. Same goes for the banks in the rest of the European Union.