How Should Investors Respond to 'Brexit'?

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As you know by now, the United Kingdom has voted to leave the European Union. The “Brexit” vote is expected to have major implications for Britain’s trade and economic relationships – but how might it affect you, as an individual investor?

At first glance, you might be worried. After all, right after the results came in, we saw a sharp decline in stock markets around the world, including here in the United States. And we may well see more volatility in the near term. But by taking a step back and looking at the big picture, you might see that the outlook for investors is nowhere near as gloomy as you may have thought.

Here are some suggestions for maintaining your perspective:

Be patient. Despite the Brexit vote, it’s not so simple for the U.K. to just pack its bags and bid “adieu” to the European Union. In fact, it may take three or more years before the U.K. actually departs. This extended time period can give financial markets a chance to absorb the new reality – while giving investors time to ponder their long-term strategy.

Don’t forget about the “fundamentals.” Financial markets dislike uncertainty, which is why they fell so sharply after Brexit. But the markets move much faster than the fundamentals that actually drive stock prices – and, despite Brexit, these fundamentals remain generally positive. In the U.S., economic growth is expected to continue in the 2 percent to 2.5 percent range, and the prospects of a recession remain small. U.S. companies will continue to operate in Britain as before, and British companies will still participate in the global economy.



Review your investment portfolio – and look for opportunities. If you’ve done a good job of building a diversified portfolio that’s based on your individual needs, goals, risk tolerance and time horizon, you may not need to take any action in the immediate aftermath of Brexit. Diversification is especially important, because it’s possible that some financial assets may be more negatively affected by Brexit than others; you can blunt this impact by owning a wide range of investments. (Keep in mind, though, that while diversification can ease the effects of volatility, it can’t guarantee profits or protect against all losses.) As you review your holdings, you may even want to consider adding international and U.S. stocks, if appropriate for your situation, to take advantage of the drop in price of many quality companies. As always, of course, be aware that the value of your shares will fluctuate and you may lose principal. Also, international investing does carry some special risks, mostly related to currency fluctuations and foreign political and economic events.

Keep your focus on the long term. If Brexit-inspired volatility does go on for a while, keep your focus on your long-term financial goals, which have not changed. By staying focused on the “far horizon,” so to speak, you’ll be less tempted to make short-term moves that may not be in your best interest.

The Brexit vote may not be a positive development for the global economy. But we’ve gotten past bigger events in the past, including wars and other political crises, and we’ll get through this one, too. As the British themselves famously posted on their walls during World War II, “Keep Calm and Carry On.” That’s good advice for investors, too.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Courtesy of Walter Lother, Financial Advisor, in North Adams, at 413-664-9253. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

 


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Macksey Updates on Eagle Street Demo and Myriad City Projects

By Tammy DanielsiBerkshires Staff

The back of Moderne Studio in late January. The mayor said the city had begun planning for its removal if the owner could not address the problems. 
NORTH ADAMS, Mass. — The Moderne Studio building is coming down brick by brick on Eagle Street on the city's dime. 
 
Concerns over the failing structure's proximity to its neighbor — just a few feet — means the demolition underway is taking far longer than usual. It's also been delayed somewhat because of recent high winds and weather. 
 
The city had been making plans for the demolition a month ago because of the deterioration of the building, Mayor Jennifer Macksey told the City Council on Tuesday. The project was accelerated after the back of the 150-year-old structure collapsed on March 5
 
Initial estimates for demolition had been $190,000 to $210,000 and included asbestos removal. Those concerns have since been set aside after testing and the mayor believes that the demolition will be lower because it is not a hazardous site.
 
"We also had a lot of contractors who came to look at it for us to not want to touch it because of the proximity to the next building," she said. "Unfortunately time ran out on that property and we did have the building failure. 
 
"And it's an unfortunate situation. I think most of us who have lived here our whole lives and had our pictures taken there and remember being in the window so, you know, we were really hoping the building could be safe."
 
Macksey said the city had tried working with the owner, who could not find a contractor to demolish the building, "so we found one for him."
 
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