Brexit: Does This Make Great Britain Little England? The Fallout & More...

June 27, 2016
 
 
 
 
 
 
 
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I think we've all been taken by surprise by the Brexit vote on Friday. The pundits, of course, in the financial markets were predicting about a 60% probability that the British would stay in the European Union. As we said in the video we sent out on Thursday, that was priced into the markets. What wasn't priced in was an exit, but that exit has now been priced in.

 

Hi, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management, a boutique wealth management firm based here in The Woodlands, Texas. Now, it's a little bit of a timely video, so I'm actually recording from Denver, Colorado. What has been the impact of Brexit? So far the pound, the British pound, has fallen against the dollar to its lowest level in 30 years. In essence, the financial markets, the global financial markets, are voting with their dollars, and they're staying with their opinion. The British, in this case, made a big mistake. It's certainly understandable. There's a lot of stress in the United States and Europe because of the impact of globalization, the impact of technology, this duality between those who are very successful and those who feel like they're being left behind. Unfortunately, a vote does not undo the rule of economics' gravity. We are dealing with globalization and technology whether or not we like it.

 

What is going to happen? London's probably going to lose thousands of jobs in the financial services industry. Those areas that voted most against Europe, most in favor of Brexit, in the countryside, in the reaches away from London, are actually the ones who are going to most feel the impact of their decision, due to the significant fund transfers that exist from Europe to the various farm communities within Europe. United Kingdom and Great Britain are going to start to sound a little bit like an oxymoron. Scotland and Northern Ireland is now in a position where they almost will have to push for a referendum to be independent if they want to retain and regain all the freedoms and benefits that go with being part of the European Union, so expect at least one if not two new referendums within the next 24 months, which truly will leave Great Britain now the new Little England.

 

How's that going to affect us, my clients? Simply put, in the short term, the effects already have been felt. The markets have overreacted as they always will. These changes will take years, if not decades, to have the full impact on Europe, so clearly those changes that have occurred in the last 72 hours are not the beginning nor the end when it comes to valuation. Returns in Europe and in England are going to be higher. That's not good for Europe. It's not good for England, but it is good for investors today. There is blood in the streets, and now is the time to buy.

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