Brexit Schmexit

By now, you’ve probably read numerous articles explaining what Brexit means for you, the economy and your portfolio.  Though plenty of pundits will claim to know what it means, the truth is that no one knows for certain how the economy and investors will react in the short term. Though the event is primarily political in nature, it will have economic ramifications based on the emotional impact which may have an effect on spending and growth particularly in Europe.
 
I believe the longer-term ramifications on growth will be minimal however and the likelihood of a recession remains low as Europe will remain accommodative while cooperating as necessary to preserve their common economic interests.  Companies will find methods to remain profitable and capitalism will find an outlet for growth even though it is likely to be slower in the coming quarters.  
 
With timing these issues an impossibility, I believe we will continue to be best served by not succumbing to our innermost fears thereby selling stocks and instead be content to collect above average dividends from the European companies we own such as spirits maker Diageo, chocolatier Nestle, industrialist Siemens and consumer goods producer Unilever, as the growth of their products will likely continue to be consumed globally.
 
With panic in the streets of London Friday, I took the 44% gains we experienced in Darden Restaurants since purchasing the company in December of 2012 and purchased Lloyds Bank believing that British banking is not going to be irreparably damaged long term.  Of note, when we purchased Darden the consensus view was that the company would not be able to turn itself around.
 
Since my senior year in high school (1986-1987), I’ve embarked upon two careers serving in the Marine Corps as a pilot and founding my investment management firm in February of 1997 almost twenty years ago.  During this thirty year period of time, I have witnessed numerous reasons why one shouldn’t invest.  Yet, the broader market indices have grown ten-fold or over 1,000%. 
 
Those who moved to cash or worried about the day to day political and/or economic issues, fared much more poorly than those who remained invested. Therefore, my recommendation is to treat this crisis in the same manner as any other and instead look for the opportunities.
 
 

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