Despite the thousands of hours of news content we are exposed to every year, very little amounts to much more than noise. A lot of it is just commentary and opinion dressed up as ‘news’.
But last Friday — when the EU referendum results were unfolding in the UK — felt different to most other days. It was one of those rare times when you actually felt you were witnessing history being made. And of course, having been in the EU since 1973, the UK’s decision to go it alone is a momentous one.
You only had to see the reaction of the markets to know the result was unexpected. It seems even the key figures campaigning for an ‘exit’ weren’t ready for the result, either.
Boris Johnson had already written his concession speech, including how the country had to accept the decision and unite, when, sometime in the early hours of Saturday morning (London time), it dawned on him that the exit campaign might have actually won.
He seemed as shell-shocked as UK Prime Minister David Cameron, who at least had two speeches ready — something he joked about with his staff at a private dinner last Friday night, before numbers started rolling in. A wily politician, he soon realised something was awry.
As the UK woke up, and the result became apparent, thoughts soon turned to, ‘What have we just done?’
While UK leaders remained in a state of funk, those in the EU quickly acknowledged the result and started pushing for a quick divorce. The problem now is that nobody seems to know exactly what an exit plan entails.
Recent news that both Standard and Poor’s and Fitch have downgraded the UK’s credit rating, from AAA to AA, only adds to the uncertainty. And then there’s all the political fallout, which could drag on for years. Next up will likely be a referendum from their Scottish counterparts to the north. And who knows what might happen in Northern Ireland.
If you want to see the final verdict, check out this map. It shows how clear-cut the vote was per region.
The real question now, not just for the UK but the financial markets as well, is how to construct the exit plan. Amid much shrill speculation, nobody really knows. After all, this event has no precedent.
I don’t believe it’s a time to panic. What you’ve got to do, though, is play a very tight game. That means sticking to stop-losses and not having too much money in the market. You don’t want to be sweating over your positions.
It’s also a time to really focus on what you want to get out of the market. You need to be cautious, but not negative. Otherwise, you’ll miss out on some of the opportunities the market will throw at you.