If you’ve picked up a newspaper recently and managed to make it past the insanity of the campaign headlines, you might have noticed talk of the “Brexit.” If you’ve made the mistake of watching any CNBC lately, you’ve certainly seen the talking heads using it as fodder for their fear-mongering strategy to boost ratings. Whether you’ve never heard of it or it has you checking your 401k balance in the middle of the night, I thought I’d send you my quick (and unsensationalized) Cliffs Notes explanation.
What the hell is a “Brexit”?
Remember when the trend in the media was to give nicknames to supercouples? Just like Brad + Angelina became Brangelina, Britain + exit has now become the Brexit. And what might they be exiting? On June 23rd the British public will vote on whether or not to leave the European Union (EU). For those of you that missed that lecture in civics class, the EU is a group of 28 countries that formed both a political and economic partnership in the 70’s. The EU has it’s own parliament that makes rules governing members on anything from commerce to the environment. Nineteen of these countries have also adopted the Euro as a common currency.
What’s all the hubbub?
A lot of Jim Cramer types in the press like to take any opportunity they get to throw their hands up and yell that the financial sky is falling. If our friends across the ocean do jump ship is there a chance that it will affect the global economy? Of course. Is it the coming of the next Lehman Brothers and financial armageddon like some are prophesying? Not likely. It’s hard for me to imagine a future where a single country severing a few economic and political ties is going to significantly hamper innovation and growth around the world for an extended period of time.
So what can we do about it?
Remember when just this January every other financial “expert” was saying that the Chinese stock market was going to explode and leave us all living on Alpo in retirement? That temporary hysteria led to some substantial drops in the market, but once everyone had a chance to catch their breath and put it all in perspective, the markets came roaring right back. This case likely won’t be any different. Like I’ve said before, it’s often best to take the contrarian approach and buy at the bottom of these panic-induced dips when investments are on clearance sale prices (if if that last sentence makes your head spin, that’s what your friendly advisor is here for!).
So to steal a line from the Brits and sum it all up, “Keep calm and carry on.”