It is hard for you not to notice that the people in the United Kingdom have decided to leave the European Union (also known as Brexit). The news shocked the world on 23 June 2016.
On that single day
- Sterling pound fell by 10% against the US dollar to its weakest level in over 30 years
- Japanese stock market plunged 8%
- Hong Kong’s stock market dropped 5%.
- US stock market fell by 3.6%
- Closer to home, the Straits Times Index was down nearly 3%.
It was a doomed news for the financial market, or really?
Judging by the speed of stock market fall after Brexit, most investors must have been very panicked and sold their stocks holding. The interesting thing is that suddenly a lot of “experts” came out with a crystal ball, some say volatility will remain high; some say there will be contagious effect; some say financial crisis is coming again…
There are no facts, only opinions. – Ivan Guan
The real question we should ask is, “how should you invest now”? You have 3 choices:
- Anchor to your previous investment decisions and try to find ways to justify it
- Bet on your own predictions of the future
- Make decisions based on currently available information and manage your risks rigorously
To survive any stock market crash or event such as Brexit, you need to be the third one. Here is why.