Uncertainty Creates Volatility As Well As Opportunity
June 29, 2016
By Marty Resnick
England’s surprise vote to leave the EU has created the usual volatility and fear that surrounds all major changes. If you are properly allocated, the appropriate course of action is to do nothing. It is impossible to gauge the impact on business entities worldwide, and companies will certainly morph to capitalize on new opportunities as the details of the partition get hammered out.
The uncertainties are many and not limited to the items below:
- Changing valuations for the Euro and Pound going forward.
- Movement of corporate headquarters from London to other locations in the EU.
- Possibility that the EU will vote to punish England by raising tariffs on goods and services coming from England into Europe.
- Exports into England from outside trading partners may be negatively impacted as the Pound weakens.
- Other members of the Eurozone may try to exit the EU, further damaging their status in the global economy.
Please be aware that it is impossible to judge the long-term effects surrounding this matter, and, more importantly, being what they are, well-managed corporate entities will always find ways to prosper inside the new paradigm. While the details of Brexit are complicated and time-consuming, opportunities for nimble companies will be evolving on an ongoing basis during this process. This is why it is so important to keep some exposure to the EU as well as exposure to England.
On a big-picture note, I believe the sound of angry people with pitchforks can be heard in the distance! There appears to be a rise in populism globally that has not been seen since the period leading up to World War II. Populism manifests itself in a high degree of dissatisfaction relating to the distribution of wealth and/or power. This is something worth monitoring, as it may affect global growth going forward.
As always, I would be happy to discuss any of this with anyone who would like to give me a call or send me an e-mail – firstname.lastname@example.org.
Marty Resnick serves as Partner and Managing Director at Resnick Advisors in Westport, CT.