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Lindsey Report – July


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As you are likely aware the equity markets both domestic and international experienced a rather tumultuous end to June (as measured by the S&P 500, Dow, FTSE and Dax). It was likely hard to avoid hearing that on Friday the 24th, the Dow fell more than 600 points and fell 900 points in just two days, including the 27th. The stories were similar across the pond, albeit the percent drops were even higher (MSN).

Of course what precipitated this move was the “Brexit” vote in Great Britain, which had been the topic of conversation in the finance world for quite some time. As you are likely aware, “Brexit” was the phrase coined for the British “exit” from the European Union. The majority of the pundits, and the British odds makers, had believed that the people would vote to remain and not to exit: well they were wrong.

As has been noted many times over the years, the markets do not like uncertainty, and this vote has created significant uncertainty. Not unexpectedly, the markets had a knee-jerk reaction, if not an overreaction. Many believe that in situations like this, it is the computers and algorithms driving all the trades and it takes some time before cooler heads prevail or actual heads, as in, people making decisions. I’d like to think that is the case.

Nonetheless, I’m guessing it is less well known that equity markets had been moving up in the days prior to Brexit in anticipation of a “yes” vote. Even though the first reaction was “sell, sell, sell”, both the S&P 500 and the Dow eked out gains in June and are up slightly for the year.

While no one knows what effect, if any, this will have on the global economy, it is likely to lead to instability and a slow-down in the U.K.’s near-term, economic prospects. In the domestic markets, I’m expecting this issue and others will lead to more volatility this summer.

As it is summer, the kids and I are making our annual pilgrimage to Cancun. If you need assistance while I’m away, please call the office and someone will be here to help you.

By The Way, Happy Summer!

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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