Brexit: Heed the Facts, Not the Hype

The media is a successful investor’s worst enemy. They sell hype. I cringed when I read that the stock market had “plunged” on Friday and investors’ 401(k) accounts had been severely damaged.

Let’s look at the facts:

First of all, the stock market had been up earlier in the week of June 20th in anticipation that the Brexit proposal would result in Britain staying in the European Union.

Here are total returns of broad stock market indices ending Friday, June 24, 2016, and we draw your attention to five-year returns (as we always do) for the minimum time period to measure a stock market investment:

Fund Name One Day   One Week Year to Date Five Yrs
Vanguard Total International Stock Fund -7.09% -2.08% -3.31% +0.82%
Vanguard International Developed Markets -7.73% -2.49% -5.41% +2.43%
Vanguard International Emerging Markets -4.01% -0.14% +3.31% -3.64%
Vanguard U.S. Total Stock Market -3.65% -1.61% +0.67% +11.83%
Vanguard Index 500 Fund -3.59% -1.62% +0.74% +12.30%

  A one-day loss of 3% to 7% is not a “plunge,” in my opinion. A drop of 15% or more in one day is, such as -23% on October 19, 1987. And we all know we lived through that.

[Tweet "The media is a successful investor’s worst enemy. They sell hype. "]

Successful investing is a contrarian process. Buy and/or hold when your gut tells you to sell. Sell when your gut tells you all is great!

More news to come on this whole event, but for now, focus on the facts and the actual results. Not as bad as the media screams!

As always, please contact us with any questions, news or comments.