With Britain clarifying its decision to leave the European Union through a referendum vote albeit by a narrow margin, some of the major investors of the US stock market have their own opinions about this. It’s worth checking out how these millionaire investors have reacted to Brexit.
Before that, you would have noticed that US stocks have posted losses for the second consecutive day on Monday, the 27th of June 2016. The S&P 500 was down 1.72% while Dow Jones Industrial Average was down 1.40% by midday. In this context what do the following investors, with experience stretching from the previous century, have to say and do?
Warren Buffett Isn’t Moved
Back in April, Warren Buffett said that he didn’t let macroeconomic factors affect his investing. He wasn’t in favour of Brexit, but said that whatever happened he wouldn’t change his investment strategy at all.
Howard Marks Won’t Be Distracted
Howard Marks, Oaktree Capital Management’s co-founder and co-chairman, said on the day immediately after the referendum that he didn’t believe in forecasts much. Brexit should not be allowed to distract or confuse us on our strategies. This incident is one-of-a-kind since something like this has not happened before. So there’s no point in predicting what would happen since no one can ever know. Therefore one cannot conceive the right strategy for something like this as it really cannot be known what its long term implications could be.
Marks acknowledges the psychological effect Brexit has been causing. People could be investing and spending less, though Marks doesn’t consider this to be a long-term negative for the countries involved. However, he doubts whether this would affect or change people’s lives much. While the psychological effect must be realized and accepted, Marks does not believe Brexit would result in a financial catastrophe though it would have significant political, societal and geographic consequences. Selling stocks as soon as uncertainty arises is something most traders do, but Marks believes that is not always the right decision. He cannot agree with the idea that increased uncertainty warrants selling.
George Soros Paints a Bleak Picture
When talking about the Founder and Chair of Soros Fund Management, George Soros, we cannot but remember 1992, when he reaped over $1 billion by betting against the British pound at a time when it was forced to leave the Exchange Rate Mechanism. With regard to Brexit, though, his outlook is bleak.
Unlike Buffet or Marks, Soros compares the consequences of Britain’s decision to leave the EU with the 2007-2008 financial crisis. Soros reminds us that immediately following the vote the value of the pound dropped to its lowest in over 30 years. He believes that financial markets all over the world are likely to be in a turbulent situation as Britain’s political and economic exit from the EU is worked out. While Britain could be eventually be well off or worse having left the EU, the short term seems to spell trouble for the country’s people and economy, according to Soros. While Soros Fund Management was short the pound in 1992, it was long the pound heading into the Brexit vote.
Observing the actions of major investors and understanding their perspectives do their part in giving you some kind of guidance in online stock trading. TradeZero can help you with the resources needed. Contact us at +1 954-944-3885 or at support@tradezero.co.
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