Brexit: It Seems Like We’ve Been Here Before

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By Jason Oshins, Financial Advisor, MBA

Proposed referendum on United Kingdom EU membership of the European Union decision

Britain has decided to exit the EU.  By now, Brexit is a word firmly planted in our minds.  The points are the points.  To the extent we choose to politicize them is an individual decision.  We’ve seen the immediate impact of the referendum.  The pound dropped precipitously, reaching a 30-year low.  The markets reverberated in grand form.  “Volatility” joined “Brexit” on all major word-trending lists.  Everybody became an instant expert, confidently predicting the impact on the global market.  Talking heads screamed in high-pitched voices.  Buy this!  Sell that!  A slew of questions arose: Is now the time to sell?  How far will the market fall?  Is this temporary, or will this last a long time?  Will this bring down the global markets?  So, what should our clients do?  This is where, as advisors, we show our mettle.  Do we join the chorus of confusing voices, or do we provide a steadying hand?

In New Order’s[1] song “Everything’s Gone Green”, Bernard Sumner repeatedly sings the refrain, “it seems like I’ve been here before”, the repetition highlighting that, indeed, he has been here before and this is not an entirely new experience.  Without question, Brexit is a major event, and it likely will have major implications.  This specific event has never occurred, however every decade we’ve had major events that seemingly raise the aforementioned questions.  Some impact the markets; others don’t.  Sometimes the impact is large; other times it’s small.  This time, like the others, we have no idea of the impact.  Nobody does.

So, back to the world of advising and investing – what should our clients do in response to Brexit?  We as advisors need to reframe the discussion and make sure we’re addressing the correct issues.  Really, the right questions to ask are the following: (1) What does this mean?, and (2) What should I do?


Nobody knows with certainty, and those talking heads who claim otherwise are continuing to play a dangerous game of prognostication and fortune telling.  Sure, it might be good for ratings, but it’s less likely to be good for portfolios.  Will the first Monday following the referendum result in a rebound or a further decline?  What about the Monday after that?  And the one following that?  Here’s the only thing certain about binary predictions: 100% of the time they’re either right or wrong.  If every day I tell you that today’s the day it’s going to rain, at some point I’m going to be correct.  And this is coming from somebody who lives in Las Vegas!


Investing should be done with a long-term outlook.  Academically-structured portfolios[2] are designed for volatility.  Sectors rise, and sectors fall.  Then they change their minds.  And then they change their minds after changing their minds.  Rarely do they behave in beautiful harmony, as though choreographed in advance.  By applying the principles of evidence-based investing, which entails systematic rebalancing[3], the investor is likely to be rewarded long term.  Unfortunately, this is easier said than done.  From seductive whispers to eardrum-barreling screams, “experts” prey on emotions.  Those advisors and investors who react based on emotions are often punished.

In its most recent “Quantitative Analysis of Investor Behavior”, an annual study of actual investor returns, DALBAR[4] noted that investor behavior is the number one cause of investor underperformance.  In fact, the average investor significantly underperforms the index.  According to the 2016 study[5], the average equity mutual fund investor’s annualized returns over the past 30 years were 6.69% lower than those of the S&P 500, an index widely used as a proxy for market returns.  Feel free to reread this paragraph and pause to fully absorb it.

Brexit is a serious event, and it certainly will have implications.  However, nobody knows the implications or the extent of them.  Investing is for the long term.  Similar to times in the past, those who manage their emotions, who don’t panic, are likely to be rewarded; and those who deviate from their strategy and don’t remain disciplined are likely to be punished.  The strategy remains the same: own equities, diversify globally, and rebalance on the relative highs and lows.

Bernard Sumner sings “seems like I’ve been here before” over and over.  “Everything’s Gone Green” – quite apropos… in the long term.


[1] Other New Order songs have applicability to the financial market, with titles such as “Confusion”, “Round and Round”, “Shellshock”, “Temptation”, and “World in Motion”, among others.

[2] The phrase “academically-structured portfolio” refers to those globally-diversified portfolios adhering to principles developed by thought leaders such as Harry Markowitz, Eugene Fama, and Kenneth French, among others.

[3] Different asset classes perform well at different times.  This causes the portfolio to become unbalanced, thus altering its defined mix.  Rebalancing is the process of regaining the predetermined alignment.  When a mechanism for rebalancing is built into the process, the investor obtains the investment holy grail of buying low and selling high.  For example, let’s assume a portfolio is comprised of $50,000 of US stocks and $50,000 of international stocks.  If the US stocks increase to $65,000 and the international stocks decrease to $45,000, the portfolio no longer is in balance.  Rebalancing simply involves selling $10,000 worth of the US holdings – selling high and locking in the gains – and purchasing $10,000 worth of international ones – buying low – resulting in $55,000 in each asset class, resuming the defined ratio while maintaining the original risk tolerance.  Effective portfolio management involves having a systematic approach to rebalancing, based on academics.

[4] DALBAR, Inc. is “the financial community’s leading independent expert for evaluation, auditing, and rating business practices, customer performance, produce quality, and service”.  Each year, DALBAR publishes the “Quantitative Analysis of Investor Behavior” (QAIB), a study of actual investor returns during the prior 20-year period.

[5] In the 2016 QAIB, the annualized return for the average equity mutual fund investor vs. the S&P 500 for the past 30 years was 3.66% vs. 10.35%, for the past 20 years was 4.67% vs. 8.19%, and for the past 10 years was 4.23% vs. 7.31%, with the average equity mutual fund investor significantly underperforming the index.



Jason Oshins is a Financial Advisor with Wealth Strategies Group. He works closely with clients throughout the country to increase wealth during lifetime, improve income during retirement, and provide a greater legacy upon passing, while also protecting their estate from taxes, inflation, and market volatility. He specializes in the areas of estate planning, investments, retirement planning, insurance planning and design, disability protection, long-term care, wealth transfer, and business planning. Jason obtained his MBA from the University of Michigan in Ann Arbor. He can be reached at (702) 735-4355 x 218 or at


This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Data and rates used were indicative of market conditions as of the date shown. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 6455 S. Yosemite Street, Suite 300, Greenwood Village, CO 80111, 303-770-9020. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Wealth Strategies Group is not an affiliate or subsidiary of PAS or Guardian.
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