Brexit and the chaos it unleashed in financial markets are no reason for investors with a sound financial plan to panic. That’s the word from Ric Edelman, who runs one of America’s top financial advisory firms.
Stocks (^DJI, ^IXIC, ^GSPC) tanked on Friday, with all three major indexes plunging three to four percent. Investors turned to classic safe havens, sending gold prices (GCN16.CMX) soaring and bond yields (^TNX) sharply lower. U.S. stocks are pointing to a slightly lower open Monday after mixed results in Europe and Asia overnight.
“This is a classic knee-jerk reaction from Wall Street traders,” Edelman tells Yahoo Finance about the Brexit selloff in stocks. “Our clients are focused on their long-term goals. There will be no sustained impact five years from now. They can ignore it, or if anything, capitalize.”
Edelman Financial Services manages $16 billion for more than 30,000 clients.
Edelman says given Brexit, the US presidential election and other worries, investors should expect market volatility for a while. In response to wild market swings, his strong advice is “do not change your long-term investment strategy.”
Edelman says his clients will take advantage of the volatility to rebalance their portfolios, selling assets that have appreciated in value and adding assets like stocks that have suffered declines. “This represents investment opportunity,” he said.
Unfortunately, Edelman says, many investors will do exactly the opposite and dump stocks when they’re falling. “Nobody knows how low is low, and nobody knows what the market is going to do to. Trying to time the market is a fool’s bet, and that’s precisely what a lot of people try to do.”
That said, Edelman says events like the Brexit vote and the market’s reaction are a good time for people who need to get their financial houses in order to take action and to avoid making mistakes.
“If you don’t have a long term strategy, if you’re not properly diversified, this is the time to get effective financial advice,” Edelman says. “Investors could act on impulse and do the very wrong thing at the very wrong time.”
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