The UK votes to leave the EU

  • “Basically, they took back their country. That’s a great thing…and it is essentially the same thing that is happening in the United States.” – Republican presidential nominee Donald Trump, reacting on 6/24/16 to news that UK citizens voted to leave the European Union. Read more
     
  • “We respect the choice the people of the United Kingdom have made.” – Democratic nominee Hillary Clinton, who had favored the UK remaining in the EU, reacting to the news. Read more
     
  • “Markets are panicking? Markets often panic. They’ve panicked a lot worse than this many other times. And each time in the past they recovered and then some. Anyone who bought stocks after Lehman Brothers [collapsed] has made a mint.” – MarketWatch Columnist Brett Arends, writing that heightened volatility brought on by Britain’s decision will settle down soon enough. Read more
     
  • “Hunkering down, hedging your exposure, risk-on/risk-off, getting defensive or searching through the rubble for bargains sounds interesting when things get dicey. It will feel better to do something instead of sitting on your hands and doing nothing. But trying to do these things on the fly because others may be doing them is a sure way to lose some money without a proper plan in place.” — Ben Carlson, blogging at A Wealth of Common Sense about the dangers of reacting to news, such as the “Brexit,” instead of sticking with your investment plan. Read more
     
  • “The phrase ‘United Kingdom’ is now a full-blown oxymoron, akin to ‘jumbo shrimp’ and ‘death benefits.’”
    — Barry Ritholtz, writing at Bloomberg View about the very real possibility that Scotland might rejoin the European Union, leaving the UK united no more. Read more

Overseas’ interest rates turn negative

  • “That’s exactly how the European Central Bank would like you to feel. Low bond yields are meant, in part, to nudge investors to buy other stuff—to invest in things more economically productive than a loan to Germany.” – Wall Street Journal reporter Charles Forelle, writing about negative interest rates in Europe and the idea that signing up to lose money seems crazy. Read more
     
  • “The whole point of negative rates is to penalize banks and savers who hold onto cash. They get 0% interest or have to pay a penalty fee in some cases. The idea is to spur Germans, French, Italians, Spaniards, etc. to go out and spend their money. But that’s not happening. ‘If you give the U.S. consumer $100 more, he or she is likely to spend it. You give the German consumer $100 more, they are going to save it,’ [Paul Achleitner, chairman of Deutsche Bank] explains.” — Achleitner predicting the European Central Bank’s decision to slash rates into negative territory will fail to get Europeans to spend money and boost their economy. Read more
     
  • “I don’t think we’re going to have to provide accommodation but, if we do, I don’t think that’s something that’s on our list.” — Fed Chair Janet Yellen, telling Congress on June 21 that while the Fed has the legal authority to implement negative interest-rate policy, it isn’t planning to use it. She said the Fed is on a path of tightening monetary policy, not easing it. Read more

ETFs multiplying like rabbits

  • “While there are new funds coming to the market that are worth your attention, most are mere novelties. When it comes to choosing, most investors would do well by keeping things simple and keeping costs low. ”– Ben Johnson, Global Director of Manager Research, Passive Strategies for Morningstar, writing there are now more than 1,900 exchange-traded funds available. Read more