The Real Winners and Losers Post-Brexit; Plus, Where You Should Dig for Brexit Gold
While the U.K. faces down financial calamity following Brexit, the rest of the investment world has watched closely, breath held, for what comes next. While many have speculated as to what industries will win and lose following the U.K.'s vote to leave the European Union, there's one segment that has been a guaranteed winner: fear-mongering.
The biggest winners in the Brexit debacle were those who make a living selling fear in the financial markets, as it gave them an opportunity to "make a market" in fear. The height of absurdity were the comments by Marc Faber, who told viewers on CNBC's Squawk Box this past week that "We're all on the Titanic, but the Titanic still has maybe a few days to travel before it collapses so we might as well enjoy the journey." He went on to say that he's holding physical gold and safe deposit boxes, and -- get this -- buried in his garden.
Market turmoil is good news for those who make a living pedaling fear and Faber, editor of the Gloom, Boom & Doom Report, must have awoken after the Brexit vote with a spring in his step. His outlandish statements get attention from the financial media -- that is precisely what they are designed to do. Unfortunately, some investors are indeed swayed by his statements and abandon their reasoned investing plans. Comparatively little attention is given to those pundits who say, "this too will pass" and "keep calm and carry on."
There is little disagreement that Brexit will hurt the U.K. markets overall and many sectors, specifically financial stocks, by the historically bad referendum to leave the EU. It may be the first time in history that a country's electorate voted a recession upon itself.
Perhaps the biggest losers are going to be those long commercial and residential real estate in the city of London and surrounding area. Many high-paying jobs in the financial sector will likely be relocated to other cities throughout remaining EU members and London will lose its status as the center of the financial world. And, it isn't just the financial industry that will suffer in London. Think about all the service industries supporting the wealthy bankers and professional staff that will suffer as a result of losing these companies and individuals.
And there is also fairly broad agreement that the ill-conceived vote will damage the European Union as nationalistic and xenophobic political parties line up to follow the U.K. and walk off the European Union gangplank. It also will likely embolden isolationists in the United States to follow Donald Trump's vision in reversing globalization.
But the vast majority of investors shouldn't change a thing because of Brexit. They shouldn't speculate on specific companies or strategies that will likely benefit from Brexit. The only post-Brexit strategy that is an obvious winner is digging in Marc Faber's garden.
This article is commentary by an independent contributor. Robert R. Johnson is president and CEO of the American College of Financial Services in Bryn Mawr, Pa. At the time of publication, the author held no positions in the stocks mentioned.