Local Financial Advisor: Don’t panic over global markets’ reaction to Britain’s exit from the EU

The curve of the German stock index DAX is displayed at the stock exchange in Frankfurt, Germany, Friday, June 24, 2016. The British vote to leave the European Union shook up financial markets around the globe, leading to sharp falls in stocks and the British pound. (Frank Rumpenhorst/dpa via AP)

ALBANY, N.Y. (NEWS10) – News of Britain’s exit from the European Union sent shock waves through the global markets on Friday.

The Dow Jones fell some 500 points within 10 minutes of the opening bell.

“There’s no question, it has some significance, yes there is no question it is somewhat negative, but it’s not as negative as a 500 point decline in the stock market suggests,” Financial Advisor Hugh Johnson said.

Johnson says don’t panic.

We’ve seen this before, we’ll see it again.

A knee-jerk response, one that, fiscally gives this vote more significance it deserves.

“The reason the stock market declines is because it carries with it negative implications for the U.S. economy and earnings. It does not mean that the U.S. economy will stop recovering or expanding.”

That said, Johnson says we will slowly see some subtle impacts if Brits stop buying stocks in the U.S., and if companies do less business with the United Kingdom.

“The UK is an important export destination for the US. Companies do a lot of business. Companies located right here in the capital region do a lot of business with the UK, so if the UK economy slows, which it will, then it’s going to affect them. You’re not going to be able to do as much business.”

Experts say when this sort of thing happens, people tend to panic, sell their stocks, and buy something tangible, less risky, like gold, platinum, or silver.”

Which is why, Wendall Williams of Ferris Coin says the cost of gold is the highest it has been in years.

“At 11:48 a.m., it was $1,316.40 and two minutes later it was $1,319.10, which gives you some idea of how it’s moving nervously,” Williams said.

He says that’s significant because gold is usually in the $6-$12 range.

Bond prices are up, another safe haven for investors.

So why not do that in the first place? The return won’t be as greats they could be with stocks.

The greater the risk, the greater the return.

“I think what’s going to happen is we’re going to end up on the downside on Friday. It’s going to reflect the fact that this is to some extent negative,” Johnson said. “I think in the next few days, you’re going to see the market stabilize as we all try to quantify the impact of this vote.”

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