KAILUA-KONA — The decision of one island populace in the Atlantic Ocean could have ramifications felt by another in the Pacific.
KAILUA-KONA — The decision of one island populace in the Atlantic Ocean could have ramifications felt by another in the Pacific.
After the United Kingdom voted in favor of exiting the European Union, stock markets dropped across the world, and Hawaii residents likely won’t be immune from changes on their investments. But some West Hawaii investors preached patience monitoring how the situation half way around the world plays out rather than focusing on any drastic shifts in the coming days.
“It will have some short-term impact. I’m not really concerned for the long-term,” said Jerry Anderson, owner of Anderson Wealth Planning in Kailua-Kona.
That opinion is echoed by David Uhlmann, financial adviser with Ameriprise Financial Services. Sudden changes and how everyone reacts to them isn’t necessarily an indicator for how things are going to be years from now.
“The market doesn’t like surprises,” he said.
Thursday’s election outcome could certainly be classified as a surprise. So too is what’s in store for England, a national financial power, now that its decided to leave. That uncertainty amplified the effect on the market, Uhlmann said.
The EU is an economic and political agreement that currently includes 28 countries. It eliminated tariffs to encourage trade throughout the region. Nineteen of the countries began using the Euro, although the British retained the pound.
People with a heavy international portfolio may see their investments sink, said Anderson, at least temporarily. But American investments are likely to be solid, he said.
“The US really is the bright spot in the world economy right now,” said Uhlmann, citing that he and other investment professionals suggest a majority of a portfolio be American.
Uhlmann views the drop as giving up some of the gains made so far this year. It also creates a number of opportunities, he said, as investors may be unloading useful stocks that can be bought at a lower price.
“I think it will provide good opportunities,” said Anderson.
Other countries, like Spain, France and Germany, are having their own votes on remaining in the EU. That may open up some places for American trade. It may also open up a route for some investors to expand their international investments, Anderson added. Much of the response comes down to how much risk an investor is willing to take.
But one thing’s certain — the ripple effect from U.K.’s vote is being felt here. Uhlmann has been sending out emails and making calls to update his clients as things change.
“I’m definitely going to be making a lot of calls tonight and this weekend,” he said.
Anderson said that clients who purchased insurance on their retirement income also seem to be less concerned. That is a service where someone can insure that they will receive a minimum amount of money regardless of market changes.
If people are concerned, Anderson said they should consult with their financial advisor. They may want to shift money out of Europe, perhaps to the US or the Pacific Rim, he said.
“For most investors, especially those with a retirement account, it’s not what happens next week or next month, it’s five or 10 years,” Anderson said.
The referendum is not legally binding, so the British government would need to pass or repeal various laws to get out. The referendum is only the beginning of any exit, said Uhlmann, and it will take several years to complete.
“It’s to the EU’s and UK’s benefit to ensure a smooth exit,” he said.