June 30, 2016
As the dust starts to settle after two days of a dramatic drop followed by some solid returns we thought a "Brexit Part 2" communication was in order.

The Facts
  • Britain shocked the financial community by voting to leave the European Union (EU).
  • Britain's Parliament still needs to act. Regardless of media headlines, until that happened, no action is possible toward negotiating Brexit from the EU.
  • US exports to the UK were $55 billion, 2.5% of all exports and just 0.3% of US GDP. The direct effects of a slump in the UK will be hardly noticed.
 
Our Thoughts on Brexit
We were expecting a vote to "remain" but felt the vote to leave is a healthy development.
 
Why did we think there would be a vote to remain? In elections regarding benefits, voters are reluctant to give up benefits that they perceive someone else is paying for and so votes tend to be in favor of keeping the benefits or in this case, keeping the membership that provided the benefits.
 
Obviously in the U.K., the voters thought other member states were benefiting more and the U.K. was footing the bill.
 
The Brexit vote demonstrates the political mood has changed in the U.K. and possibly all of Europe.
 
We are optimistic Europe will go through a period of adjustment as it renegotiates with the United Kingdom and it is an opportunity to improve the overall relationships.
 
Our Thoughts on The Markets
As of this writing, the market is down slightly since pre-Brexit.
 
On the horizon:
  • On July 1, we anticipate Puerto Rico will default on some of it's debt. New Jersey and Illinois are also having trouble managing their budgets. This is not new news, and it should already be priced into the market prices. Coupled with Brexit, it could create more uncertainty.
     
What To Do
Nothing! It is yet to be determined if this is a time for defense or time for the offensive. The fundamentals have fundamentally not changed. We continue to monitor the situation. 

Please advise us promptly if there are ever any changes in your financial situation or investment objectives.
 
Feel free to give us a call at 888.797.9009 if you want to discuss anything further. 

Cheers,
WH Cornerstone Investments, Inc.
A Massachusetts Corporation 

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Mailing address: PO Box 207, Duxbury, MA  02331
Office address: 13 Tremont Street, Kingston, MA
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