Last week, all eyes were on the Federal Reserve: would they raise rates and crash the markets or keep rates steady and buy the world some more time… This week, it’s BREXIT: will Britain remain part of the European Union.
Dire warnings from politicians and master market manipulators like George Soros are all over the headlines this morning. Doing everything they can to scare voters and investors, Mr. Soros even predicted a “Black Friday” event if UK. voters decided to exit the union.
The fear trade is never-ending. There will always be some near-term event that will be bad for the markets that could blow up whatever trade it is that you’re involved in.
The same goes for the bullish side: each week for the rest of your life, there is going to be a reason why a certain investment is set to rise higher in the days to come due to some major news story that will break, and then it’s off to the races for that asset.
The old saying on Wall Street is “buy the rumor, sell the news.”
Right now the rumor is BREXIT won’t happen, so gold is down and major indexes are up. Britain remaining in the EU is a continuation of the status quo, which the markets like in the near term…
Now, I have no idea what the news will be this evening as the vote results come in, but just like the FED last week, whatever the news is, we can expect it to have the opposite effect of what the rumor itself is doing for the markets now.
These types of news-related, short-term trades can be costly to a portfolio over time, because no matter how smart we all think we are, we can’t predict what millions of people are going to do – or even billions, when it comes to the global economy. At least not for the short-term.
For the long-term, I can safely predict that people will want to be safe, secure, and improve their own lives and that of their children. This is why no matter how much the government and oligarchs try and screw society up, in the end, we keep moving forward.
Stick with the fundamentals, buying good value and long-term trends.
Legendary investor Rick Rule has noted that very early in his career, he had to learn the difference between inevitable and imminent, because just because something is guaranteed to happen — like a currency crisis — doesn’t mean it’s absolutely going to happen right away.
Too much wealth is lost on speculating on the next bullish or bear trade… However, 99% of this is just market noise.