Will the stock market crash (June 24 2016 Update)?

[Dr. Blackheart]

The Tories (Conservatives under Cameron) and Labor (under Corbyn) were both in favor of remain.  It lost and Cameron resigned and Corbyn is on his way out.

Simply Amazing.

To appreciate this ... imagine the US had a referendum yesterday and the democrats and republicans both supported it.  It lost and today Obama resigned and Paul Ryan is excepted to resign in the coming days.

That is the political earthquake that hit the UK/EU. 

You'll be telling your grandchildren about this event and what is coming next.

A long way to go.  The referendum was non-binding, and only Parliment has the legal right to decide.  That creates a political mess, and Cameron was savvy to resign immediately to force/delay that hand.  Today was an emotional reaction, let's see what happens when the rational sets in.

[Jay Bee]

Not on a daily basis.  I want to spend their time managing my stuff,  not talking people off the ledge.

This was an unusual and significant day. My comment to you was based on you going after someone for "looking at it"...

Not a daily basis issue.

To think it's worthy of critiquing someone for considering the implications of a potentially significant event... strange.

[Tugg Speedman]

A long way to go.  The referendum was non-binding, and only Parliment has the legal right to decide.  That creates a political mess, and Cameron was savvy to resign immediately to force/delay that hand.  Today was an emotional reaction, let's see what happens when the rational sets in.

Non-binding is irrelevant.  Cameron reigned so they can get someone that is Pro-BRexit to lead them in leaving (probably Boris Johnson).  So it will happen.

What happens next?  Next ... which is why the DJIA was down 600 points.

END OF THE EU? Germany warns FIVE more countries could leave Europe after Brexit
FIVE European countries may seek to follow Britain’s lead in leaving the EU in a Brexit domino effect, Germany has warned.

http://www.express.co.uk/news/world/683224/END-OF-THE-EU-Germany-France-Austria-Hungary-Finland-Netherlands-Europe-Brexit

--------------

The EU is coming apart.  It is going back to the 1970s.  To do business in the 28 countries of the EU, you'll need to make 28 different version of your product (one for each country's rules) deal in 12 currencies and 7 languages.

So why do you think the markets reacted so badly?

I hope I'm wrong.

[Coleman]

Non-binding is irrelevant.  Cameron reigned so they can get someone that is Pro-BRexit to lead them in leaving (probably Boris Johnson).  So it will happen.

What happens next?  Next ... which is why the DJIA was down 600 points.

END OF THE EU? Germany warns FIVE more countries could leave Europe after Brexit
FIVE European countries may seek to follow Britain’s lead in leaving the EU in a Brexit domino effect, Germany has warned.

http://www.express.co.uk/news/world/683224/END-OF-THE-EU-Germany-France-Austria-Hungary-Finland-Netherlands-Europe-Brexit

--------------

The EU is coming apart.  It is going back to the 1970s.  To do business in the 28 countries of the EU, you'll need to make 28 different version of your product (one for each country's rules) deal in 12 currencies and 7 languages.

So why do you think the markets reacted so badly?

I hope I'm wrong.

To be sure, all of that COULD happen. The UK could be the match that lit the fire.

Or it could just be the anomaly, the country that was always a bit of an oddball for not accepting the euro that was destined to leave at some point because it never fully integrated.

Which is the true answer? If I had to put money on it, I'd say the latter. But there is a reason markets are spooked. There is a risk. I deal with risk in my job and anyone who knows anything about risk knows that the two major factors are likelihood and impact. Markets are spooked not so much because of the high likelihood, but the potential catastrophic impact. I firmly believe a total EU disintegration is low likelihood, but high impact. It would be like a catastrophic asteroid capable of wiping out civilization with a 1000 to 1 chance of hitting earth. "Likely"? No. Worthy of concern and keeping a close eye on? Absolutely.

[Lennys Tap]

We literally don't know whether it is good or bad for at least two years. Practically speaking there should be no changes for the next two years and the changes beyond that have to be negotiated between the UK and the EU.

No changes? Tell that to someone who was long the pound.

[Benny B]

This is the perfect example of why the rich get richer... because the stupid get scared.

[Dr. Blackheart]

Non-binding is irrelevant.  Cameron reigned so they can get someone that is Pro-BRexit to lead them in leaving (probably Boris Johnson).  So it will happen.

What happens next?  Next ... which is why the DJIA was down 600 points.

END OF THE EU? Germany warns FIVE more countries could leave Europe after Brexit
FIVE European countries may seek to follow Britain’s lead in leaving the EU in a Brexit domino effect, Germany has warned.

http://www.express.co.uk/news/world/683224/END-OF-THE-EU-Germany-France-Austria-Hungary-Finland-Netherlands-Europe-Brexit

--------------

The EU is coming apart.  It is going back to the 1970s.  To do business in the 28 countries of the EU, you'll need to make 28 different version of your product (one for each country's rules) deal in 12 currencies and 7 languages.

So why do you think the markets reacted so badly?

I hope I'm wrong.

It is hardly irrelevant when a vote has to make it legal, Scotland and Northern Ireland want to have a vote to leave the UK, Spain lays claim to Gibraltar which houses the British fleet, both majority parties oppose it, Spain/Portugal/Italy send the Brit retirees packing, and a new Prime Minister isn't in place until October.  And now, perhaps the elitist EU will wake up and understand the sentiment of many of their member countries.  As time passes, the harsh realities of all this will settle in.  Will Parliment have the scones to vote for an exit in the midst of a free fall, or will the EU wake up, saving face for everyone?

[ChitownSpaceForRent]

Right, the UKIP (the party leading the charge to leave) only has 4 seats, out of the 1450 in the British parliament. It's not insane to think that the government is gonna pull an "oh sh!t, we really screwed up" moment and not actually enact it. It's not like it was a landslide vote, and people who voted to leave were pretty open by saying that they may have screwed up. They could also take into account the demographics of the vote, where young voters who will have to deal with the consequences were overwhelmingly in the remain camp.

The one thing Britain has going for them is that their liberal and conservative party isn't as divided as democrats and Republicans in the US, they could actually pull this one out.

[Tugg Speedman]

The reason the vote won is their is London and the rest of the U.K., like we have Mahattan and the rest of the US.  Americans all visit London, and once they understand London, they really know nothing about the rest of the U.K.  Just like foreigners that visit and understand Manhattan really know nothing about the rest of the US.

The hatred for the EU outside of London is palpable. Those people are celebrating in the streets that this vote won.   If a bunch of intellectuals and politicians in London try and stop it there will be a revolution.    That's why Cameron resigned, and said he was resigning so somebody else can take over and lead the UK's exit from the EU. So stop with the fantasy that they're going to call this back. They are leaving and it's significant.

And polls in Europe show that many others (France, Dutch, Netherlands) have higher percentages that want out.  And the UK is at risk of having Scotland and Northern Ireland leave them.

The floodgates are opened all over Europe. France will leave the Netherlands will leave the Basque country of Spain want to become independent Flanders want to become independent of Belgium. This is just a start.  A full reshape of Europe will be underway like we haven't seen and hundreds of years.

And as each one of these regions leaves it renegotiates tariffs and rules that will make business harder and more expensive.

We have an 12 page thread here and everybody says that everything that ever happens anywhere to anything is always a buying opportunity.  That blind bullishness has worked for 30 years Because of the ever increasing globalization of the planet and business efficiencies that come from that.   The BRexit vote could've mark end of the movement towards globalization. If so, one of the most titanic shifts in business we seen in our lifetime has just occurred.

My fear is the stock market's next 30 years will look like Japanese stock market over the last 30 years ... Go nowhere.     That's essentially been the case for the last 15 years, it's barely beating the rate of inflation and underperformed the bond market, gold, commodities and just about every non-cash option.  It's also been the case since this thread started in June of last year, it's down 3%.  So markets might be forward looking and been so poor an investment since 2000 because it sees this coming.

I hope I'm wrong.

[naginiF]

This is the perfect example of why the rich get richer... because the stupid get scared.

"Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicking and he's not." - G. Bailey

[vogue65]

The Tories (Conservatives under Cameron) and Labor (under Corbyn) were both in favor of remain.  It lost and Cameron resigned and Corbyn is on his way out.

Simply Amazing.

To appreciate this ... imagine the US had a referendum yesterday and the democrats and republicans both supported it.  It lost and today Obama resigned and Paul Ryan is excepted to resign in the coming days.

That is the political earthquake that hit the UK/EU. 

You'll be telling your grandchildren about this event and what is coming next.

O.K. now it's political, it's like the Republicans got kicked in the teeth by the Tea Party they created, and it could happen here.  The triangulating Democrats and the true Republicans have created globalization to the determent of the masses.  The low wage workers and unemployed may just be revolting and that is a very big problem.

All the analysis, metrics, analytics, and number crunching won't solve the problem because it is systemic to unregulated, cannibalistic capitalism.  The so-called free market is running its inevitable course.
Unbridled capitalism has thrown the bit and is running wild, enjoy the ride. 

[GooooMarquette]

"Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicking and he's not." - G. Bailey

Yep.

[vogue65]

This is the perfect example of why the rich get richer... because the stupid get scared.

Because the stupid get screwed and the end-game is war.
That's when the stupid get really screwed.
However, in todays world war should be unthinkable, but it must be in human nature.  So we start with trade wars, political wars, and we slide into shooting wars.

Yes, Take America Back, from the brink of war....this is just what ISSIS prays to Allah for, the west fighting with itself. 

The hand of the free market at work, or the hand of God if you prefer or ignorant democracy.

BTW we are talking economics and not really politics although politics is the means by which the economic order is changed.

[Golden Avalanche]

blah blah blah

I didn't read beyond your first three lines because I knew it would be crap like all else you write but you need to be correct if you're building a grand argument against people not knowing crap.

Northern Ireland voted to remain. Scotland voted to remain. Simply writing it is "London and the rest of the U.K." regarding the vote is disingenuous. And that's a kind description.

[Tugg Speedman]

I didn't read beyond your first three lines because I knew it would be crap like all else you write but you need to be correct if you're building a grand argument against people not knowing crap.

Northern Ireland voted to remain. Scotland voted to remain. Simply writing it is "London and the rest of the U.K." regarding the vote is disingenuous. And that's a kind description.

Northern Ireland Voted Remain and they wants to Remain, so they will join with Ireland (who is an EU member) and stay.  (This is the theory)

Scotland voted to remain so they will become an independent country and join the EU.  This time it will happen because they have a positive economic argument, unlike 2014 when they were scared with a negative economic argument.  Problem is this could bankrupt the UK (the main argument used to stop the Scottish referendum in 2014).

But at the same time the Netherlands, France, Dutch and Italy have a huge movement energized to leave the EU.  Within Spain the secessionist movements are energized, ditto Belgium. 

Everything is turning upside down. 

40% of the S&P 500 countries get their revenues from overseas.  The emerging markets are a mess (led by China), Japan is a mess and now Europe is a mess.  Further the dollar is soaring which further hurts these companies.  S&P 500 companies have had 5 quarter of negative earnings, this does not help this situation.

It's all bad bad bad and was a total shock, and this is not corrected in 1 day or 1 week.  Yes, this sets up a great buying opportunity ... in 2 or3 years but don't lose a third to half your money first.

I hope I'm wrong.

[Coleman]

"Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicking and he's not." - G. Bailey

That film really has so much wisdom buried in it.

[GooooMarquette]

But at the same time the Netherlands, France, Dutch and Italy have a huge movement energized to leave the EU.  Within Spain the secessionist movements are energized, ditto Belgium.

But those movements are being led by parties that aren't in control.  The only reason the UK one got to a vote was because Cameron made the stupid logistical move of daring his opposition to vote to leave...and they did.

I kinda doubt that Hollande, for example, is going to serve it up to Marine LePen on a silver platter like Cameron did in the UK.

And when citizens of other countries see how this is affecting the UK, their opinions of the EU is likely to change.  Funny thing - Google showed that many Brits were searching for basic information about the EU (what exactly does it do?) in the hours after polling closed.  In other words, they had no real idea what they were voting about.

[brandx]

This is the perfect example of why the rich get richer... because the stupid get scared.

Bingo!!!!!!

The people who get hurt the worst are the people who voted for it.

[GooooMarquette]

Bingo!!!!!!

The people who get hurt the worst are the people who voted for it.

Except the stats showed that older Brits largely put this one over the top, while younger people - who will be impacted the most - generally voted against it.  The problem is that fewer young people voted...either due to general apathy, or the mistaken assumption that it would never pass.

[ChitownSpaceForRent]

Except the stats showed that older Brits largely put this one over the top, while younger people - who will be impacted the most - generally voted against it.  The problem is that fewer young people voted...either due to general apathy, or the mistaken assumption that it would never pass.

Funniest tweet I saw was something along the lines of, "I'm never giving my seat up to a old person again, because they have enough energy to screw our country"

[vogue65]

And the Chinese in England continue to sightsee and eat French and Italian food, they really don't care, why should they?  This is just a big deal for the British finance industry, banking and insurance.

I am really tired of hearing about how Britain is our closest ally, hooey.   As they have demonstrated, it is each person out for him/her self.

Would you believe it, but in England today, I have a friend there at the moment, there is no talk of Trump.   

[MU82]

So why do you think the markets reacted so badly?

"The markets" hate change. They really hate uncertainty. And they almost always overreact -- whether it's panic-selling or wild buying.

For the first several days this week, "the markets" overreacted to reports that Brexit probably would not happen, pushing all indices into or near record territory. Friday's giveback was predictable. Even after Friday's carnage, most of "the markets" are still within a few percentage points of their all-time highs.

Things will continue to be volatile as this all shakes out. Every time there is a rumor that another country wants out, there will be selling, followed by buying, followed by selling.

Every crash or correction is followed by a recovery. Every bull is followed by a bear.

There are two ways to deal with this: 1. Try to time the market as a trader; or 2. Build a portfolio filled with high-quality, time-tested companies (or funds), ride out the bad times and profit handsomely from the good times.

Study after study shows that the "average" investor doesn't even realize half the gains of the overall market over time. Why? Because he/she panics in just these situations, selling during down times and buying during good times.

[rocket surgeon]

trying not to push this into bipartisan politics, but would the UK voting to get out of the EU be similar to individual states voting(if it is even possible) to become independent of the fed?  that would mean the state(s) would have to come up with their own currency, but how would they figure in to the national defense/military involvement and anything else i may not be considering?  just wondering

[Tugg Speedman]

But those movements are being led by parties that aren't in control.  The only reason the UK one got to a vote was because Cameron made the stupid logistical move of daring his opposition to vote to leave...and they did.

I kinda doubt that Hollande, for example, is going to serve it up to Marine LePen on a silver platter like Cameron did in the UK.

And when citizens of other countries see how this is affecting the UK, their opinions of the EU is likely to change.  Funny thing - Google showed that many Brits were searching for basic information about the EU (what exactly does it do?) in the hours after polling closed.  In other words, they had no real idea what they were voting about.

Yes all those parties are not in control.  The key word is "yet."  These parties are gaining.  The Right-wing party in Austria barely lost last month with 49.7% of the vote.  Merkel's approval rating is way down, Hollande is unpopular, LePen is gaining, let's see how the Spanish elections goes tomorrow.

European banks were down about 25% yesterday. Something they didn't even do in the worst of 2008. They are scared out of their mind that Europe is going to come apart and they're gonna be left holding trillions of dollars of derivatives and securities in a currency, the euro, it might not exist.

[Tugg Speedman]

"The markets" hate change. They really hate uncertainty. And they almost always overreact -- whether it's panic-selling or wild buying.

For the first several days this week, "the markets" overreacted to reports that Brexit probably would not happen, pushing all indices into or near record territory. Friday's giveback was predictable. Even after Friday's carnage, most of "the markets" are still within a few percentage points of their all-time highs.

Things will continue to be volatile as this all shakes out. Every time there is a rumor that another country wants out, there will be selling, followed by buying, followed by selling.

Every crash or correction is followed by a recovery. Every bull is followed by a bear.

There are two ways to deal with this: 1. Try to time the market as a trader; or 2. Build a portfolio filled with high-quality, time-tested companies (or funds), ride out the bad times and profit handsomely from the good times.

Study after study shows that the "average" investor doesn't even realize half the gains of the overall market over time. Why? Because he/she panics in just these situations, selling during down times and buying during good times.

I hate this phrase that the market hates uncertainty. Can you tell me a period in human history when things weren't uncertain?

What is driven the epic bull market this started in 1982 was/is globalization. We are now legitimately talking about ending it. That is one of the biggest things that ever happened.

The reason the market was so bad and Friday is it was so inconceivable leave Would win.    And now that it has we are on the precipice of an epic change which might not be good.

 I hope I'm wrong I really do.