Unless you have been living under a rock, by now you probably have heard that Britain voted to leave the European Union on Thursday’s referendum. The result of the referendum sent markets tumbling all over the world on Friday. There are lots of uncertainties on what’s going to happen, so investors are fleeting equities and investing in “safer” assets like bonds and precious metals.
What do I think about Brexit and the market tumbles?
First I was shocked to see the referendum result. I knew it would be close but I didn’t think the “Brexit” group would actually win. When a referendum is this close, typically people that are borderline with their decisions will vote to remain status quo. BBC pointed out some interesting data. One data that surprised me is that those aged over 50 were the most likely age groups to want to leave the EU. The younger people wanted to remain in the EU. However, the low turnout in the younger age groups meant they lost out on this important referendum. Lessons learned? Always go out and vote, no matter how old you are. Your decision does matter!
Image from BBC
I never imagined Britain would actually leave the EU. Clearly, the right wing groups won this time. This makes me very worried that Donald Trump might actually win the US election this November. That is one scary thought!!!
Before I turn this post into a political discussion… let’s take a closer look what the referendum result means to our investment portfolio and how it may affect our investment decisions.
Two simple words: Absolutely nothing.
Honestly, I don’t see why many investors are freaking out about the referendum result. I don’t see why our investment strategy and decisions should change based on an event. After all, we are investing for the long term, like 40+ years.
Time in market is more important than timing the market.
Looking at our dividend portfolio, I fail to see how the result of Referendum of the United Kingdom’s membership of the European Union affects these dividend paying companies.
People are still going to buy General Mills’ products.
People are still going to buy gas produced by Chevron, Suncor, Conocophillips, and BP.
People will continue to buy iPhones, Macs, iPods, and other Apple products.
People will continue to buy Tylenol, Band-Aid, Listerine, Reactine, and other Johnson & Johnson products.
People will continue eating at McDonald’s, drinking coka cola and Starbucks coffee.
Canadians are still going to use their cellphones on Telus, Rogers, and Bell networks.
Canadians are still going to buy dairy products from Sapputo.
People will continue needing Waste Management to pick up their garbage.
People will continue to buy insurance from Manulife and Intact Financial.
Sure there may be some negative effects on financial sectors but I believe they will be minor and short term.
As I mentioned in the 10 lessons I would give to my 23-year-old self, we need to take advantage of economic downturns. Since stock market has a tendency to go up over the long term. We should all take advantage of the stock tumbles due to the result of the UK referendum.
I will keep my eyes open for buying opportunities.
What do I have in mind?
Diego plc (DEO) if price drops to below $100.
Canadian National Railway (CNR.TO) if price drops to below $70.
Dream Global REIT (DRG.UN) if price drops to below $9.
Alphabets (GOOGL) if price drops to below $600 (yes it’s not a dividend payimg stock but I’m convinced that Alphabets will start paying dividends in the near future).
Unilever plc (UL) if price drops to below $40.
Target (TGT) if price drops to below $65.
Vodafone (VOD) if price drops below $28.
These are just some stocks I’m monitoring.
Let’s pray for the volatility to last a little longer so we can buy stocks on discount!
For now, Mrs. T and I will be working hard to save more money. Considering we’ve already purchased over $35,000 in dividend stocks this year, it would be totally awesome if that number can double by end of 2016. One can dream right? 🙂
Dear readers, what are your thoughts on Brexit? Are you looking to add more dividend paying stocks?