The decision by the British people to withdraw from the European Union (EU) took markets by surprise. Yet, it did not occur in a vacuum. Britain's vote to leave the EU needs to be seen in the context of a confluence of global social and economic trends. While cash or bonds might seem like a safe alternative, they entail risks that need to be carefully weighed. As a saver holding cash or bonds, your interests are diametrically opposed to those of governments who are large borrowers and are in a position to dictate both your return on capital and return of capital. Essentially you need to believe that the government will act in your interest and not those of the electorate. When fear and uncertainty prevail, share prices can fall sharply. While it may be tempting to simply respond to the financial pain that these price falls cause, it is worth remembering that it is precisely these price falls that open the best wealth creating opportunities. (VIEW LINK)
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