Earlier today, British voters elected to leave the European Union (EU) by a margin of 52% to 48%. The results were a shock to the global markets as polls and betting markets expected Great Britain to remain. Global stock markets had moved up this week in anticipation of a "remain" vote.

After the voting results, the Prime Minister of Great Britain announced his resignation and the country will begin the process to activate Article 50 of the Treaty on European Union to notify the EU of its withdrawal and start negotiating an agreement to leave, which will be a long and drawn out process.

Since this event was not expected by the markets, there has been increased volatility as investors digest this news. The initial market reactions have been:

• The British pound has fallen sharply and is at its lowest level in 30 years.
• Global stock indexes are down with the U.S. Market down 3-4%, essentially giving up its gains from earlier in the week, plus a little more.
• European and Asian markets are off 8-10%.
• Bond prices have rallied in a flight to safety with the 10-year U.S. Government yield dropping to 1.50%.
• Gold prices are up 5%, having its best day in many years.

While today's news will create tremendous near term uncertainty as investors, economists, and politicians try to decipher the longer-term consequences, we caution investors not to over-react and let your emotions get the better of you. Remember, the markets tend to discount new events quickly and build updated expectations into today's prices. One reason the markets are reacting so violently today is because the news was unexpected.

As we have mentioned in the past, it is best to ride out periods like this with a sound, balanced, and well- diversified portfolio and not try to make short-term trades in reaction to today's headlines.

We are continuing to monitor developments and will provide further updates as warranted.
But, in the interim, feel free to contact us in Wealth Management if you have any questions.