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How to Handle Brexit in Your Portfolio

It was quite a night in the United Kingdom.

“Brexit” voters who favored leaving the European Union (EU) had canceled their victory party by 9:00 pm. Indeed, their leader, Nigel Farage, had conceded that Brexit had lost by late in the evening, 52% to 48%.

As a result, Britons went to bed at 11:00 pm secure in the knowledge that they would awake to a Britain that had voted to remain in the EU.

But when they awoke this morning, their world had changed. The pound sterling had plunged 10% to mark its biggest move in history, briefly hitting a 30-year low.

The U.K. stock market fell by close to that amount by the time it opened.

And if Britons overslept even slightly, they also woke to the news that U.K. Prime Minister David Cameron had resigned.

Both currency and stock markets have steadied in the intervening hours today, with the Bank of England (the United Kingdom’s version of the Fed) providing ample liquidity.

The long-term fallout is still unclear, but the relative steadiness of the markets suggests this is very different from 2008.

Yes, European banking stocks plunged about 15%.

But in my view, that is an overreaction — and an opportunity that I may look to exploit in the coming days.

In terms of your current Bull Market Alert positions, none are directly affected.

Stick to your stops, and look to weather any financial storms over the coming few trading days.

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world. He was the Editor of The Global Guru, a free weekly e-newsletter, and also edited the trading services Momentum Trader Alert, which focused on making short-term profits in the hottest markets in the world, and The Alpha Algorithm, which was designed specifically to deliver big, fast triple-digit winners, month after month. He was also the editor of Smart Money Masters, a monthly service focused on longer term investments recommended by the brightest minds in the business. Mr. Vardy has been a regular commentator on CNN International and the Fox Business Network. He has also published articles in The New Republic, The World and I, and The Baker & McKenzie Legal Review. The Global Guru/Nicholas Vardy has been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo! Finance, and MSN Money Central. Mr. Vardy graduated from Stanford with a B.A. — with honors and distinction — in both Economics and History, and he also earned an M.A in Modern European Intellectual History. After winning a Fulbright Scholarship, he earned a J.D. degree at Harvard Law School where he was an editor of the Harvard International Law Journal. When not uncovering investment opportunities for his subscribers and investors, Mr. Vardy is a keep-fit enthusiast and an avid student of classical music.