Obviously each investor’s time horizon will be key in determine their best course of action. For anybody looking five years or more into the future a strong argument can be made that they should ignore Friday’s events all together.
If they had the right asset allocation in place to begin with, there is no reason to abandon it over a few days of turmoil, even of this magnitude. Provided you are working within a long enough timeframe equities always go up again after slides.
As JP Morgan’s Stephanie Flanders pointed out, over the long term it will be the micro impacts of being in or out of the EU that will be more important in determining each company’s share price, not the initial market reaction on Friday.
Investors with a shorter horizon may have a little more work to do. It could be prudent to reduce UK equities and sterling exposure before voting gets underway in favour of traditional safe havens and assets which have demonstrated very little correlation with UK equities over time.
The counter argument to this is that if you think the remain vote will win, this course of action would reduce the upside in that event. However for investors with short time horizons, caution always has to be king.
