The third quarter began on a very uneven footing. The U.K. had just surprised investors by voting to leave the European Union (E.U.), and markets were in the process of digesting an enormous amount of uncertainty and repricing shares in the face of that uncertainty. However, hindsight has a way of offering clarity that’s dicult to grasp in the middle of the storm. While markets at home take their longer-term marching orders from profits and profit expectations, in the short-term any number of variables such as the surprise vote in the U.K. can influence sentiment. In reality, Brexit led to a two-day selloff in shares (St. Louis Fed Reserve). When cooler heads prevailed, the selloff was quickly followed by new highs for the S&P 500 Index (see Figure 1) and the Dow. In fact, the S&P 500, Dow Industrials and Nasdaq Composite all reached new all-time highs in August on the same day, the first such occurrence since December 31, 1999… READ ON
