Brexit and The End of the World

Yesterday morning, I didn't read the newspaper when I was eating breakfast. I didn't know the outcome of the Brexit vote until I was checking my investments and saw this sign. It was not subtle.

OMG, I thought. This is not going to be good news. Normally, the Vanguard website has a picture of a happy couple drinking coffee and reading the newspaper. Last summer, the stock market took a major dip, and Vanguard usually says stuff like "This is a market correction. No worries. Stick to your plan and hold. The market will rebound," etc.

This time, Vanguard admitted there might be problem, such as increased uncertainty which will cause greater volatility in the market. (Here's the link to what they said.) They didn't say this, but volatility can be good. Back in the days when I did compensation consulting, we used the Black-Scholes Model for evaluating stock options. (Please keep reading--it will only be boring for a few more sentences.) Options are worth more when a stock had a more volatile history as measured by the amount a stock price fluctuated. The more it goes up and down, the greater the chance to buy low, sell high and then pocket a nice profit. Steady and stable stocks were worth less because they were less like to have dramatic increases in price.

The downside of volatility is when you need to sell a stock or fund to pay for your daughter to go to college, and the market tanks before her tuition is due. Or that it really might not be volatility, but the actual final cratering signifying the end of the world.

I read a nice summary of the Brexit mentality by John Cassidy in The New Yorker. (You can tell where he stands by the photograph of Nigel Farage looking like dressy Homer Simpson.) One of his points (Cassidy's, not Simpson's) is that globalization has helped some people and hurt others. Just because the people who support xenophobic, racist, and sexist leaders, those who have lost out due to globalization have real grievances.

It seems as if the U.S. and other parts of other relatively stable First World are going through some political rubbing of our tectonic plates which could lead to upheaval. I am waiting for the day when I click on the Vanguard site when the market slides down to read:

Greetings valued investor! The world is coming to an end. We give up.

• Take all of your money out of the market and invest in canned goods, bike tires and duct tape.
• Consider installing solar panels on your home for when the grid crashes. Collect rain water in rain barrels for showering and flushing your toilet. Consider purchasing a water purifier that does not run on electricity. 
• What plants grow well in your region? Consider growing root vegetables like potatoes or onions. Live in a warmer climate? Grow tomatoes and can them for easy meals in the winter. Many urban areas allow you to raise chickens, and eggs are an excellent source of protein, as are squirrels.
• Click here to find out ways to turn old clothes into quilts and make those jeans last for another ten years. 
• Do you have good skills like making furniture, chopping down trees or trapping squirrels? Barter is a great way to get what you need from your neighbors.
• Pillaging? Don't forget your local library! Your e-reader likely be out of commission. Abe Lincoln did fine reading Shakespeare and the Bible when he was growing up.
• Live in a dense urban area? Consider relocating to a place with arable land. Pennsylvania, Iowa and New Zealand are excellent choices.
• Click here to find ways to stay warm in the winter and cool in the summer when the grid crashes. 
• Are you on a daily medication? Consider purchasing a five year supply. Order a book on home medicine tout de suite. 
• Consider reading post-apocalypitical fiction like Station Eleven* by Emily St. John Mandel to learn survival techniques. 

And remember: print all of this out!! There might not be electricity in a few weeks!"


* Actually, this is a really good book. I recommend it.