Leading Advisor and Market Analyst Shares His Primary Long-Term Concern About the Brexit Vote

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Leading market analyst and advisor David Scranton spoke with fellow advisors across the country in the wake of the Brexit vote about his concerns over the possible long-term implications of the move and the potential risks involved for stock market investors.

In the wake of the global market turmoil triggered by Britain’s surprise vote to pull out of the European Union, market analyst and Sound Income Strategies Founder, David Scranton, reached out to fellow financial advisors to share his thoughts on how to put the matter in perspective for nervous clients. Scranton said that what is most concerning to him about the move is that if other relatively healthy European countries should eventually decide to follow suit, it could create a scenario with devastating repercussions for the entire global economy.

“What we saw right after the vote, with the market pulling back and the ten-year treasury dropping: that was nervousness. It’s understandable and it’s probably short-term,” Scranton said, “but the long-term issue that concerns me is this: imagine if countries like Germany or Switzerland, some of the more stable economies, opt to follow England’s lead and pull out. Then we’ve got a problem.”

Scranton said this is because if a number of relatively strong economies were to exit the EU, it could severely compromise the Union’s ability to help weaker economies in times of crisis.

“Think about the weaker economies like Greece, Italy, Spain, and Portugal,” Scranton explained, “and remember that Greece was bailed out because the European Union got together to bail it out. But if more strong economies should pull out, I’m afraid the European Union as a whole would no longer be strong enough to help other countries in danger of defaulting. And, if the European Union can’t get involved, it’s unlikely the U.S. would come to the rescue. So now you have a situation where these weaker countries are allowed to fail, and the cascading effects could be devastating worldwide.”

Scranton said investors should bear in mind that the European Union is, in essence, an unprecedented “experiment” in global economics, so there’s no way of knowing for sure what the long-term repercussions of Britain’s decision will be. At the same time, however, he said they should also be aware that the U.S. stock market is – according to the lessons of market history – long overdue for another major sustained drop like those that occurred from 2000 to 2003 and 2007 to 2009.

“With all the new uncertainties triggered by the Brexit vote,” Scranton said, “I’m advising extreme caution where the markets are concerned, especially for investors anywhere near retirement age.”

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With over 25-years of experience in the financial services industry, David J. Scranton (CLU, ChFC, CFP®, CFA, MSFS) is a highly sought-after market expert who frequently shares his insights on CNBC, Fox Business and other outlets. In addition to running his own advisory practice, Scranton Financial Group in Connecticut, Scranton is founder of New York-based Sound Income Strategies, a Registered Investment Advisory firm specializing in the active management of individual fixed-income securities. Scranton is also founder of Florida-based Advisors’ Academy, a prestigious training and marketing organization for elite financial advisors nationwide who specialize in helping clients create “defensive,” income-generating savings and investment plans. Scranton adopted his unique business model after his research into market history enabled him to forecast—and protect some clients from—the 2000-2003 market crash. Scranton is author of the acclaimed book “Stop the Financial Insanity,” which details his eye-opening research into stock market history.

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