Although it may not be immediately apparent depending on where you’re reading this, much of the world is currently engrossed in the World Cup. The 2018 FIFA World Cup (including 64 total matches) is being hosted in cities throughout Russia, with the championship match to be played on July 15th. The largest tournament of the world’s most popular sport often takes over the lives of its fans – typically ranking as the most watched global event every four years. As a frame of reference, while the 2018 Super Bowl between the Philadelphia Eagles and New England Patriots had over 100 million viewers worldwide, the 2014 World Cup final between Germany and Argentina had more than 1 billion viewers.1
In the coming together of nations around events like the World Cup, the hope is that within sport, great competition is coupled with great sportsmanship while each nation’s distinguishing characteristics are on display and celebrated. Of course, it’s not all hugs and handshakes. The competition is fierce and every team is striving for the ultimate goal of winning it all.
Just over two years ago, the world’s focus was similarly fixated on the outcome of a competition of a different kind. Unfortunately, the two sides contending for victory in this rivalry weren’t necessarily displaying the behaviors of good sportsmanship and weren’t acknowledging the best qualities of the other side. This battle wasn’t to be won or lost on the pitch, with the winner hoisting a trophy at the end. This competition was to be waged through the ballot box to determine the fate of the political and economic realities of modern day Europe. Perhaps that sounds hyperbolic today, but in June of 2016 those fears were real.
As a refresher, in late June of 2016, British citizens went to the polls to vote on whether they would remain members of the European Union (EU) or begin the official process of leaving the political and economic union—an act that became known to the world as Brexit. Concerns for the future of the global economy, particularly the economies most closely impacted within the EU, were as dire as anyone could imagine. Some speculated that a Brexit would push us all into a global recession deeper and longer than what we experienced in 2008. Indeed, some investors undoubtedly aligned their portfolios with their fears and went to cash (or worse) right before or right after the vote, with the hope of dodging what they expected to be an inevitable cascade of losses in stocks and bonds.
In a review of the past two-years’ performance of stock market returns for a variety of countries across the world (see illustration below), we see that an investor who sold stocks and went to cash fearing the worst, missed out on significant global equity returns. Contrary to the dire headlines of the time, the U.K.’s stock market has not crashed post-Brexit and instead has posted double-digit annualized returns. The U.S. fared well over the past 24-months, but our returns were less than half of Austria’s, which falls in the midst of the EU and Eurozone. Like any short-term window of time, predictions of market movements after Brexit varied wildly and mostly missed the mark.
For those unfortunate enough to have made drastic moves in their portfolios, rather than being ahead of the game, they may now be years behind in terms of reaching their goals. Simply stated, this experience illustrates yet again the fact that when investing, it’s best to stick with “what works,” such as the time-tested strategies of diversification and tax-optimization, while remaining disciplined during volatile markets and in the face of daunting headlines, is what will serve you well.
As we continue to face challenges in global economics and politics, we know that changes in regulations, treaties, and trade policies will impact how markets function and therefore impact outcomes for investors in the future. What we don’t know is exactly how and when those influences will present themselves and manifest into returns. While it’s too early to know what the long-term impact of what we’re experiencing in today’s global conversation of trade wars and escalating tariffs will be, we can look back to the not-so-distant past to see how markets reacted to unexpected shifts in the “rules of the game.”

Data represents past performance. Past performance is no guarantee of future results. Chart is for illustrative purposes only. Specific indexes used for the illustration are as follows: MSCI Switzerland NR USD; MSCI United Kingdom NR USD; MSCI Australia NR USD; MSCI Japan NR USD; MSCI Germany NR USD; MSCI Portugal NR USD; MSCI Spain NR USD; S&P 500 TR; MSCI Korea NR USD; MSCI France NR USD; MSCI China NR USD; MSCI Austria NR USD.