Investing in a post-Brexit world

The United Kingdom’s exit from the European Union, or “Brexit,” became official yesterday with 52% of the vote. As expected, markets are reeling from the resulting uncertainty. Even though there is no precedent for what’s to come, we know a couple of things for sure. First, it will take two years to formally withdraw from the EU, which means that investors get to fret over this decision for many months to come. Second, and more importantly for US investors, American companies have very little exposure to companies on the other side of the Atlantic. According to FactSet, the S&P 500, an index of larger US businesses, has a mere 2.9% sales exposure to the UK. Even the most exposed sector, energy, derives only 6.4% of sales from the UK. This is an important point to remember as you wade through all of the articles outlining the political implications of the UK withdrawal. Although much ink has been spilled in an effort to explain the political consequences, not nearly as much attention has been given to Brexit’s impact on markets longer term. This chart shows the exposure of the S&P 500 to the UK by business sector:     Additionally, according