Last week's vote in the United Kingdom to separate from the European Union is the most important thing to happen on the global stage since the end of World War II, rivaling only China's moves in the 1970s and 1980s to participate actively in the global economy.
In this episode of Industry Focus: Financials, The Motley Fool's John Maxfield and Gaby Lapera put the vote in historical perspective and explain why it has hit stock prices so hard. Then, Dan Caplinger and Gaby follow-up with investing strategies for the economic dip.
A full transcript follows the video.
This podcast was recorded on Jun. 27, 2016.
Gaby Lapera: Hello, everyone! Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. You're listening to the financials edition filmed today on Monday, June 27th, 2016. Today's topic, Brexit, Bremain, Bregret and you. My name is Gaby Lapera and joining me on the phone is John Maxfield. Later we will have Dan Caplinger, but for now, welcome John!
John Maxfield: Thank you very much, Gaby! I'm excited to be here today.
Lapera: I know you are. [laughs] Just a warning folks. This episode is hella long. You probably realized that when you clicked on it to listen, but I just want to reiterate. I'm sorry, we just had a lot to fit in today. Basic structure is going to go something like this: a look at Brexit, what it means for Britain, what might -- and I really want to emphasize that it is a "might," we don't have a crystal ball so we don't know what will happen, but what might happen -- and what's going on with the big U.S. banks as a result. Dan will then join me on the back half of the show to talk about investing strategy. Let's dive right in.
Brexit. Brexit is the topic on everyone's minds. Just in case you somehow manage to miss the news, Brexit is a portmanteau of exactly what happened. Britain voted to exit the European Union. This was a referendum, so this isn't something that is actually pushed through yet, but this was completely unexpected.
Maxfield: Yeah. It was completely unexpected from the perspective that nobody thought that actually anybody would win. We all knew that this referendum was coming up, they had announced it earlier in the year and all this kind of been agitating in the United Kingdom for a couple of years actually. What's important to keep in mind is that, first of all we're a financial show so a lot of you are probably investors, you're probably already seeing what's happening right now to stocks. In the United States, the S&P 500 which is our main large cap index, is down something like 5% since last Thursday's vote.
The FTSE which is kind of the analogous index, it's the large cap index in the United Kingdom, it's actually down only 6%. That's a huge move for such a large index when you consider that those are the 100 biggest and most profitable companies in the United Kingdom, but that's still when you consider how momentous Brexit is that isn't that substantial of move. However, this being the financial show, there's actually a much more substantial impact on financial stocks.
If you look at, let's say, the KBW Bank Index, which tracks the 24 largest banks in the United States, it's down 11.2% just since last Thursday. These are very large moves that we're seeing in stocks. To just throw out one more number to bring home how big of an impact this is having on stocks, the FTSE 250, which includes not only the U.K.'s 100 biggest companies, but also it drops it down 150 more, so 150 smaller companies are included in that, that is down by 14.2%. This is a really monumental thing for stocks right now.
Lapera: Yeah. I don't know what people's backgrounds are when they listen, but you're maybe thinking Britain just voted to leave the E.U., I don't understand what the big deal is. It is a really big deal.
Maxfield: Yeah. This is, in my opinion, this is the most important thing on the global stage that has happened since World War II. The one other thing that really factors in there is China's opening up in the seventies and eighties and emerging into a super power to really balance out the United States in the world.
Here's really why: you think Britain's just like a collection of a couple islands, why is its potentially leaving the European Union such a big deal? The reason it's such a big deal is because if you look back on the past couple hundred years, what we have seen is a movement toward global unification. As we have seen this movement toward global unification, we have experienced, particularly after World War II, one of the most peaceful periods in recorded human existence.
Lapera: Especially in Europe. I'm not going to say that all parts of the world are super peaceful right now, but Europe used to be one of the most war torn areas of the globe, really. Now it's not. It was -- it is, I guess -- this confederation of states that have agreed to create an economic zone. That's what, I think, a lot of people miss is that the Eurozone is primarily an economic zone. Yes, there's a lot of political benefits that come along with it, but the economic realities of it mean that those countries are tied together in such an economic way that it makes it politically unlikely that they would want to go back into war against each other.
Maxfield: Right. To your point about Europe, let's just go back a few hundred years. You had the 100 Years War. Who else has a 100 years war? You had the 30 Years War, you had the Franco-German War, you had World War I, you had World War II. Then they decide, you know what, this isn't a good way to operate a continent. Let's get together, let's be peaceful, and it's turned into the largest collective economy in the world. The United States, single-handedly, is the largest economy, but when you put all those countries together in Europe, this is an enormous economic might.
Now, just to give a little bit more historical context in terms of how all these things work, what's going on in Britain? Why would they be voting for something like this? This is how I look at it from a historical perspective. In the 1920's, we go back then, we had this huge boom that led to a bust that led to economic problems. Those economic problems lead certain people in certain countries to blame other countries or other types of people, other types of religion, for their problems. That leads to conflict. That conflict -- obviously World War II -- we then have the United Nations, we have the European Union. That settles all this peace.
Then, we have the financial crisis of 2008, which was the biggest economic event since the Great Depression. That leads to economic uncertainty, that leads to this movement toward nationalism and blaming immigrants and other people for problems, and that's where we're at. It's an almost exact replica of history.
Lapera: Yeah. Just an FYI for listeners, the Great Depression, it hit the United States really hard, but it was kind of a global event even in the 1920s. I know that the global system wasn't quite as in place back then, but we had really strong connections to Europe, so it hit them too.
Now we're in this -- we don't really know what's going to happen. Britain voted to exit the European Union. They decided to leave ... This is going to be really interesting for financials because the U.K., while it does make some things, I'm not 100% sure what. A lot of its economy is focused around their financial sector.
Maxfield: Right. This is something we've talked about in the past, Gaby! If you look at how you grow an economy, it's actually a really simple equation. Economic growth comes from changes in capital, changes in labor, and changes in productivity. Those three things. If you increase one, you hold the other two equal, you're going to increase your economic growth. If you decrease one holding the other equal, you're going to decrease economic growth. Let's just break that down and look at what a Brexit, if they go through on this, what a Brexit will do to those components.
Let's first start with capital. To your point, what is Britain's economy predicated on? Is it predicated on manufacturing and exports? No, right? If you've ever been to the United Kingdom, you know how ridiculously expensive it is there. That means that labor there must be really expensive, which means that on a global manufacturing basis, it's not going to be able to compete against your China's, your Vietnam's, your Philippines', right? What is its economy predicated on? It's predicated on its financial sector.
London is one of the financial centers in the entire world. In fact if you look there's an index that traces what are the biggest financial centers in the world, and London and New York are tied. You say, why is London such an important financial center? One of the reasons is that the pound is a reserve currency for all of these different countries in the world. You have your central banks, your sovereign wealth funds holding pounds, dollars, euros, and Japanese yen in order to help them smooth out the fluctuations in their own currencies. The reason they hold those four currencies, in particular, in reserve, is because they have the deepest financial markets and because those currencies are the most stable in the entire world.
If you look at what's happened since the Brexit vote last Thursday, the pound has dropped something like 11% or 12%, which it is now at its lowest point in 30 years. We are just at the beginning of this. It's impossible to say if it will go up or down from here, but it very realistically could do both and it very realistically could go down. Right?
Lapera: Yeah. Right now, right at this very instant, the British pound equals $1.32, which is insane.
Lapera: I can't remember the last time it was that low, probably because the last time it was that low was before I was born, which is insane. This is part of the reason that the Brexit coverage has been so obsessed with what was going on with the pound.
Maxfield: Right. Then you think, how does this factor into that equation for growing your GDP, which just to be clear, there is no doubt that growing your economy is a very important thing. That's a very important thing.
What happens when if its currency were to go into this period where it loses a ton of value and fluctuates a lot more, there is going to be less incentive to hold it as a reserve currency. If other countries do not hold it as a reserve currency, they're going to pull their money out of that economy and that leads to a loss of capital. Again, GDP is a function of capital, labor, and productivity. If you decrease capital, you're going to decrease economic growth. Okay?
The other piece that we have going on here is your labor. One of the big reasons that Brexit was supported was because there's this fear about too many immigrants flooding into the country. Immigrants flooding into a country as a general rule will actually increase your economic output because you're boosting labor. If they were to kick out all these immigrants that have come from all these different European countries and all over the world into the United Kingdom under these open border policies, you are going to decrease your labor, which will necessarily decrease your GDP. On top of that, if you institute more stringent immigration standards, it will slow the flood of immigrants into a trickle, that will then further throttle your GDP growth.
The big thing for the United Kingdom is that, yes, we all understand that everybody's having issues right now in the world as a result of the layover from the financial crisis. By voting to separate yourself from the European Union, you are almost necessarily condemning your country to a decrease in economic output.
Lapera: Right. Like I was saying earlier, part of being in the European Union, it comes with a lot of economic benefits. Attached to that is labor. We don't really know what's going to happen. Great Britain is going to have to renegotiate all these things with the E.U. Who knows? Do they still have free passage between the European Union and the U.K.? Can people who are from the U.K. work anywhere else in Europe and vice versa? We don't know. We don't know what's going to happen.
Maxfield: Yeah. Here's what's interesting. If you look at the coverage since the Brexit vote came through, one of the things that we have noticed is that all of the main supporters are now backing off of all of the promises that they made in order to convince their constituents to vote in favor of it.
Let me give you some example. Boris Johnson. He was the former London mayor who's really been the front man for the whole Brexit movement. He has now come out, and he's basically been like a totally off the scene since the vote came out. This is the leader of the movement who's basically receded behind the curtain since all this happened. He has basically come out and said, OK wait, wait, wait. The one thing he has said is that there's really no hurry to invoke the articles that would then start the process of the United Kingdom leaving.
You think about that for a second. The biggest advocate for this push is now saying maybe we should slow down on this. Maybe this wasn't such a good idea after all. That's the implications that maybe he's thinking it wasn't actually such a good idea.
The other thing to keep in mind is that ... Another claim that they've backed off from is that they're saying "No, no, no, we're actually not going to stop immigration coming into the country. It may just slow it a little bit." Now they're backing off on that.
Lapera: What's really interesting about that is I looked it up before we came on the show. The total fertility rate in the U.K. in 2014 was 1.83. That means the population isn't replacing itself. For the population to replace itself, your total fertility rate has to be two. You have two kids and when the two parents die they take their place in the population. Their population isn't replacing itself and you have to remember that this includes births to women who have immigrated to the U.K. and this also includes women who are U.K. citizens but gave birth to children outside the country, which was around 27% of those births. Immigration is really propping up the U.K. population.
Maxfield: Yeah. Which props up its economy, right? You brought this point up earlier. Being a part of a free trade zone is really important. Let's say ... British tea. You have British tea it's going to earn really low margins as you export that. The European countries are major trading partners for the United Kingdom. Your margins on tea are going to be extremely slim, because that's such a competitive market and because it's a commodity. As soon as you start entering frictions into that trade process, those frictions insert costs into that. In a commoditized market where your margins are already really slim, you're going to impact some of those exporters.
Presumably if trade barriers were to come up as a result of all of this, you are going to also hurt whatever exports Britain is exporting to the European continent.
There's just one more thing I want to point out now, that we're really learning that a lot of these rationales weren't really grounded. In fact, one of the most picturesque pieces of the whole Brexit movement was this bus, that traveled all over the United Kingdom.
Lapera: The Boris Johnson bus.
Maxfield: Right. The Boris Johnson bus. On the side of the bus, it claimed that the United Kingdom was sending 350 million pounds a week to the European Union, basically subsidizing the European Union. It turns out that the European Union was actually kicking back about 200 million pounds a week in rebates back to the United Kingdom. The net difference is only 150 million pounds on a weekly basis. Then you have to factor in the value of being a part of the European Union, which among other things, you have the reduction in trade friction, which helps the British economy. On top of that because all these countries are now basically coexisting, nobody has to spend all this money on their militaries because they're all together.
Maxfield: It saves all this money for them. Once you just really dig into the rationales for leaving, you can start to understand why the voters are having buyer's remorse.
Lapera: Yeah. What the newspapers are calling Bregret.
Maxfield: Yeah. I didn't see that. That's awesome.
Lapera: Yeah. This is really interesting. When I looked at the news coverage on Saturday, the E.U. had told the U.K., "If you're going to leave then you need to leave as fast as possible," which is a fair thing I guess to say. It sounds like now they're saying "We'll give you a chance to reevaluate." I know that quite a few newspapers have run articles. I don't know because we're just so early in, I don't know exactly what the numbers are, but it sounds like a lot of polling places have actually had voters call in and say that they regret their vote and would like to change it, please.
Maxfield: The other thing to keep in mind is that a large portion of the young population who voted, voted in favor of staying. They recognize the benefits to their future of being a part of this huge economic union. The problem was that when you break down who actually did the voting, a larger proportion of older people voted and they obviously have less to benefit in the future from this.
I saw this thing on Twitter, this is horrible, but there was a young person who is in the United Kingdom put this up. He said, "When I'm on the Tube now and I see an older person, I'm no longer going to move my seat. It's an eye for an eye." You know what I mean? That really is a generational issue over there. I'll tell you, unless they reverse this thing, it's a very unfortunate thing for the younger generations in the United Kingdom.
Lapera: Yeah. The other thing I'm really interested to see is what happens with Scotland. If this referendum had happened before the Scottish independence referendum, Scotland would've left, hands down. Scotland would've left. The entirety of Scotland voted to stay in the EU. I don't really know what the future holds for that. It sounds like the U.K. is in for a bit of a battle both from the EU and internally from Scotland and from its young people.
This is really interesting but we have to move on in order to stay on time. Can you give our listeners a little bit of background on what has happened to bank stocks since Brexit?
Maxfield: Bank stocks, we kind of touched on this at the beginning, the S&P 500 now's something like 5%-6%, the FTSE is down something like the same amount, since the Brexit vote, but bank stocks are down twice if not a little bit more than that. The KBW Bank Index, again, this tracks the 24 large cap banks in the United States. It's down 11.2% since then, since the closing price on -- I think last Thursday -- which we learned the results of Brexit, Thursday after trading hours had closed. It's down by 11.2%, Bank of America's (NYSE:BAC) down 12%. They're being hit roughly twice as hard as stocks in general.
Lapera: Yeah. You might be asking yourself why. There's a bunch of reasons why. Partially it's just that the financial system is so global and interconnected now that what happens in Great Britain unfortunately has a pretty big impact on what happens here in terms of our banking.
Maxfield: That's exactly right. If you look at the reason their being hit hard, banks are being hit hard, let's just go through it. There's four or five.
The first is that this uncertainty in the global economy is causing volatility in the asset market, so debt and equity markets. This volatility is causing trading revenue and investment banking fees to fall at the major universal banks. That's the first thing.
The second thing is that by impacting the confidence of businesses in terms of being able to have any idea what everything is going to look like out of this, it's reducing their incentive. It will reduce their incentive to invest in their businesses. When you reduce a business's incentive to invest in its businesses, you will necessarily reduce the demand for loans. We've talked about this in the past. Banks, what they do, they make money essentially by selling loans. If there's less demand for loans, they're going to make less money.
Third, your higher dollar. The pound fell, the euro fell, the Chinese yuan has fallen. The only one that has increased relative to the dollar is the Japanese yen. What happens when the dollar increases even further in value than it has been since the financial crisis is that that reduces U.S. exports, it hits profits of large U.S. based multinational companies that are earned in other countries. All this stuff lowers economic activity. If you lower economic activity, again, that will translate into lower demand for loans, and it could also translate, in fact, into higher loan losses if this were to push the U.S. economy into a recession or something along those lines.
Lapera: Right. Hold on. Just so listeners know, the reason that this is happening, why the pound going down and the U.S. dollar increasing is not great for the United States, you think oh our currency is getting stronger, that's good. It actually makes our products more expensive for people to buy abroad so they're less likely to buy them. Companies make less money.
Additionally, with the loans, if the loan amount is in dollars but you're paying it back in a different currency ... You're going to have to make a lot more to pay that back now.
Maxfield: Yeah. To that point if you look at like a JPMorgan Chase (NYSE:JPM), it's got something like $50 billion worth of cross border exposure to the European continent so you have loans that are being paid back in dollars, but are priced over there in their own currency. As those lose it's going to be harder to service that debt.
Lapera: Yeah. This all impacts interest rates as well, right?
Maxfield: That's exactly right. The final two things -- and this is a big thing -- for a long time there was conversation that the Federal Reserve was on the verge of increasing interest rates as unemployment had dipped below 5%, inflation was starting to show signs of life again. The Federal Reserve came out last week, actually before the Brexit vote, and said after the May jobs report which showed the lowest increase in jobs growth on a monthly basis in over five years, the Federal Reserve came back and said look we're actually going to be less aggressive in terms of raising rates. We're not going to raise them in June at the very least.
Now with the Brexit vote and all that's happening, that is going to probably further delay that timeline. The reason that matters for banks is because banks make money obviously off their loan portfolios and a lot of their loan portfolios are indexed to the current interest rates. As interest rates go up, they will earn more interest income from those portfolios which will then boost their revenue. As interest rates stay low, it just produces a stagnant revenue environment for banks.
The final reason that this is bad for banks is that, and this is with respect to universal banks, for those that have both commercial and investment banking operations, is because -- and particularly ones that have large bases in London, which is JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley -- all those big fancy high finance banks in the United States, they're going to have to, assuming this goes through, they are going to have to probably move a lot of their people that are based in London to the European continent.
What our banks would do is they would send their employees to London with passports to which is a major financial center, but then they could operate anywhere in the European continent because the passport was good anywhere. Now they're going to have to send them actually into the European continent assuming the referendum actually gets put into effect, and that will cost money just because they're having to reorganize their operations.
Lapera: Yeah. You might be asking yourself why bank stocks and the pound all of them fell so much, so quickly. It's because since no one really thought that Britain was going to vote to leave it wasn't already priced into the market. The market just corrected itself really, really hard all at once.
Maxfield: Right. Let me make two really important points to bank investors or anybody even thinking about bank stocks or owning bank stocks. It just so happened that last Thursday we also got some incredibly good news. That was when the annual stress test results were released. What that showed, it was the first time since the financial crisis that all of the banks -- these are the banks that have 50 billion dollars worth of assets on their balance sheet or more -- every single one of them passed the stress test.
In fact if you dig into the results, at like say a Bank of America or a JPMorgan Chase, they had so much excess capital after the stress test assumed things like unemployment shot up to 10%, equity prices fell by 50%, home values lost 25% of their value. Even after assuming all those things and looking at the hypothetical impact that that would have on bank balance sheets, Bank of America still had something like, don't quote me on this I don't remember the actual figure, but tens of billions of dollars in excess capital above and beyond the regulatory minimum.
The problem isn't that our banks are in threat of, say, failing, like they were during the financial crisis, what we're seeing now in the bank stocks is a reflection of the fact that investors are coming to terms with the fact that their profits are just going to be depressed, or likely depressed, as a result of what's going on.
Lapera: Yeah. That actually leads me perfectly into my next segment. I'm going to say goodbye to John and thank you for joining us and hello to Dan Caplinger to talk to us about investment strategies.
Dan Caplinger: Hey, Gaby! Good to be here!
Lapera: Awesome. I'm really glad that you can join us today. We wanted to reiterate what the Motley Fool's general philosophy was when it comes to these mini... crisis is the wrong word... these mini economic dips, that this is really an opportunity, especially if you're a long term investor to pick up shares on the cheap, especially if you have money that you've set aside for investing. This is such a great time to buy because everything is a lot cheaper now, right?
Caplinger: Yeah. Yeah. We've seen this so many times in the past where it seems like the scariest possible time to put money into the market, but time in time out it has also turned out to be one of the best times to put money into the market. Even though a lot of people are running scared right now, some of the most successful investors, they're salivating, they're ready to buy into the stocks they've been looking at for a long time at prices that are a lot cheaper than they were just early last week.
Lapera: Yeah. Right now is a great time to be a long term investor and not a short term investor. We wanted to talk a little bit about some ways to take advantage of the situation, I guess. Just things that you could set up and just have them running continuously in the background so you don't even notice them.
Caplinger: Yeah. One of the hallmarks of a strong investment plan is that you think upfront how you're going to handle situations like this. How the plan is going to deal with suddenly having an opportunity to get shares of either stocks you like or mutual funds, exchange trade funds, whatever it is, at a cheaper price.
One of the easiest ways to do that is really to set something up in advance. It's called an automatic investing program. Basically what it involves is you pick a certain amount of money that you're going to take out of your bank account and put it toward investments. What the amount is doesn't matter as much as the fact that it's automatic, it happens without you doing anything. You set it up once, you can forget about it at that point, and then month in, month out, that money goes to work for you. In situations like this where the stock market has suddenly gotten a lot cheaper, that same amount of money goes further for you because the cheaper shares, you can pick up more shares with the same amount of money.
Lapera: Right. I think the thing that you are starting to refer to here is dollar-cost averaging, which is an example of an automatic investment program. Dollar cost averaging is a really, really neat concept. The idea is that you make a schedule where you say I'm going to send, for the sake of easiness on the podcast, $100 a month to my investment account and I have it set to buy these stocks automatically. If stocks are really expensive, you buy less, and if stock's really cheap, you buy more. The cost of the stock kind of averages out.
Caplinger: Yeah. Gaby I can give you a good example of how that works. Say that you take that $100 that you just talking about and you are interested in a stock, it trades for $25 a share. You do the math, your $100 will buy four shares of that stock at $25 a share. Makes sense right?
Caplinger: If you cut the price of the stock by 20%, say you have a 20% correction, now suddenly those shares cost just $20, your $100 now it's going to buy five shares for $20. You get to take advantage of the fact that the stock fell in price. Basically even though you're putting the same amount of money in, you're actually buying more stock, which is exactly what you want to do in a situation where the price has fallen.
Now similarly in the future when the stock bounces back to $25, that bargain period will be over, you'll go back to that four share buy instead of the five shares, but you'll have taken advantage of that short term dip in the market. That's exactly what you want to be thinking about doing in situations like this.
Lapera: Right. The really great thing about this is that this is happening automatically. It's not even something you have to think about, which is why it's so important to always be doing your homework and have an idea of what you are trying to buy and what you want to buy and have these plans set in place ahead of time.
Caplinger: That's exactly right. It's really valuable because if you actually had to do something, then you'd second guess yourself. You'd think, "Boy should I buy it now, should I wait for an even better price?" Making it automatic is the best way to make sure that it actually happens and that you get the benefits of it.
Lapera: Yeah. Another example of one of these plans is a DRIP plan is what it's called colloquially, but that is a dividend reinvestment plan.
Caplinger: That's right. That goes with if you own stocks that pay dividends, you have a couple options. You can either have the company pay the dividend to you in cash, but what a lot of people do instead is instead of taking that cash, maybe they don't need the income right now, instead they tell the company to keep the dividend and buy some extra shares with it. Again, this kind of acts the same way as an automatic investment program does. Every quarter that the stock pays that dividend, it goes right back in to buy additional shares.
You'll find over time, a lot of people if they start out with say 100 shares of a dividend stock, you hold on to it for years and years and years, eventually you get to the point where the shares you bought with dividends are more than the shares that you originally bought with your original purchase. That really shows you just how valuable those dividends can be for a long term investor.
Lapera: The really cool thing about DRIP investing is that with DRIP plans you are allowed to buy portions of stocks, which is not something you can do on the stock market.
Caplinger: That's right. If you have X dollars and X cents, your company will let you buy, I think it's all the way down to 10,000th of a share. You never have to worry about "Is my dividend big enough to buy a whole share of some company like Google that's got the $600, $700 share price?" No, you can get a fractional share and that lets you get into those investments, even though they have a high share price.
Lapera: Yeah. Our final example of an automatic investment program is a 401(k) contribution. Something that I'm sure, or I hope, a lot of you have set up to automatically go into your account from your paycheck every month so you don't even have to think about it.
Caplinger: That's right. It's just one example of the way -- in that case you have it taken directly from your paycheck and it stays at your company. The automatic investment plans that we've been talking about before, that usually works, it's taken out of your checking account or your savings account once your paycheck's already hit your bank account, that's when the financial institution comes in. Whenever it comes out, the important thing is that it's being invested regular basis, over and over again, sticking with a long term plan which is your best chance at financial success.
Lapera: Definitely. I want to reiterate for our listeners that what's going on right now is just a bump in the road, it's not the end of the road. I really love biology, I don't know if you guys knew that about me. This is a great time to be an opportunistic scavenger. This is a great time to be a turkey vulture and swoop in and pick up shares at a discount that someone else wrecked for you. It turns out that that deer that you're picking at, that dead deer, it's actually a zombie deer. It's going to pop right back up and walk away, but right now is a really good time to grab a little piece of it while you can.
That might be a gory analogy for some of our listeners, but this is a really exciting time to be an investor and a biologist.
Caplinger: That's an awesome analogy, Gaby.
Lapera: I'm really glad you liked it. Do you have anything else you want to add, Dan?
Caplinger: Reiterating everything that you just said, these situations are difficult to keep in perspective when they're happening. In hindsight, the most common regret is that people didn't take advantage of the opportunity when it was there for them. Don't make that mistake. Take a look at your portfolio, think about the things that you can do to take advantage of the situation while it's here. There's no guarantee it's going to be here for very long.
Lapera: Awesome. Thank you so much for joining us, Dan. Thank you, John. As usual, people on the program may have interest in the stocks they talk about and The Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear.
Contact us at IndustryFocus@fool.com or by tweeting us @MFIndustryFocus if you voted in the referendum or wish you could've. Thank you very much to Anne Henry, today's totally rad producer and thank you to y'all for joining us. Everyone, have a great week!