On Friday of last week, the Dow Jones dropped more than 600 points in one of the worst days in recent memory. Today, the Dow Jones tumbled and lost more than 250 points, dropping the index into negative territory for 2016. Let’s examine a few of the reasons that have caused investors to lose confidence in the markets.

Political Uncertainty in the UK.

Prime Minister David Cameron resigned after the shocking Brexit vote and left behind no apparent successor. Nigel Farage, leader of the UK independence party, and Boris Johnson, the mayor of London are not particularly appealing to the public right now.

Farage has already backed off his promise to use the 350 million pounds sent to the European Union each year to improve health care. Johnson is a man of questionable character who has repeatedly portrayed himself as a racist and a bigot.

Political Uncertainty in the European Union.

The Brexit vote could prompt a number of other countries to start looking at an exit. Britain was a key player in the European Union and it will be harder to effectively ensure financial stability in Europe without their presence. If other countries side with theBrexit supporters, it could create a domino effect that leads to the collapse of the entire European Union. Without the presence of the European Union, investorswill continue to lose confidence in the future financial stability of Europe as a whole.

Stock Market Volatility.

When an event as unexpected as Brexit takes place, investors flock to the safest spots they can find. That means that people are selling their riskier stock portfolios and reinvesting those funds in safer investments such as bonds or gold. Thanks to Brexit, gold has reached its two-year high.

In a market with so much volatility, it’s not surprising that it’s easier to find stocks to sell than it is to find good ones to buy.

Currency Market Volatility.

Stocks aren’t the only assets that have been hit hard by the Brexit vote. The dollar has strengthened significantly against the pound and pretty much every other currency.

Companies that make materials were hit particularly hard by the stronger dollar, losing more than 3.5% of their value in the S&P 500. The pound shockingly reached a level of $1.3122 during the day, the weakest the currency has been since 1985, a sign of just how poorly the markets have reacted to the Brexit decision.

It doesn't look like financialmarkets are going to get any clearer in the near future, so aggressive investors will just have to take chances while more passive investors reallocate their money and invest elsewhere.

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