In a shocking majority vote, the British people have chosen to exit the European Union, making the dreaded Brexit a reality. The decision is already having massive effects worldwide as global markets fell heavily in response to the unexpected News.

Dow Jones

After the Brexit vote went into effect, the Dow immediately dropped more than 300 points. By the end of the day, the Dow Jones had dropped more than 600 points, erasing all of its 2016 year to date gains. Investors in the major stock index have already begun to panic and scrambled to sell off shares before losing even more value. Smart long-term investors know that this is a one time occurrence and will not react by selling off their shares.

Over the long term, the stock market is still one of the best investments in today's market. However, most people are impatient and refuse to hold onto stocks that are losing them money. Usually, these people love to overreact to news like Brexit and sell more shares than necessary. Remember, this isn't the 2008 mortgage crisis.

Exchange Rates

Anybody shorting the pound prior to Thursday's vote made a ton of money today. The pound plunged to a 31 year low exchange rate after the Brexit results were announced. The exchange rate today is around $1.37 for a pound. That's far lower than the exchange rate of $1.50 per pound that was prevalent just one day ago. The uncertainty surroundingthe British situation will likely only devaluethe pound further.

Political impact

In the wake of the Brexit vote, prime minister David Cameron chose to resign his position. Feeling out of touch with the British people, Cameron felt like his only choice was to resign. Financial markets collapsed as a result of this news combined with Brexit, dropping the markets to a 31 year low.

Fortunately, the Bank of England stepped in and promised that 250 million pounds could be injected into the financial system if the situation should become dire. This helped to allaythe fears of both the British people and global citizens, but it was not enough to prevent the massive damage that had already been done.

Euro Zone

Now that Britain has successfully left the EU, the next question becomes who else will join them? Britain had played a key role in the EU and was a driving force in the fight to make sure Europe remained financially stable. Now that the Brexit vote has removedBritain from the EU, people will question the legitimacy of the European Union and wonder once again whether or not the EU was a failed experiment.

Scotland

Britain wasn't the only country clamoring for independence from someone. Scotland tried and failed to gain its independence in 2014, but will likely try again in another referendum this year. Now that Brexit has the nationalists in a fervor, Scotland has a much better chance of succeeding.

Last time, Scotland was convinced to give up its fight for independence.Brexit is undoubtedly the biggest financial event of the year and its impact will be felt for the next several months until things have all been sorted out. Until then, investors will be forced to navigate a chaotic market.

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