Causa Proxima

While the legal definition of causa proxima is captured in the aforementioned quote, I often use the phrase in describing why the media is always looking for a proximate cause as to why the markets went this way or that. Back in the 1970s, when the markets would do this or that and nobody could figure out why, we always blamed it on the Middle East wealth funds because NOBODY knew what they were doing. Over the past few weeks, however, as the equity markets became more susceptible to the downside, the media’s causa proxima has been fears that, if the UK leaves the EU, it could cause a domino effect as other countries leave, as well. I would remind folks that even if the Brits do “leave”, it will be a few years before the separation process would be complete. I would also remind investors that my contacts in the UK do not think a “leave” vote is a fait accompli. In fact, if the vote is to “stay,” it could spark a pretty dynamic rally for the world stock market.



Speaking to this point, my friends at the keen-sighted GaveKal organization (I own some of their funds) recently wrote that if the UK “leaves”, it most certainly gives the country more freedom. As Charles Gave writes:

My starting point is that I cannot remember a single incident of increased freedom being followed by a sustained decline in living standards – not one. And even ardent ‘remainers’ would be hard pressed to argue that an exit from the regulatory and nondemocratic EU monster would not boost economic freedom in the UK.