By Ramalingam K

World stocks headed for one of the biggest slumps on record, and billions of dollars were wiped off the value of European companies.

Briefcase

1 David Cameron to step down by October.

2 Stock markets fall, with banks leading way.

3 Sensex plummets 604.51 points to end at 26,397.71; Nifty nosedives 181.85 points to 8,088.60.

Britain has voted to leave the European Union, forcing the resignation of Prime Minister David Cameron and dealing the biggest blow to the European project of greater unity since World War Two.

Global financial markets plunged on Friday as results from a referendum showed a near 52-48 percent split for leaving a bloc it joined more than 40 years ago.

Sensex fell 604.51 points to end at 26,397.71; Nifty nosedived 181.85 points to 8,088.60. 

The pound fell as much as 10 percent against the dollar to levels last seen in 1985, on fears the decision could hit investment in the world's fifth-largest economy, threaten London's role as a global financial capital and usher in months of political uncertainty.

World stocks headed for one of the biggest slumps on record, and billions of dollars were wiped off the value of European companies. Britain's big banks took a $130 billion battering, with Lloyds and Barclays falling as much as 30 percent. 

An emotional Cameron, who led the "Remain" campaign to defeat, losing the gamble he took when he called the referendum three years ago, said he would leave office by October.

"The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction," he said in a televised address outside his Downing Street office.

"I do not think it would be right for me to be the captain that steers our country to its next destination."

Quitting the EU could cost Britain access to the EU's trade barrier-free single market and mean it must seek new trade accords with countries around the world. The United Kingdom itself could break apart, with politicians in Scotland - where nearly two-thirds of voters wanted to stay in the EU - calling for a new vote on independence.

The EU for its part will be economically and politically damaged, facing the departure not only of its most free-market proponent but also a member with a U.N. Security Council veto, a powerful army and nuclear capability. In one go, the bloc will lose around a sixth of its economic output.

The result emboldened eurosceptics in other member states with populist leaders in France and the Netherlands demanding their own referendums to leave.

The vote will initiate at least two years of divorce proceedings with the EU, the first exit by any member state. Cameron - who has been premier for six years and called the referendum in a bid to head off pressure from domestic eurosceptics, including within his own party - said it would be up to his successor to formally start the exit process.

His Conservative Party rival Boris Johnson, the former London mayor who became the most recognisable face of the "leave" camp, is now widely tipped to seek his job. Johnson made no comment as he left his home to jeers from a crowd in the mainly pro-EU capital.

'INDEPENDENCE DAY'

There was euphoria among Britain's eurosceptic forces, claiming a victory over the political establishment, big business and foreign leaders including U.S. President Barack Obama who had urged Britain to stay in.

"Dare to dream that the dawn is breaking on an independent United Kingdom," said Nigel Farage, leader of the eurosceptic UK Independence Party, describing the EU as "doomed" and "dying".

"This will be a victory for real people, a victory for ordinary people, a victory for decent people ... Let June 23 go down in our history as our independence day."

European politicians reacted with dismay.

"The news from Britain is really sobering. It looks like a sad day for Europe and Britain," said German foreign minister Frank-Walter Steinmeier.

"Please tell me I'm still sleeping and this is all just a bad nightmare!" former Finnish Prime Minister Alexander Stubb tweeted.

The shock hits a European bloc already reeling from a euro zone debt crisis, unprecedented mass migration and confrontation with Russia over Ukraine. Anti-immigrant and anti-EU political parties have been surging across the continent, placing unprecedented pressure on the centre-left and centre-right establishment that has governed Europe for generations.

French National Front leader Marine Le Pen called for a similar referendum in France, changed her Twitter profile to a Union Jack and declared "Victory for freedom!"

Dutch far right leader Geert Wilders, also demanding a referendum, said "We want be in charge of our own country, our own money, our own borders, and our own immigration policy."

U.S. presidential candidate Donald Trump, whose rise has been fuelled by disenchantment with the political establishment in the United States that has parallels with populism in Europe, declared that Britons "took back control of their country". He was in Scotland opening a golf club.

Britain has always been ambivalent about its relations with the rest of post-war Europe. A firm supporter of free trade, tearing down internal economic barriers and expanding the EU to take in ex-communist eastern states, it opted out of joining the euro single currency or the Schengen border-free zone.

Cameron's ruling Conservatives in particular have harboured an anti-EU wing for generations, and it was partly to silence such figures that he called the referendum in 2013.

World leaders including Obama, Chinese President Xi Jinping, German Chancellor Angela Merkel, NATO and Commonwealth governments had all urged a "Remain" vote, saying Britain would be stronger and more influential in the EU than outside.

The four-month campaign was among the divisive ever waged in Britain, with accusations of lying and scare-mongering on both sides and rows on immigration which critics said at times unleashed overt racism.

It also revealed deeper splits in British society, with the pro-Brexit side drawing support from millions of voters who felt left behind by globalisation and believed they saw no benefits from Britain's ethnic diversity and free-market economy.

At the darkest moment, a pro-EU member of parliament was stabbed and shot to death in the street by an attacker who later told a court his name was "Death to traitors, freedom for Britain".

Older voters backed Brexit; the young mainly wanted to stay in. London and Scotland supported the EU, but wide swathes of middle England, which have not shared in the capital's prosperity, voted to leave.

Concerns over uncontrolled immigration, loss of sovereignty and remote rule from Brussels appear to have trumped almost unanimous warnings of the economic perils of going it alone.

THREAT OF UK BREAK-UP

The United Kingdom itself now faces a threat to its survival; Scottish First Minister Nicola Sturgeon said Thursday's vote "makes clear that the people of Scotland see their future as part of the European Union."

Her predecessor, Alex Salmond, said Scotland was now likely to push for a second independence referendum. It voted against seceding in 2014. Northern Ireland's largest Irish nationalist party, Sinn Fein, said the result intensified the case for a vote on whether to quit the United Kingdom.

The global financial turmoil was the worst shock since the 2008 economic crisis, and comes at a time when interest rates around the world are already at or near zero, leaving policymakers without the usual tools to respond.

The body blow to global confidence could prevent the Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all major central banks, despite their limited options.

The Bank of England said it would take all necessary steps to secure monetary and financial stability. Japanese Finance Minister Taro Aso promising to "respond as needed" in the currency market.

EU affairs ministers and ambassadors from member states gather in Luxembourg by 10 a.m. (0800 GMT) for previously-scheduled talks that will provide the first chance for many to react.

Left unclear is the relationship Britain can negotiate with the EU once it leaves.

To retain access to the single market, vital for its giant financial services sector, London may have to adopt all EU regulation without having a say in its shaping, contribute to Brussels coffers, and continue to allow free movement as Norway and Switzerland do - all things the Leave campaign vowed to end.

EU officials have said UK-based banks and financial firms would lose automatic "passport" access to sell services across Europe if Britain ceased to apply the EU principles of free movement of goods, capital, services and people.

Aside from trade, huge questions now face the millions of British expatriates who live freely elsewhere in the bloc and enjoy equal access to health and other benefits, as well as millions of EU citizens who live and work in Britain.

Courtesy : Investopedia 

While it may be true that in the stock market there is no rule without an exception, there are some principles that are tough to dispute. Let's review 10 general principles to help investors get a better grasp of how to approach the market from a long-term view. Every point embodies some fundamental concept every investor should know.

1. Sell the Losers and Let the Winners Ride!

Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope of a rebound. If an investor doesn't know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice. The following information might help:

• Riding a Winner - Peter Lynch was famous for talking about "tenbaggers", or investments that increased tenfold in value. The theory is that much of his overall success was due to a small number of stocks in his portfolio that returned big. If you have a personal policy to sell after a stock has increased by a certain multiple - say three, for instance - you may never fully ride out a winner. No one in the history of investing with a "sell-after-I-have-tripled-my-money" mentality has ever had a tenbagger. Don't underestimate a stock that is performing well by sticking to some rigid personal rule - if you don't have a good understanding of the potential of your investments, your personal rules may end up being arbitrary and too limiting. 
• Selling a Loser - There is no guarantee that a stock will bounce back after a protracted decline. While it's important not to underestimate good stocks, it's equally important to be realistic about investments that are performing badly. Recognizing your losers is hard because it's also an acknowledgment of your mistake. But it's important to be honest when you realize that a stock is not performing as well as you expected it to. Don't be afraid to swallow your pride and move on before your losses become even greater.

In both cases, the point is to judge companies on their merits according to your research. In each situation, you still have to decide whether a price justifies future potential. Just remember not to let your fears limit your returns or inflate your losses

2. Don't Chase a "Hot Tip."

Whether the tip comes from your brother, your cousin, your neighbor or even your broker, you shouldn't accept it as law. When you make an investment, it's important you know the reasons for doing so; do your own research and analysis of any company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out, it's also a type of gambling. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run. 

3. Don't Sweat the Small Stuff.

As a long-term investor, you shouldn't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. Also, don't overemphasize the few cents difference you might save from using a limit versus market order.
Granted, active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.

4. Don't Overemphasize the P/E Ratio.

Investors often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued. 

5. Resist the Lure of Penny Stocks.

A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a $5 stock that plunges to $0 or a $75 stock that does the same, either way you've lost 100% of your initial investment. A lousy $5 company has just as much downside risk as a lousy $75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it.

6. Pick a Strategy and Stick With It.

Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid. Take Warren Buffett's actions during the dotcom boom of the late '90s as an example. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that had no earnings and eventually crashed.

7. Focus on the Future.

The tough part about investing is that we are trying to make informed decisions based on things that have yet to happen. It's important to keep in mind that even though we use past data as an indication of things to come, it's what happens in the future that matters most.
A quote from Peter Lynch's book "One Up on Wall Street" (1990) about his experience with Subaru demonstrates this: "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought Subaru after it already went up twentyfold. But I checked the fundamentals, realized that Subaru was still cheap, bought the stock, and made sevenfold after that." The point is to base a decision on future potential rather than on what has already happened in the past. 

8. Adopt a Long-Term Perspective.

Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is a must for any investor. This doesn't mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certain specialized skills.
Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire. 

9. Be Open-Minded.

Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps; over the decades from 1926-2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard & Poor's 500 Index (S&P 500) returned 10.53%.
This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Index, and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains. 

10. Be Concerned About Taxes, but Don't Worry.

Putting taxes above all else is a dangerous strategy, as it can often cause investors to make poor, misguided decisions. Yes, tax implications are important, but they are a secondary concern. The primary goals in investing are to grow and secure your money. You should always attempt to minimize the amount of tax you pay and maximize your after-tax return, but the situations are rare where you'll want to put tax considerations above all else when making an investment decision .

The Bottom Line

There are exceptions to every rule, but we hope that these solid tips for long-term investors and the common-sense principles we've discussed benefit you overall and provide some insight into how you should think about investing.