War, Conflict & Long-term Investing
Stock Markets Reaction to War
All of us at Tulett, Matthews & Associates are shocked and saddened by the human and emotional toll the conflict is inflicting on the Ukrainian and European populations.
With heightened investor anxiety, we have recorded this episode to shed some light on how the stock markets have reacted to past wars and global conflicts and what it might mean for current long-term investors.
In this episode, Marcelo and Keith talk about geopolitical risk/shock in investing. When we’re facing major geopolitical events, war, health crises, or an economic recession, many investors’ immediate reaction is that we’ve never seen something like this before. We hear – this time is different. Unfortunately, that often leads financial investors to make short-term, reactive decisions that ultimately harm their long-term financial investment plan.
We hope that today’s episode helps you with perspectives on long-term financial investing.
Investor attitudes to war and uncertainty
- Why we’re talking about the implications of the Ukraine war (2:41)
- Geopolitical risk is not a new aspect of investing (3:10)
- The dangers of the “this time is different” concept (4:05)
- How social media feeds into our fears (7:17)
- Trends in stock market reactions to war and major geopolitical events (8:31)
- Distinguishing between a geopolitical event and a recession (10:28)
- Russian equity exposure and portfolio construction (12:49)
- How investment organizations are decreasing their exposure to Russian equities (13:43)
- Getting through these crises and preparing for the future (15:14)
- The lifeboat drill we use with our clients (16:11)
- Your capacity and emotional ability to bear risk (17:25)
- Investment philosophy as a central pillar of your investment plan (20:01)
- The key to ensuring your portfolio can weather any storm (21:29)
- Our main takeaways for investors (23:19)
- And much more!
2022 has been a challenging year for Canadian investors; inflation is higher, interest rates have been going up, bonds are down, and stocks have been volatile. Typically, bonds have sheltered investors in periods of uncertainty. This hasn’t been the case this year.
We discuss the looming possibility of a recession and how you can successfully manage your investment portfolio through uncertain financial times.
A good evaluation goes beyond a financial advisor’s performance and lets you get a sense of their processes, structure and the people helping you.