17 March, 2022 Tax Planning

How to Invest In A War

How to Invest In A War

Due to the Russian invasion of Ukraine, global stock markets are continuing the declines that we’ve seen since the start of 2022.

It’s an unsettling time. Beyond the obvious humanitarian concerns, oil and commodity prices have both skyrocketed. In Russia, the ruble is now essentially worthless, and the Moscow stock exchange hasn’t even been allowed to open since the war began.

How have stock markets historically reacted to similar events?

War and the Stock Markets

History is never guaranteed to repeat itself, but stock markets have a long track record of recovering after events like this.

The most common question I’m hearing right now is some variation of “Should I go to cash and wait for things to settle down?”

Trying to time the market is always tempting, but it doesn’t work.

In the short-term stock markets are completely unpredictable. A Russian plane accidentally straying into NATO airspace could lead to a deep escalation of the war. Or, next week, Russia and Ukraine could announce a ceasefire.

Trying to predict what will happen tomorrow, next month or next year is pure speculation, and not a strategy for success.

Consider this: On March 23rd 2020 when the S&P 500 was down over 31% for the year did you predict the 67% rally that happened after that?

Spend your time focusing on what you can control. You can’t control Putin’s next move, global oil output or short-term stock market movements.

What you can control is making sure you have an investment plan that matches your personal risk tolerance and the goals you’ve set for yourself.

This will help you endure through these scary times, and all the other ones that haven’t happened yet.

*The views and opinions expressed in this article may not necessarily reflect those of IPC Securities Corporation.

i Assumes all dividends reinvested

ii https://dqydj.com/sp-500-return-calculator/