How war impacts your investment portfolio
Chris Broome – Chartered Financial Planner
Worried about how the current Ukrainian war is going to impact your investment portfolio?
It’s an understandable and very normal thing to think about.
The truth of the matter is this: history shows us that war, and the inevitable impact felt around the world, has little to modest impact on global equities.
My short article today looks back in time to provide what I hope is some comfort, if it can be found, in what is current happening in Europe and how it may impact your investment portfolio.
- The above image is what war, implications of war, terror and fear, and well-known assassinations historically looks like when assessing the US S&P 500 stock market.
- As you can see, on average, these horrendous events lead to a 1 day loss of -1.1%.
- Drawdowns (the maximum amount the portfolio falls by) from these events average -4.8%.
- They take 19 days to hit bottom.
- And then 43 days to bounce back.
- Even World War II (and the attack on Pearl Harbor) only took the market a year and a half to recover from.
- Arguably the worst war in human history, and the S&P 500 only required 143 days to bottom out, and then grew to a higher level some 307 days later.
- I’m clearly not saying that we should approach the current war with complacency, however we should view current events as something capital markets have experienced before, and recovered from.
- As our clients know, at Longhurst we believe that the most successful investors focus on the long-term. They do not succumb nor react to geopolitical and market noise. They have faith in their financial plan, even when others do not.
- We also believe, as the image confirms, that we’ve been here before, we will no doubt be here again in the future, and we’ll get through it.
- Ignore the noise as best as you can.
- And pray for our Ukrainian allies.
Want to donate to a Ukrainian cause?
UNICEF has a given page set up to support them as they give aid to the Ukrainian families and children caught by this war.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.