RL106 – How does war impact the stock market?
Today on the Retirement Lifestyle Show, Roshan Loungani and Adrian Nicholson talk about how the markets behave in response to wars and conflicts. They analyze market trends in response to the Ukraine-Russia conflict, fed policies during times of war, and why time horizons are crucial for investing during uncertain times.
[04:10] How Conflicts and Wars Affect the Markets
[08:10] The Markets Hate Uncertainty
[10:27] How the Markets Respond Before, During, and After Wars
[15:50] Why You Need to Know Your Investment Time Horizons
[17:20] Fed Policies in Response to Wars
[21:38] The Gold Versus Crypto Debate
[21:45] Cash at Hand During Times of War
[27:07] Value Versus Growth Investing During Uncertain Times
[32:40] Parting Thoughts
Links and Resources
For more links and the full show notes keep scrolling down!
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Full Show Notes:
How Conflicts and Wars Affect the Markets
Tensions between Ukraine and Russia came to a head when Russian troops invaded Ukraine in late February 2022. And if you've been following the markets, you'll have noticed that the potential for war has been weighing on the global economy for weeks. For example, the ever-increasing sanctions on Russia have had a negative effect on global oil prices. Also, we witnessed a sharp sell-off in the S&P 500 while Nasdaq briefly fell into bear market territory. Interestingly, both stock indexes have recovered in a wild trading session never witnessed since the start of the pandemic.
That said, how will the markets respond long-term if the Russia-Ukraine tension evolves into a full-blown war? What can you do as an investor to cushion yourself if things go south?
First, the full effects of the conflict on markets are confusing and still unknown at this time. Second, the markets are constantly moving up and down in reaction to every bit of information coming from Ukraine. So, it makes sense not to make rash decisions based on every information that comes your way. Although the potential for war might tempt you into overreacting and selling your investments, most financial experts advise against that. This is because any reaction you have to the current situation is more likely to hurt you than help you.
Links and Resources
All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.