Broker Check

The Uncertainty of War

| February 28, 2022

The one thing that is certain when geopolitical events take hold is that uncertainty runs rife, and the one thing that investors and the markets don’t like is uncertainty. It’s during these times that market volatility picks up and emotional investors tend to head for the exit. But with so many factors at play in addition to the increase in geopolitical risk –high inflation, Central Banks removing accommodative policies, and the possibility of another Covid variant to emerge to name a few – investors should ask themselves, ‘Is now the time to give up on a well-diversified portfolio?’

What can we learn about the markets’ reaction to historical geopolitical tensions?

Uncertainty from geopolitical tensions creates worry, and during these times risk assets tend to sell off. But the fall and negative impact on risk assets, while significant at times, has always proven to be temporary. During a geopolitical event, the perceived safe assets of gold and US Treasuries have held up best, while risk assets, namely equities, can fall into correction territory –historically registering a drop of at least 10%.   To continue reading click on the following link:  The Uncertainty of War