How should you react to the ongoing events in the Middle East?

At times of extreme uncertainty, you’ll hear from me. This bulletin is in direct response to the latest conflict that has erupted in the Middle East, specifically in Iran.

Put aside the very real human devastation, the war’s morality, and the political and financial drivers.

We’re all human, and we’ll have opinions and feelings about such events.

As your financial adviser, my main job is to manage the understandable financial anxiety you feel about your family’s life savings during such events.

If we use history as our guide (it’s the only guide we have and there are no factual details about the future until it happens), the stock market – a collection of real businesses run by adaptable humans – has historically proved resilient through events it has encountered.

“The first rule of compounding: Never interrupt it unnecessarily” – Charlie Munger

The stock market has historically declined frequently, and occasionally in an extreme manner. You may recall some of the events that prompted such declines, such as the pandemic, the dot-com bubble, and the financial crash.

But I believe these declines are a feature, not a bug, of the stock market.

Rather than trying to avoid these declines, staying invested to participate in the market’s long-term growth is more important for most long-term investors. Indeed, keeping you invested is my North Star.

Here are some counterintuitive thoughts I think it’s important for you to consider as we wait for clarity on how the current crisis will unfold:

• A declining stock market is good news for regular buyers of investment units. During these periods, you’re buying cheaper units, and historically, these periods have tended to be temporary, although timing is unpredictable.
• I’d encourage you not to look at your portfolios during this turbulence. After all, you know what you’ll see. The less you look, the better you’ll feel and ultimately perform.
• Think long term; your 30-year investment horizons should not be derailed in any way by the last 30 minutes, or even 30 days, of news.
• Your incredible, diversified portfolios have been constructed with periods of uncertainty like this in mind.

As always, I’m here if you’d like to discuss how current events may affect your financial plan.

Get in touch

If you have any concerns about your investment strategy or financial plans, please get in touch.

You can call me on 07769 156250.

Please note

This blog is for information purposes only and does not constitute advice or a personalised recommendation. The information is aimed at individuals only.

Please do not act based on anything you might read in this article. This blog is based on our understanding of current and proposed legislation, which may change.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a guide to future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

When investing, your capital may be at risk.