How to act on the Russia Ukraine crises



"Mankind must put a end to war before war puts a end to mankind"


I bet we all sat at one time wanting to press the sell button on all our shares and buy commodities, losing all the profits gained after a nervous battle through Covid already is not a small pill to swallow.

Whenever any major event happens, it causes pandemonium in the markets the next day. When tension is building around a growing conflict, it creates market uncertainty. This tends to hurt the stock market. The mere threat of political turbulence tends to cause stock markets to dive. That’s because markets don’t like uncertainty of any kind.


We’ve Been Here Before !


Nomi Prins had an interesting article and I would like to share some of her views. Take a look at these statistics. The recovery of the stock market after a massive stock drop caused by the market reacting to major conflicts.



Take a look at the S&P 500 graph dipping and recovering after past Ukrainian conflicts.


The Same Pattern Is Playing Out


We can assume that these patterns will repeat, the only thing we are not sure of is how long it will take, if you take the above into consideration, we can expect another 6 months of volatility.


Trading or investing on emotion or hope isn’t a strategy, these volatile markets is an opportunity for you to make use of undervalued stocks. Revert to my article regarding When to sell a stock and remind yourself why you invested in the stock in the first place. Stick to your strategy and be on the lookout for opportunities to buy your favourite stocks at a discount.


Areas affected by the Russia Ukraine conflict


Russia and Ukraine are deeply embedded in the world’s agricultural and food markets. This is not only through supplies but also through agricultural inputs such as oil and fertiliser.


We will see massive food inflation.

  • Grains and Wheat, Ukraine is the worlds third largest exporter of corn and Russia is the world’s top wheat exporter.

  • Natural Gas, Oils, palladium and nickel, Europe relies on Russia for around 35% of its natural gas. JPMorgan said the tensions risked a "material spike" in oil prices and noted that a rise to $150 a barrel would reduce global GDP growth to just 0.9% annualised in the first half of the year, while more than doubling inflation to 7.2%. Pullbacks within this uptrend are considered buyable with a longer term upside target of $119/barrel projected from a fibonacci extension as suggested by Investing.com.


‘What is certain is that investor confidence in Russia has been dealt a massive blow,’ said Steven Dashevsky, founder of Russia-focused investment fund Dashevsky & Partners.


Mineral Resources and Energy Minister Gwede Mantashe indicated that the crisis would likely lead to a surge in petrol prices as motorists brace themselves for a fuel hike.


Closing

  • Stay with your investments strategy and do minor adjustments

  • Understand why you bought the stock and buy the dips

  • Understand how inflation will affect markets

  • Commodities will be the go-to stocks for a long period

This will be a bumpy ride, do not act emotionally and look for opportunities in these volatile undervalued markets.



Happy Investing!

88 views0 comments

Recent Posts

See All