War in Europe: What Investors Should Do Now
March 1, 2022
It’s something many of us thought we’d never witness: an all-out assault on a country in Europe. Since Russia’s invasion of Ukraine began last week, we’ve seen the most land combat in the continent since the end of World War 2.
And thanks to the internet, the war is all too real for people around the world. We can follow along minute by nail-biting minute.
As you can imagine, that’s made the stock market pretty tense. And it’s not like we needed more volatility in stocks already this year.
During the month of February, each of the major indexes fell more than 3%, marking the second straight month of losses.
Since the invasion began, stocks have largely recovered. But it’s likely we’ll see more volatility in the markets as this situation plays out.
So what’s an investor to do?
In reality, the answer is: Not much.
Don’t Be Fearful
When you trade stocks, you should always be careful to keep your emotions out of the way. Easier said than done, right?
However, emotions can cloud your logical thinking. And when you’re dealing with your money, you want to be as logical as possible.
Fear and panic are among the most potentially destructive emotions when it comes to investing. They can hold you back from great gains.
For instance, say you panicked last week when Russia began its invasion and pulled out of your money out of stocks.
Although the markets were down Thursday morning, by the end of the day, they were back on the rise.
You would have lost out on the pleasant gains your portfolio could have made Friday morning, all because of fear.
Should You Change Your Investing Strategy?
In times of crisis, historically, people have gone to extremes such as burying gold coins in their backyard.
Although it always makes sense to have a diversified investment portfolio and not put 100% of your cash into stocks, this kind of extreme behavior won’t do you any good.
The best thing to do right now is to continue with your main investing strategy and focus on holding for the long term, beyond the current volatility.
That said, be sure to be on the lookout for great investment ideas along the way.
Along with defense companies, cybersecurity stocks look like good themes to add to your portfolio now — especially given Russia’s penchant for ransomware attacks. I would also recommend looking into energy stocks without exposure to that country.
In addition, given that it’s likely we’ll see gas prices on the rise, consider investing in electric vehicles (EVs). Already a hot investing trend, demand for EVs could grow faster and stronger than we previously expected.
How to Help
And if you’re feeling helpless and looking for the best ways to help in the current crisis, consider donating some of your investment gains to those who need it the most: the children of Ukraine. Save the Children and Voices of Children are two legit organizations that are currently working to help kids affected and displaced by the war.