Financial markets react to the various events happening around us. The price movement occurs because all world markets are interrelated. Successful investors need to keep track of the financial events worldwide, of which geopolitical ones are especially critical. Online investing requires one’s attention to detail.
How should you, as an investor, react to such events?
As an investor, you may sometimes wonder why you should bother about inflation in the US, excessive oil production in Saudi Arabia, shortage of semiconductor chips in Taiwan, and many other such global occurrences.
But in this modern world, the financial markets are linked to each other. A sudden fall in European or US stocks can lead to a decline in Sensex here in India. Similarly, an exceedingly positive development in some parts of the world can lift the value of your portfolio having Indian stocks.
In this age of Internet connectivity, an investor needs to be tuned to all happenings in world markets. Stock trading is an art that requires the investor to be prepared for all eventualities.
Impact of War-like Situations on Your Stock Portfolio
The news of war-like situations is probably the most critical of all global incidents that can impact your holdings. Wars leave a lasting impression on the lives of the people involved. It could also lead to massive volatility in financial markets, which can profoundly impact your stock trading portfolio.
Mostly, in war-like situations, financial markets tend to suffer rapid decline. But there could also be some stocks that may show a positive trend from the outcome of such events. Either way, your online investing is affected by wars.
The Chaos of War and How to Navigate your Portfolio During War like Situation?
As an investor, what should you do to best safeguard your interests during wars?
Let us look at some ideal scenarios you can resort to.
1. Take Up Bold and Risky Trades
You can take up short positions in stocks that you may feel might come crashing down. Alternatively, if you feel that certain stocks, like oil companies and defence-related scripts, could go up, then you could take long positions in them. You should take up this strategy only if you are also ready to accept losses if your predictions turn out to be inaccurate.
2. Sit Tight and Do Nothing
The extremity of the event needs to be gauged. As per your analysis, if it could only be a short time reversal, you can hold on to your assets. It has been noted repeatedly that selling in haste in fear-like situations has resulted in lost opportunities for many.
3. Value Pickings
Disastrous events like wars can result in extreme reactions on the markets. It could afford you an enterprising opportunity to pick up specific offerings at extremely attractive valuations.
Online investing today allows users to make instantaneous decisions. In the unfortunate event of a war, you have to remember that volatility in financial markets will be very high. But it will be judicious to understand the scenario, measure the severity of the influence on the market, and ascertain the expected duration of the upheaval.
Here are some more insightful articles on investing which will walk you through the basics of stock market, buying & selling shares, building of strategies & much more.
Happy Investing 😇
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.