Market Update: Israel & Hamas war – What is the impact on your investments?

This conflict is not only a tragedy, but also brings concerns to global financial markets. Oil and gas are main sources for energy, and the Israel - Hamas conflict threatens to disrupt energy supply worldwide.

What is the impact on energy markets?

About a third of the world's oil comes from the Middle East. This conflict is putting this  supply at risk. In a time when the global economy is already struggling with inflation and high interest rates, a surge in oil prices would add even more issues to the global economy.

What are potential consequences?

First, the conflict endangers the process of Israel and Saudi Arabia normalizing their relationships which could have led to more stability in the region. Additionally the US might tighten sanctions on Iran, which could lead to a strain on the oil market. Even though the oil supply remains stable for now, rising tensions could endanger this. Usually, the financial markets react sensitively to uncertainties around the oil price since higher oil prices have a negative impact on economic growth.

How does the market react? 

Oil prices have already risen and the markets have taken a considerable dip. Assets like gold and other precious metals are gaining in value, which reflects investors’ concerns.

How is your Selma portfolio impacted? 

Your portfolio at Selma is structured with a key principle in mind: global diversification. 

This diversification helps in spreading and managing risks across various asset classes and regions around the globe. While the ongoing crisis between Israel and Hamas might influence markets worldwide, it is important to note the very essence of diversification is to buffer against such uncertainties. The spread across multiple markets and sectors means that even if one area faces challenges, other parts of your portfolio can potentially offer stability or even growth. 

Further, the precious metals in your Selma portfolio give you stability, of course the equity markets around the globe have suffered from the uncertainty. The Israel - Hamas conflict might impact the financial market negatively also in the future. But, it can also be an opportunity to increase your investments and lower average purchase prices for long term investors.

3 tips to keep in mind while investing in turbulent times

1. Make sure you invest your money long-term

Crises are part of every investor's journey. While there have been more crises recently, the past has shown us that the market recovers in the long-run. Temporary drops are unavoidable, but also an opportunity to buy investments for a lower price. Remember, just invest money you won’t need short-term. 

2. Stick to your plan, invest regularly and don’t panic

Yes, panic is contagious – but emotions are never good advisors. Invest your money regularly, monthly if possible and stick to your original plan. 

By investing on a monthly basis, you can get a stable average purchase price when buying investment products.

3. Double-check your investor profile

You can adapt the risk in your investor profile, in case you don’t sleep well due to the ups and downs. When lowering the risk, Selma will invest your money in products that tend to grow slower and get impacted less in rocky times. Companies (and therefore their stocks) on the other hand, usually feel uncertainties first and therefore come with a bit more “action”.

The past years were not easy for investors all around the globe with various crises around the corner. That’s why in our latest webinar, we discussed Selma’s investment philosophy and strategy plus had a look at the current market view. This can help you understand that crises come and go, but the financial market usually recovers quickly. The best thing investors can do is stay calm and invested.