Will the conflict between Israel and Iran hurt my portfolio?
In short, the answer to this over the coming days and weeks is ‘Yes’.
We have already seen how Oil, Energy, Armaments and Precious Metals such as Gold – track upwards with war. Pretty much everything else tracks down.
In the early hours since the Israeli attacks on Iranian Nuclear related targets; we have noticed the US Dollar track upwards as well.
This is not good news for inflation. It is not good news for Emerging Markets and Asia either.
Furthermore, it is really bad news for any attempts at reducing global conflicts and it helps Russia to maintain it’s invasion as Oil Prices rise and political attention swings to the Middle East.
So, we’re doomed?
No. I genuinely don’t believe this will affect portfolios over the longer term.
We have been here before and we know roughly how the script reads.
Iran will now send missiles back at Israel which they will mostly intercept – whilst the US convinces Israel to show restraint.
If the overnight attacks on Iran’s nuclear facilities have satisfied the Israeli’s – we may see things start to calm.
We could see some weeks of airstrikes – but ultimately Iran does not want a war with a country backed by the worlds’ largest superpower. Iran is also fairly isolated within the region so it is extremely unlikely that they will push for outright conflict.
My suspicion is that the rhetoric calms and Iran eventually agrees to a US led nuclear restraint deal. Oil prices will fall back and portfolios should swiftly recover.
What should I do now?
Don’t think short term – it’s a mugs game! Your portfolio will fall over the coming days and possibly weeks whilst this plays out. The simple formula to successful investment is not to let short term price movements affect your long-term plan.
I completely sympathise that this has been an incredibly volatile period and I definitely have a few more grey hairs! However, we were literally only seeing yesterday how our portfolios were really enjoying a positive rally over the past six months – on the back of lower Oil Prices and a weaker US Dollar.
In our recent Proactive review – we firmed up the Gold and Cash components in our more cautious portfolios to help them weather just this sort of thing.
Falling Oil Prices and a weaker US Dollar will come again. Ultimately, this is where the world knows it collectively wants to be. Give this time.
As ever, I am here if you need anything at all. A quick phone call with Darren may be just what you need if you are concerned! I am around on my mobile and we are with you all the way. Nothing is too much trouble.
Darren
