Success in Turbulent Investment Markets: How To Manage Your Portfolio

Investing during times of global conflict can be particularly challenging, and it comes with a higher degree of risk compared to normal conditions, whatever that means. It's important to approach these situations with caution and a clear understanding of the potential risks involved. In today's show, I'm going to outline some things that you can do as the Israel conflict grows. Stay tuned.

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Hey everyone, welcome to another edition of We're Talking Money. I'm Phil Clark, founder of OmniStar Financial Group, and today I'm focusing on how you can invest during global conflict. We have another situation of war as Israel for declares war against Hamas. Now this, along with Ukraine and Russia conflict, will almost certainly bring higher levels of volatility. Another less talked about conflict is Taiwan and China.

So there's a lot going on around the globe at this point, and those things combined, in our opinion, will create a lot of consternation, a lot of unrest, and that means volatility.

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Okay, so let's dive in to some considerations for you to keep in mind. First, as we just mentioned, increased volatility. Now, during times of conflict, we know that financial markets tend to experience greatly increased volatility. This means that asset prices can fluctuate rather significantly over short periods, and while this can present opportunities for traders, it also means there's naturally a higher risk of loss.

Regardless, the kind of volatility that I'm speaking of can create extreme fear. Ultimately, that level of fear can create a self-fulfilling prophecy of capitulation, and that's never a good thing, because that capitulation means markets could sell off very quickly.

Next is diversifying your investment portfolio. Diversification is crucial, especially during times of uncertainty, and just as it can create opportunity, can also create those potential losses, and they can be severe at times. Consider spreading your investments, if you haven't already done so, across many different asset classes. You want stocks and bonds and real estate, commodities.

What you're ultimately trying to do is find your portfolio designed in such a way that you have asset classes that are not correlated. You want reverse correlation when it comes to allocation. And of course you have to consider geography, so you want Geographic re to be covered at the right time. Now, this can help mitigate some of the risk that we're talking about.

Next is safe havens. Some assets are traditionally considered safe havens, and particularly during times of global unrest or geopolitical turmoil. These include things like gold and US Treasuries, certain currencies like the Swiss franc and Japanese yen. These assets can often retain their value, and sometimes they appreciate.

Let's talk about gold for a minute. Often it's considered the ultimate safe haven asset, and right now everyone is talking about gold. Should they buy it? How much should we buy? You see it on the television. If you watch any TV, you've probably seen some advertisement for purchasing gold, especially in your IRA.

Gold has been used as a store of value for centuries. It tends to hold its value even when what we would call normal or fiat currencies and other assets experience higher levels of volatility. So I'm not saying that it's good or bad. I'm simply saying that it is considered a safe haven. But before you rush out and buy it, make sure you understand why you're buying it and how much of it makes sense for you.

Number two as a safe haven is US Treasury bonds, and these are debt securities. They're issued by our US government, and they are considered among the safest investments in the world, and that's because they're backed by the full faith and credit of the United States government. Now, today that doesn't necessarily sound like the greatest promise, particularly when you look at our US government's debt load.

Number three is the Swiss franc. Switzerland, known for a very stable economy and political neutrality. The Swiss franc, it is considered a safe haven, has been for a long time, and it actually tends to appreciate during times of uncertainty.

Japanese yen: similar to the Swiss franc, the Japanese yen is often considered a safe haven.

Number five, the US dollar. Now, it's not immune to volatility by any stretch, but the US dollar is considered a relatively safe currency, especially during global crisis. Many investors will seek refuge in the dollar because of its status as the world's primary reserve currency. Let's hope that continues.

Number six, government bonds from stable countries. And now we're talking about bonds issued from countries that are outside of the United States. Bonds issued by financially stable governments, such as those of, say, Germany or Singapore, Canada, they're all en considered safe haven investments.

And number seven, precious metals. So we've already talked about gold. Now I'm speaking of silver, platinum, palladium. They're not used as much, but they can serve as a safe haven asset. So if gold is a little bit too expensive for your taste, maybe you consider some of these.

Number eight is real estate. Now, real estate, particularly in stable and well-established markets, can absolutely be considered a safe haven. It has been for decades, centuries. Properties in desirable locations tend to hold their value, and they tend to appreciate over time.

Number nine, utilities stocks. Now, I'm not suggesting that you go out and buy a lot of utility stocks, but what I am saying is that companies in the utility sector, I'm speaking of course about electricity, water, gas, these tend to be less sensitive to economic downturns. People need these services regardless of a global economy.

Number 10 is high quality corporate bonds. Now, bonds issued by financially stable and well-established companies with a high credit rating, they can be relatively safe investments. In fact, right now our firm believes that corporate bonds tend to offer a pretty significant level of opportunity, considering where they've been, where they are, where the economy is and where we see it heading. Corporate bonds may not be a bad play.

Number 11, cash and cash equivalents. For the first time in years, you can actually get paid very well for being in cash. Holding cash, or investments that can be quickly converted to cash, like a money market fund, right now in particular, they are providing a great level of safety.

Now, let's don't forget long-term perspective. If you're investing for the long term, for example your retirement, it's important to remember that conflicts, they are usually transitory. And I don't mean that they only last for a few weeks or months. They can last for years, but temporary are these events in the grand scheme of things. Historically, markets have generally recovered from these crisis when they come out of these times of chaos.

Next, you want to stay informed. Now, keep a close eye on the news and geopolitical developments. This kind of information, it can certainly give you a better understanding of the potential risks and opportunities in different regions and industri. But the question, of course, is who can you trust? The news today, it sells nothing but fear, just parts, I believe, of the truth. Be careful what you're reading, what you're viewing. Be careful what you're believing.

Consider defensive sectors as another potential safe haven. Now, what do I mean by defensive sector? So during times of conflict, certain sectors of the economy tend to be more resilient than others. For example, companies in sectors like healthcare and utilities and consumer staples, they tend to be a little less sensitive during economic downturns.

And then you want to avoid speculation. Some people say that speculation is a great thing during these times of mass chaos. I say avoid making high-risk speculative bets during periods of uncertainty, particularly as it relates to those that involve war. Stick to a well-thought-out investment strategy based on your risk tolerance, your capacity for risk, your financial goals and your time horizon. If you want invested in those speculative areas so that you don't throw yourself off track for your long-term goals.

Let's talk about emergency funds for a minute. You want to ensure that you have an emergency fund. You want this to be place and well-funded before making other significant investments. This fund is there to cover basic expenses for at least 3 to six months. It can provide a great cushion.

And then you want to seek professional advice. Now, I'm not saying to go out and purchase a membership to a professional advisor or a financial planner, but I am saying that you should consider consulting a financial advisor or wealth manager who is familiar with not just this geopolitical situation, but someone who stays up to date, who understands how to deal with these things, someone who's been through these types of situations. They can provide personalized advice based on your set of circumstances.

Lastly, be prepared to adjust your strategy. As this situation evolves, and I believe it will, be prepared to adjust your investment strategy accordingly. This might involve rebalancing your portfolio or making more aggressive adjustments, such that your investing program aligns with the changing circumstances, and that it always matches what you are trying to accomplish.

Remember, there is no one-size-fits-all approach to investing, and especially during times of conflict. It's not going away soon, in my opinion, and it is highly likely that these situations will deteriorate further before things improve. Your strategy should be based on your individual situation, your risk tolerance, your risk capacity and your long-term goals.

If you don't have a good advisor, consider the value that they can bring. And if you're a do-it-yourself, do a thorough job of researching before you start making major investment decisions, especially as we're going through times of heightened uncertainty and what I believe will be increased volatility.

Thanks for watching today. Don't forget to leave comments about the show. I would love to hear what you're doing to protect your investments, even if it's nothing. Please subscribe to our channel and hit that thumbs up button if you like today's content. I'll see you next time on We're Talking Money.

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