You're probably wondering how the recent allied attacks in such a sensitive area of ​​the Middle East will affect your investment portfolio , and even if they could be repeated in the coming weeks. And of course, you're also considering the potential retaliatory actions of one of the world's major powers, Russia. These are some of the factors that small and medium-sized investors need to understand in order to manage their investments more securely during this critical period in international geopolitics. Because these events could have a much more decisive impact on the financial sector than you might initially think.
All of this is happening against a backdrop of financial markets that is anything but positive for the short term. The benchmark Spanish stock index, the Ibex 35, has fallen by nearly 3% so far this year, reaching levels of 9.724 points. One of the most noteworthy facts of this period is that only slightly more than ten stocks have shown gains in the first quarter of the year. This trend in equity markets is so pronounced that the volatility indicated by the VIX index is currently at 19 points . Meanwhile, a growing number of analysts are beginning to see the end of the stock market cycle that began in July 2009.
Added to this is the uncertainty generated by this surprise military attack in Syria. The initial reactions in equity markets have not been particularly significant, far from it. On the contrary, these military actions have not impacted the financial markets. In other words, you won't be able to profit from them except in a few very specific stock market sectors, and even then, price projections will certainly not be very optimistic. This is, for now, the first reaction from the stock market to the escalation of the conflict in one of the most sensitive areas of the Middle East.
Syria: is it affecting oil?
One of the markets most sensitive to these military attacks is the one that uses oil as its benchmark . But this time, the effect of previous offensives has not materialized. While the price of oil in financial markets has risen, it hasn't been as significant as financial agents would have liked. It certainly isn't causing a sharp change in the price of this important financial asset. As a result, you won't be able to capitalize on this trend to generate significant profits in terms of stock market returns . Beyond a few short, isolated increases that aren't altering the underlying price levels of these specific international equity securities.
From this perspective, it's crucial to remember that oil is highly sensitive to these kinds of movements in the financial markets. In this regard, oil companies are among the biggest beneficiaries of this geostrategic situation. Their share prices have risen significantly as a result of the uncertainty in the financial markets. Furthermore, they benefit from an underlying upward trend, which is very advantageous for making your savings grow, at least during this period of uncertainty surrounding the situation in Syria. Their dividend yields are, in most cases, very close to 5%.
Big hikes in arms companies
Undoubtedly, these types of companies are the biggest beneficiaries of this unique situation. To such an extent that they have seen the largest gains in equity markets worldwide. Not surprisingly, their business lines have been bolstered by the events unfolding in the Middle East in recent days. In this regard, you can open positions if you believe these events will continue, as the potential for significant price increases could be truly spectacular and certainly higher than in more conventional sectors.
However, one of the biggest problems with this particular investment strategy is that you can't implement it in domestic stock market indices. Instead, you'll have to turn to international markets if you want to fulfill this objective. Specifically, you'll need to look at US indices , where most of these companies are concentrated. With a wide range of options available, you can select the best one that meets these specific criteria.
Another option, get away from the markets
However, if your profile as a small or medium-sized investor is more defensive, you can always opt to withdraw from the financial markets. This will allow you to maintain full liquidity to protect your positions. Furthermore, it will be a very effective strategy to later capitalize on the genuine business opportunities that will undoubtedly arise from this point forward. It will be a period of several months during which you should stay away from the stock markets, primarily to prepare for unforeseen circumstances.
On the other hand, keeping your money completely liquid doesn't mean you won't earn a return on your savings. Of course not, since you can earn a small return through a fixed-term deposit of a few months . This is a risk-free option that serves as a bridge until you return to the stock market. Because in a short time, you'll recover your initial investment plus the corresponding interest. And you have the advantage of not having to pay any fees or other expenses related to managing or maintaining these banking products. This is something you should consider when deciding whether to leave your money parked in situations like the one arising from the current situation in Syria.
The reactions have not been violent
In any case, the reaction from financial markets these days has not been violent at all . On the contrary, the stock markets are being governed by the same variables as just a few weeks ago. That is to say, a price correction is underway that could last for a few more months. This is largely unrelated to the current war taking place in one of the world's most volatile regions. At least as of today, and provided there are no further ramifications in the military escalation. In this sense, what Russia, Iran, or Turkey might do will be very important for your relationship with the financial world.
It's also important to understand that, as long as things don't escalate, your money can remain stable in the stock market. Expect logical fluctuations as a result of stock market movements, where significant differences can occur between the highest and lowest prices of selected securities or financial assets. This is at least the current state of equities, regardless of other technical or fundamental considerations.
Strategies to apply now
From now on, you will have no choice but to carry out a series of more specific actions than before. Do you want to know which are some of the most relevant?
- Act with greater caution that before and in any case you do not invest all your available capital. With a part of it, it will be more than enough to satisfy the investment demand.
- La flexibility In investment it will be another of the most satisfactory keys and that can be materialized with a timely diversification in the operations carried out. Not only based on variable income, but also on fixed income.
- Do not direct your investments to very long periods of stay. But on the contrary, the short term is the best choice for a period as special as the one we are going through.
- Search alternative proposals in which you can make the savings profitable in the most satisfactory way possible. Even from the most unfavorable scenarios for the financial markets. To the point that you can lean towards models based on the instability or volatility of the financial markets.
- You can wait a few weeks until we see how the evolution is going to be in this geostrategic theater. At least you will have greater security in operations, as well as seeking the best interest of the contracted financial products.
It seems the impact of the armed intervention in Syria will be less significant on the stock markets . In fact, it could even trigger further gains in equity markets. However, you'll need to time your trades carefully to capitalize on any moves you make from this point forward. This should be one of your primary objectives.