Ukraine – Russia Conflict On Financial Markets

It has been a very difficult start to 2022 for investors. Worries about rising inflation and interest rates have been exacerbated by the conflict in Ukraine. Stock markets have also been volatile.

Successful investing has always been as much about clear thinking and controlling your emotions as it has about technical factors like Price-Earnings ratios and balance sheets. So, although there is currently much uncertainty, we believe strongly that it is not a time to panic. In contrast, recent events only emphasise the importance of taking a long-term view.

The risk of panic selling

If you panic and sell:

  • You lock in your losses.
  • You may potentially miss out on the best returns that often follow.

Some of the biggest daily losses have been followed by some of the biggest daily gains. In the final quarter of 2008, for example, the FTSE 100 Index saw four of its worst ten days since 1986. However, over the same period, the Index also experienced six of its best ten days. This just goes to show that timing the market is impossible over the short term and it is almost always best to stay invested.

We completely understand the temptation and tendency to panic when share prices are falling. It is human nature. However, all the evidence and past precedent suggest that at times like this the best investment strategy is to remain calm, to stay invested and that this will be to your benefit over the long term.

How can Nelsons help?Financial Markets Conflict

John Stanley is a Partner and Independent Financial Adviser in our Investment Management team.

For advice regarding the subjects discussed in this article, please get in touch with John or another member of the team in DerbyLeicester or Nottingham on 0800 024 1976 or via our online form.

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