We’re posting to offer some thoughts on the horrific situation unfolding in Israel.
The devastating terrorist attacks have already cost thousands of lives and may profoundly affect the region. While the violence might seem far away, behind every headline are real people, families, and communities that will never be the same. Let’s take a moment to grieve for the folks who are suffering and dying and hope for a solution that will save lives.
How could an Israel-Hamas war affect the economy and markets?
Given Israel’s key position in the region, it’s likely that we’ll see energy prices impacted by the conflict, which could increase inflation.1
Another concern is that this new conflict highlights how the world is becoming more fragmented. If the war spreads to involve more major powers, it will inject more uncertainty and tension into a fragile world, and markets will likely react negatively.
What does history teach us about market reactions to geopolitical shocks?
History shows that markets typically view geopolitical crises as temporary setbacks. We’ll note that the past doesn’t predict the future — but it often rhymes.
Let’s take a look at some examples from a 2022 study:2
We’d like to note that “geopolitical event” is a very antiseptic phrase for horrors like bombings, wars, invasions, and other terrible attacks, and really fails to encompass the full cost in human misery. While markets might recover quickly, too many lives will never be the same.
We can hope, pray, donate, and speak out. And we can focus on what’s in our control: Ourselves, our actions and reactions, and our strategies for uncertain times.
Looking ahead, we can expect more volatility as the crisis unfolds and more data emerges. We’re watching and we’ll reach out with more information as needed.
Let’s hug the people we love extra tightly today.
Sources
1. https://www.bbc.com/news/
Chart sources: https://www.reuters.com/markets/asia/live-markets-what-history-says-about-geopolitics-market-2022-02-18/ and http://glenview-insights.com/blog/geopolitical-events-and-stocks/
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.
Advisory services offered through Wilon Wealth Management, a Registered Investment Adviser Firm.
