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War and the Effect on Stock Markets

War and the Effect on Stock Markets

February 28, 2022

When Russia invaded Ukraine there was disbelief, sorrow, and anger.

From a financial perspective, how will this affect my investment portfolio?

We can learn a lot about the stock market from past observations. That does not allow us to predict the future, but it can provide a perspective.

Here is what is known.

One. Over the long-term the stock market has provided attractive investment returns.

Two. In the short term the stock market can be very volatile.

Three. During periods of heightened uncertainty, volatility can be more extreme.

Russia used military force to invade a neighbouring country despite warnings from world leaders. Unfortunately, we have experienced this type of aggression before because humans have been fighting since the beginning of time.

The topics of war and investing was covered in the February edition of Investor Insights from RBC Global Asset Management. It provided two observations based on past history.

First, “acts of war rarely have large or lasting impacts on markets”.

Secondly, “periods of heightened uncertainty are common during times of geopolitical tension.”

Stock markets are impacted by world events. Current day problems include military aggression, inflation, and pending interest rate increases.

Add to these world problems, we have significant environmental issues including increasing numbers of forest fires and flooding. Plus, the world has to recover from the last two years of suffering through a global pandemic.

As humans we have every right to be concerned about Russia’s aggressive military invasion. As investors we have to understand that there have always been significant obstacles to overcome.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Watson provides wealth management services through Watson Investments. He can be reached at