The fight against covid-19 is not over and a new fight is beginning in Russia and Ukraine. It is understood that these behaviors are part of history and that at present, one must have a cool head to be able to invest wisely in these products which offer support for tangible business and financial results with a good prospect of benefit. The strategy known as value investing or investing in value companies is becoming more relevant at this time.
The recent situation and the Russian invasion of Ukrainian territory is an example of the fragility of economies in times of crisis. At the time, the Cold War came just after the Second World War; in 2022 we are experiencing a new conflict just as the whole world ends the fight against covid-19.
However, the panorama is different, we are not in a cold war, the conflict with Russia and Ukraine is a different situation from that experienced between 1945 and 1989, when history documents the cold war between the United States and the Soviet Union; on this occasion, neither side directly fought the other for fear of nuclear war, but the confrontation kept millions of people energized. At that time, the war opposed two systems of government. Both countries had different ideas on how to run a country and both thought their system was superior.
Right now Russia’s incursion already involves direct actions with bombings and military takeovers of the region, so if this situation had a name it would definitely be a hot war, because if the force has been used and the main cause of the conflict is the energy, or the struggle for the distribution of gas to Europe and the United Kingdom.
Unlike the 1950s, there are significant economic relations between Russia and the European Union, which are very important due to energy shortages and rising oil prices. There are also a lot of Russians living in America, so this volatility due to the Ukrainian conflict may only be a matter of time and it will be necessary to keep a cool head to maintain investments in companies that generate value. , because there is certainly a lot at stake, not just the stability of the conflict zone, but the distribution of energy and agricultural products such as soybeans and wheat that are distributed around the world.
The situation we are experiencing is an event in which a cool head must prevail and not make hot investment decisions, certainly the conflict in Russia can go beyond a conflict between two countries and this circumstance can lead to a war involving more nations.
So Putin in Russia, calling on Ukrainian soldiers to lay down their arms immediately, also issued what appeared to be a warning to other countries, like the United States, that have backed Ukraine. “Anyone who tries to interfere with us, or even more so, to create threats for our country and our people, must know that Russia’s response will be immediate and will lead to consequences the likes of which it has never seen in its history. We are ready for any turn of events.
For his part, Biden in the United States announced the blockade of the Russian financial system and practically a barrier is given which will limit Russia’s ability to do business in the global economy and mentions that another series of measures against the Russian President “are in progress”. table”.
We must not lose sight of the radar, that the economy is in the process of economic recovery, with inflation at a multi-decade high and central banks have had to adjust interest rates to mitigate rising prices.
In this context, depending on your risk profile, there is always the possibility of waiting until there is more certainty on the outcome of the situation and taking a position, you will probably not buy at least, or sell maximum, but you can protect yourself against taking decisions lightly that could lead to losses.
Likewise, if you already have investments and want to know what to do with them, keep in mind that so far in 2022, investments in products that invest in valuable companies have performed much better than companies. speculative (see chart), as the former invest in publicly traded issuers at relatively cheap valuations relative to their earnings and long-term growth potential and have the following characteristics:
1. Mature companies or countries with a stable political trajectory.
2. Steady (but not spectacular) growth rates.
2. Relatively stable income and earnings.
4. They pay dividends
It’s time to refrain from high-risk investments (like those of the ETF Arkk Innovation), or companies with excessive valuations, on the contrary, assets considered as traditional refuges of value such as gold , raw materials and agricultural products can serve as a cushion in a time when the only certainty is uncertainty.
In terms of profitability, capital markets have suffered the worst losses since the collapse due to the covid-19 lockdown, but keep these five factors in mind to know if you are ready to continue in the market or if you prefer assume the accumulated losses at the same time. Dated:
1. What type of investor are you?
2. Are you looking for short term gains or is this a long term investment.
3. The investments you have or plan to buy are in conflict regions.
4. You know that if the conflict continues, the risk you will have to take will be greater.
5. Do you maintain a diversified portfolio? Spreading your investments among different investment options reduces risk.
Nobody knows what will happen in the future and whether the crisis between Ukraine and Russia is the beginning of a series of new conflicts, what is clear is that if you are sure of how much you are ready to lose or win, you can overcome this new geopolitical paradigm. .