We spoke with 10 experts who reveal the best practices to protect portfolios as the Russia-Ukraine conflict inflates market uncertainty.
The West continues to apply sanctions on the Russian economy and markets have fallen into turmoil.
International companies sell off their stakes in Russian firms and uncertainty is the master of the moment.
What is the next (RIGHT) step should investors do?
It’s hard to say, yet the action that will hedge against the swings in stock markets is following “portfolio protection” strategies.
Here’s what top experts reveal about the best practices to protect your portfolio:
Keep calm and Don’t panic
Hasty moves based on the day’s latest headlines is typically a way to lose money.
So, it’s crucial to keep calm and avoid making any ill-considered changes to your portfolio.
You may have questions such as, “Should I sell investment and hold cash?!” Or, ” Is it better to buy foreign currencies?”
Well, you have to stay informed and updated of the latest changes in market conditions.
Let’s take a look at advice from some of the experts.
Adam Wood, cofounder of Revenue Geeks says:
“When it comes to current techniques, I feel patience is the most important—not selling when others do, and even consider buying if you have cash. When things start to fall apart, it’s not the moment to start selling or revising your strategy.”
Théophile Sersiron from the Gold Avenue explains:
“With all the market volatility, now might not be the best time to place a larger chunk of your portfolio in high-flying stocks like, for example, Apple or Netflix. ”
“Gut check your risk tolerance, this literally means considering taking less risk with your investments.”
Therefore, investors should accept the different levels of market volatility in the upcoming months.
All investors understand very well the benefits of spreading investments in different assets and even in different regions.
This is a must-strategy to reduce risk of loss especially in volatile market where the losses are less predictable.
In this regard, Ahren Tiller founder of Bankruptcy Law Center says:
“strong portfolio that can withstand inflation and changing economic standing consists of investments that are allocated across different types of assets.”
Collin Plume, the CEO at Noble Gold Investment:
Collin believes that portfolio diversification “spreads risk” in such conditions.
However, Plume stresses that investment should be in something “tangible, scarce, demanded, and devoid of any political affiliate or economic dependency.”
On other hand, Julio Medina founder of HodI & Shill:
Julio underlines the crypto role in such circumstances: “The best way that you can hedge right now is with crypto. Specifically, Bitcoin and Ethereum as they gain adoption across the globe.”
He adds, “As citizens are cut off from traditional finance and money transfer ability, cryptocurrencies are gaining strength.
Decentralized finance is becoming the future of finance and conflicts like what we are seeing now will continue to show their value and strength in the height of these conflicts, there has never been a better time for the public to educate themselves on blockchains and crypto and bitcoin and what they provide to the finance and fintech sector moving forward.”
Chris Panteli, investment expert and founder of Life Upswing agreed with that and says:
“I have actually made a sizeable transition from low-risk savings into stable-coin yield farming – yes, in Crypto. The returns have outpaced the banks by a significant factor, and as I get more comfortable with the DeFi space; and I will start to move over more and more funds.”
Andrew M. Aran, CFA and managing partner at Regency Wealth says:
“The best strategy in any environment needs to be a long-term one that matches the investor’s resources and risk appetite to a highly diversified portfolio.
While other approaches, like trying to time the market (raising cash and then buying the dips) escalate speculation and have historically underperformed a steady, balanced approach.
Keeping some reserves, above and beyond an emergency fund, should mitigate the natural desire to de-risk at the wrong time (when risks seem high and the market is trending down).
Lastly, there are some investment products that allow for limited upside while cushioning the downside and these can be used tactically.”
Michael Hunsberger owner of Next Mission Financial Planning says:
“The best way for investors to position their portfolio for unforeseen events like the Russian Invasion of Ukraine is to have a long-term mindset and diversified portfolio based on their risk tolerance.”
“Of course, the best time to do this is before a crisis and make sure you periodically assess your portfolio to ensure it’s still diversified and aligned to your long-term goals. This will allow the investor to weather short-term market gyrations,” Hunsberger added.
“When investors ask about the situation in Ukraine or inflation or any other news headline, I tell them they’re well diversified and the best action is to stay the course and not try to time the market.
Downturns can also be a good time to invest because you will be buying at cheaper prices which will help when the market recovers.”
Kenny Kline, financial lead from Barbend
“To be a true stock picker, finding bargains is the ultimate goal. We don’t regard the recent economic downturn as a disaster, but rather as an opportunity to buy additional stock at bargain prices.
Over time, this is how great fortunes are made. Market volatility is usually short, therefore it’s usually a good idea to keep your money invested.
Whether you’re new to trading or not, the suspense of seeing investments lose value is terrifying.
Pulling that money out of the market is a risk that must be carefully considered because you risk locking in losses if you do so.
You’re selling for less than you spent if you buy at a higher price point than sell following a price decline. You haven’t lost anything if the price rises.
The importance of staying involved stems from the fact that historically, the best days in the market follow the worst days, and timing the market with precision and accuracy is impossible.
It’s important to prevent the common investment trap of capitulating during periods of high volatility.
Investors seek to control and may be tempted to do something we know will harm their retirement strategy: selling out of the market after a substantial loss, locking in those losses, but intending to reenter the market when it feels safer, whenever that may be.”
Safe Haven Assets
As of this moment, the gold price soared to a one-year high of $1,970 an ounce.
This proves that gold and heavy metals act as a hedge in geopolitical turmoil and is good strategy to protect and diversify your portfolio.
Christopher Liew, the Founder of Wealth Awesome says:
“You need to invest in gold immediately in times of war and economic uncertainty.”
Christopher illustrates, “In case you haven’t noticed, economies around the world depend on gold to be able to print additional money.
Producing more fiat money without gold backup on the vault simultaneously will reduce the value of the paper currency significantly.
The U.S. dollar can be the basis of printing fiat currency as it could be used as forex reserve of other countries respectively.
However, you should remember that not all of the U.S. dollar that circulate in the economy are backed up by gold entirely.
This means that the value of the U.S. dollar can be manipulated easily.
On top of that, economic sanctions by the USA and other countries to Russia restrict the flow of U.S. dollars to the Russian economy.
This could cause price volatility between the U.S. dollar and the Russian Ruble significantly. Based on research, the Russian ruble lost 30% of its value against the U.S. dollar after economic sanctions from various countries hit the economy instantly.”
Lana Khabarova the founder of SustainFi says:
“Safe haven assets like gold help investors protect their portfolios during times of uncertainty generally, and gold funds like SPDR Gold Trust (GLD) are an option.
That fund is up about 6% since early February.
More importantly, the reliance on Russian oil and gas highlights the need to diversify Europe’s energy supply, especially towards clean energy.
I like the idea of investing more in green stocks, such as wind and solar energy suppliers and utilities. The Invesco Solar ETF (TAN), which tracks solar energy names, is up 25% over the past five days.
The First Trust Global Wind Energy ETF (FAN), which invests in wind energy, is up about 10%.
In addition, Russia is a large supplier of many important metals like nickel, which is also important for electric cars.
Sanctions can lead to shortages of several key metals and minerals, and investing in funds like the iShares MSCI Global Metals & Mining Producers ETF (PICK) may be a good idea if you want to protect your portfolio.”
Andrew confirms that “historically, gold has increased its value during periods of market and economic uncertainty and downturns.
Looking at macro-environmental trends, a market or economic downtown is very probable, which will boost gold’s value.
Additionally, there are currently a few geopolitical risks, and political uncertainty may send more inflows into gold, increasing its value.”
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Russia-Ukraine Conflict – How To Protect Your Portfolio: Final Words
According to these 10 experts, the main thing to remember is to not panic, work on portfilio doversification, and make sure you are invested in at least a few safe-haven assets.
By following this advice from these thought leaders across the finance industry, you can lessen the blow that sanctions and economic troubles stemming from the Russia-Ukraine conflict will have on your portfolio.