Are investors ignoring the risks?

Geopolitical risks

If we look at the world stage, we see a powder keg: with the ongoing conflicts in the Middle East, oil prices are threatening to escalate and global freight costs are set to explode. At the same time, China, one of the main drivers of the global economy, is showing signs of a noticeable slowdown. Not forgetting Russia’s efforts to increase its influence over Ukraine. Last but not least, we are confronted with further political uncertainties brought about by a president like Donald Trump, especially in relation to NATO.

Robust US economy supports stock market

In the midst of this turbulence, the stock market, especially in the USA, continues to soar unperturbed. This may seem paradoxical at first. But why this apparent ignorance of obvious risks? The answer is simple: in times of uncertainty, we focus on what appears stable and secure. And at the moment, that is the US economy, driven by the strong consumer behavior of Americans. Investors are also being spurred on by confidence in major technological advances, particularly through artificial intelligence. Most people are already aware of this in their everyday lives and the future areas of application seem almost endless.

What you should bear in mind as an investor

But back to the present. As an investor, how should you deal with the current geopolitical risks? Two points: Firstly, history teaches us that things rarely turn out as gloomy as they could. Or to put it another way: things are rarely eaten as hot as they are cooked. Secondly, I would like to point out that you should never proceed without a plan. I strongly advise you to be prepared and have a plan B in your pocket. Because without such a plan B, you basically have no plan. In the vast majority of cases, working with a professional asset manager is the best solution. Without expert advice, sooner or later you run the risk of making costly mistakes with your investments. The daily barrage of headlines and news can easily overwhelm and tempt you to act emotionally and impulsively – exactly what you need to avoid in the investment world.

My advice to you, dear investors

Rely on a systematic investment strategy and not on headlines and news when investing your assets. This is not only financially more attractive, but also lets you sleep more soundly.

Yours, Mark Stock©

Mark Stock is a member of the Point Capital editorial team. “I am a stock market enthusiast and am passionate about economic history. I have been following the ups and downs of the markets for years and, of course, invest myself – preferably in shares. So my name says it all. Every month, I take up what I consider to be an exciting topic. And since the focus is on the content and not on me personally, I write under a pseudonym.”