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Financial markets have been in turmoil since Russia invaded Ukraine. A few valuable tips for small investors.
Even before the Russian invasion of Ukraine, movements on the markets increased. Since the outbreak of war, the tremors have intensified massively. And since the duration and outcome of this conflict are still completely open, the turbulence on the markets is likely to continue.
An uncomfortable situation, also for small investors. Due to the uncertainties, many of them turn to their house bank, as Caroline Hilb from the St. Galler Kantonalbank confirms: “Our information offers are very much in demand. Stronger than a month ago.”
Differences depending on Russian risk
Of course, not all stocks will be hit equally. At times, shares in international banks were badly hit, while industrial and technology stocks were more stable. In general, prices twitched more violently for companies that are more exposed to Russia.
There were also geographical differences: The economic ties between Russia and Europe are stronger than those between Russia and the USA. That is why the movements on the European markets were also more violent.
keep calm blood
In turbulent times, investors may be tempted to step out to prevent worse. However, this is often not the best recipe: “It makes little sense to restructure the entire portfolio in the current situation,” says Hilb. She recommends neither selling too much nor daring to make a big entry in the current situation.
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There have been some major shocks in the past two decades. In the early 2000s, internet euphoria evaporated and the dot-com bubble burst, while tech stocks in particular ballooned.
After the markets had recovered and the stock exchanges had reached new highs, the real estate crisis in the USA followed in the summer of 2007. This was the harbinger of the subsequent global financial crisis, which, for example, decimated the Swiss Market Index by a third in terms of points.
The nuclear catastrophe in Fukushima in 2011 also triggered a stock market tremor, albeit a rather short-lived one, and in the first quarter of 2020 the coronavirus caused a sudden price drop. And now the Ukraine war is keeping the markets in suspense. Although the previous diver was comparatively light until now.
A look at the past shows that hectic buying or selling is not a recommended strategy. For example, anyone who invested their money in the Swiss stock market in the past few decades and remained invested for seven years was able to exit with a plus with a few exceptions. In short – the small investor is advised: Better not to look at the daily twitches too often and, above all, better invest broadly than to get involved in individual stocks.
You can see more on the subject tonight at 7:30 p.m. in the “Tagesschau” on SRF 1.