How your portfolio can weather the Syrian conflict

Stay calm and carry on

 

Wednesday’s headlines were filled with warnings that a U.S. attack on Syria may be imminent, and the markets have responded accordingly—pushing oil, for example, to its highest heights in over two years.

An American intervention in the Syria civil war is disconcerting, but financial advisors across Canada are reminding their clients to keep calm and, well, carry on really, even though it may seem like now is the time to start shuffling your portfolio.

As Stevan Dostanic, an investment consultant with Astrolabe Financial put it in an email: “We try to preach patience and have [investors] ignore the noise around them; the current escalation of the Syrian conflict being but one example.”

The flurry of market activity spurred by the headlines can make investors feel as though the situation requires action on their part, perhaps in the form of leaving certain investments behind in order to buy into “safe” assets such as gold. But this may end up doing more harm than good. Dostanic noted that a crisis may be a trigger to remove yourself from risky assets, but how will you determine when the time will be to get back in?

And when the dust settles, you might find that the safe assets you flew to in a knee-jerk reaction have fallen back to pre-crisis prices.

“Trying to time the market based on world events is destined for failure,” Dostanic wrote.

Like many financial advisors, investment counsellor Malcolm Speirs of Rempart Asset Management is more concerned about long-term goals rather than short-term worries. Unless fears of U.S. military intervention in Syria turn into a more substantial event, perhaps widening to include other nations such as Russia, Speirs won’t be changing the way he operates or the advice he gives.

This is “more of a short-term situation,” Speirs said, and while short-lived political crises may have an impact on day-to-day market activity, they’re usually not big enough to justify a major change in an individual’s investment strategy.

That said, Allan Small, a senior investment advisor with DWM Securities, also noted that the current environment may have created some financial opportunities.

“As an investment advisor, I try to take advantage of all situations, unfortunately good and bad,” said Small.

“What tends to happen is you get the initial reaction of the markets falling, on word that there could be an attack, due to the uncertainty of it all. And once there is some certainty to the situation, the market actually could rebound.”

The Syrian situation in particular, though, might only be a short-term phenomenon, added Small, and will likely just be a limited opportunity to get in on some falling prices before they rise again.

In this case, “I think you need to stay the course,” he noted.


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