UK share investors woke up on Thursday to news of chaos in Eastern Europe. The flood of Russian troops and tanks into Ukraine has been days — some would argue years — in the making. It’s caused financial markets to shake and share prices to crash too.
These are clearly uncertain times for investors like me. Though, of course, today’s market volatility facing you and I is small beer compared to the upheaval facing Ukrainians today. However, my job is to consider how geopolitical, macroeconomic and social crises can impact an investor like me. And I’m aware that a lot of people are worried about financial market behaviour could affect their way of life and their plans for retirement.
Let me tell you what I’m personally doing as the worst European crisis since 1945 begins.
Looking past the near term
I’m not going to pretend that these aren’t uncomfortable times for me as an investor. As we’ve seen today, short-term movements on financial markets are governed more on emotion than anything else. In the world of share investing, the strength of a company’s fundamentals play second fiddle to horror, anxiety and often greed.
I buy UK shares with a long-term view in mind but market volatility like we’re seeing today still affects the overall performance of my portfolio.
As I type, the FTSE 100 is down 3.3% from Wednesday’s close and is still falling. At 7,261 points it was recently at its lowest point since December. As the conflict in Ukraine worsens and the international response evolves further heavy drops could be looming.
The FTSE 100 sinks
The scale of investor panic mean that all but only a handful of FTSE 100 companies have slumped today. Oil major Shell and precious metals producer Fresnillo are moving higher on the back of rising crude and gold prices respectively. Defence giant BAE Systems has gained on expectations of increasing weapons demand.
Everything else — bar Dechra Pharmaceuticals and Anglo American which have been boosted by brilliant trading updates today — is in the red. This includes robust stocks like drinks giant Diageo, drugs manufacturer GlaxoSmithKline and power transmission and distribution business National Grid.
These are companies that have great track records of delivering terrific long-term returns. And they’re stocks I believe should continue to do so, regardless of the tragedy unfolding in Ukraine. The panic selling of these shares today fails to reflect this.
What I’m doing today
At times like these it’s worth reminding ourselves of the long-term benefits of holding UK shares. The FTSE 100, for instance, is still up 42% over the past 20 years. Britain’s blue-chip index has endured wars in the Middle East, a banking industry meltdown, a European debt crisis and Brexit, and has still risen strongly in the past two decades. And I’m confident it will rise again.
For this reason, I won’t be panic-selling my shares. In fact, I plan to continue investing in stocks in the days and weeks ahead. I’m convinced UK share prices will continue to rise strongly in the years ahead.
