Keep calm, stay invested and trust your diversified portfolio

In the immediate aftermath of Iran’s missile attack on Israel the message from UK-based advice and asset management business, deVere Group, is keep calm, stay invested and trust your diversified portfolio.

deVere Group chief executive, Nigel Green acknowledged that global markets were on edge as the assessed the sudden escalation in Middle East tensions but said history has shown that geopolitical shocks are often short-lived.

“With Israel pledging a strong response, the risk of further instability is increasing volatility across global markets,” he said. “Geopolitical uncertainty in the Middle East, a critical hub for global energy production and trade routes, is a well-known trigger for market disruption.”

“In the immediate aftermath of the attacks, investors are seeking safer assets in a flight to safety, as they re-evaluate risk in light of potential further escalations.

“The dollar index is up, and gold surged about 1%, as investors shift away from riskier assets such as stocks and emerging market equities.”

“Yields on US Treasuries and other government bonds are likely to fall as demand increases, pushing prices higher. US Treasuries, in particular, are seen as one of the safest places to park money during times of geopolitical turmoil, and this trend is expected to continue as tensions flare.”

Green said global stock markets are expected to face increased volatility in the coming days as the situation evolves.

“Key sectors that are highly sensitive to geopolitical risks, such as energy and defense, can be expected to heightened activity. Oil prices have already begun to rise –  up by around 3% – driven by concerns about supply disruptions from the Middle East, which could have significant ripple effects on inflation and economic growth.”

However, this initial turbulence does not mean investors should panic.

“While markets may experience temporary turbulence, history teaches us that such geopolitical shocks are often short-lived, with prices stabilizing as the situation becomes clearer.

“Reacting emotionally and making impulsive decisions during market swings can be detrimental to long-term financial goals. Selling investments in the heat of the moment locks in losses and prevents investors from benefiting from eventual market recoveries.”

Instead, he notes, it’s important to maintain perspective.

“Volatility is a normal part of investing, and while geopolitical crises can shake markets in the short term, the long-term upward trend of the market has historically prevailed. Staying invested through periods of volatility ensures that investors are positioned to benefit when stability returns.”

A key strategy for managing the risks of geopolitical volatility is diversification. By spreading investments across different asset classes—such as stocks, bonds, commodities, and currencies— as well as sectors and geographies, investors can mitigate the impact of any single event on their overall portfolio.

While geopolitical events such as these may lead to short-term volatility, the best course of action is to focus on the long term.