Denver professor explains impacts on investments, portfolios during Iran-Israel conflict
It's been a bumpy month of April in the stock market, which has seen ups and downs the past few weeks. Investors are now closely watching what is happening in the Iran-Israel conflict in the Middle East because of its impact on their investments.
Dr. Kishore Kulkarni, an economics professor at Metropolitan State University of Denver, said the war and other factors have been impacting people's portfolios over the past few weeks.
Kulkarni said tensions were growing in the war after Iran's attack on Israel in mid-April. He added that the attacks in an oil-rich Middle East are impacting global oil supplies, including crude oil, and driving up energy prices. In turn, that's going to have an impact on your investments and portfolio.
"The number one reason is the war. That is the number one reason, because it has a direct effect on the crude oil production and uncertainty, and that creates problems with the stock market," said Kulkarni.
The stock market was up on April 11, but then began seeing major dips up until April 19.
Kulkarni said another reason for the dips, is because the Federal Reserve has also said they don't know when they'll lower interest rates. Therefore, rates will stay high, to ensure inflation is heading down. This also has an impact on financial markets.
Kulkarni recommends for investors to be patient when they see their portfolio is down, and don't sell anything.
"If you're going to stay in the market for a very long time, you do nothing because markets always go down and go up. But there is no 15-year period ever in history where the market has gone down," said Kulkarni.
Kulkarni also mentioned that's why it's important to diversity your portfolio, because you never know which sector will take hits and when.
"Buy the small amounts, and you should keep buying. Of course you cannot put all the eggs in one basket, so buy some stocks, some bonds and you can buy some real estate to diversify your portfolio," said Kulkarni.
Kulkarni also recommended buying a few stocks right now if you can, because they're essentially on sale or clearance.
The good news too, in the past week and a half, the market has seen some positive signs of recovery, despite the on-going war happening overseas.
"If the wars do show some positive signs of ending then recovery very quick actually because the market will get excited about it, and that happened after April 19," said Kulkarni. "If we stay in a peaceful time period, then economic growth is almost assured, and if the economic growth comes along, the market obviously goes up."