The Middle East and Investing
Starting on October 7, 2023, the situation in Israel and Gaza changed again, and forever. Thousands of citizens have been killed, hundreds of hostages have been taken, tens of thousands of missiles and rockets have been fired since this date. Opinions on the correct course of action for each of the parties and other world leaders are contradictory, and plentiful.
None of us are immune to the anger and grief, ourselves included. However, the focus of our practice will continue to be the financial futures of our clients and their families.
Each of our clients have unique circumstances and priorities, and our job is to understand our client needs, and then anticipate and act to reduce risk, manage volatility, identify opportunities, match decisions to goals, reduce taxes, preserve capital, and provide financial guidance.
What you Need to Know
The war between Hamas and Israel have created significant uncertainty that extends beyond the region. Over the weekend of October 28th and 29th, Israel entered Gaza with ground forces, and the U.S. fired missiles to protect its service members from aggression in the region.
The conflict could include additional parties like Iran, who supports Hamas and Hezbollah, and would then escalate the two-participant situation into a regional war.
If this escalation occurs, the market effects observed since October 7th on equities, bonds, commodities will seem small. The Ukraine war caused a spike in energy prices. A threat of disruption or actual disruption of oil production in the Middle East will not go unnoticed by commodities traders, or by consumers at the gas pump.
The likelihood of an escalation into a regional conflict is being debated continually without clarity since the players are unpredictable and the information is shrouded in complexity and secrecy. If an escalation occurs, or not, investors can decide whether to avoid risk or seek opportunity.
If you believe that oil prices will spike, then purchasing futures or energy stocks may be appropriate for you. Your spouse or close friends might decide that it is best to avoid this entire sector, because of the uncertainty and volatility, or that profiting from this conflict is untenable. Each investor’s priorities will drive individualized decision-making.
An advisor’s responsibility is to provide insight on risks, but, ultimately, investment decisions reside with the investor. Even for discretionary relationships an investor can revoke, restrict, or override an advisor’s decisions or recommendations.
The best path forward, especially during difficult and complex situations, requires open and frequent communication. If questions persist, or actions are needed, do not hesitate to contact our office.
This particular article requires a delicate introduction to our advisor clients, and an acknowledgment that it should serve as a draft for them to customize for their clients individually and client-base collectively. Something like . . .
Several ARG advisors have requested we write an article addressing the situation in the Middle East. This topic is particularly sensitive at this time, and we want to honour the requests that we have received.
To that end, we have posted this draft article to the ARG Resource Centre. It is intended to be a starting point, allowing you to contact clients on this issue after customizing it to individual client’s perspectives and the rapidly changing situation in Gaza, Israel and the Middle East.