Investing in Stock market during war
Investing in securities in the capital market includes risks of events that we did not plan for and cause unexpected changes in the state of our portfolio. A war or any major crisis can bring about sharp declines in the overall market and result in losses. We must be wise investors and make informed investment decisions. If we sell a security, it probably no longer gives us good returns that we believe we can get in other securities. A local or global economic crisis, for example, the war between Russia and Ukraine, is not necessarily a reason to sell all holdings and stop investing in the capital market. Many opportunities appear in crises. We need to follow them to take advantage of them.
From the beginning of the war of “Iron swords” that began with a brutal attack against Israel on October 7, the TA125 index fell by about 13.48% until October 26. Since then, the Israeli market has corrected the decline and returned to its initial price. Every investor who sold their portfolio in Israel in the days after the war and did not buy back at a low price did not take advantage of the opportunity that was in the crisis.
The declines in the TA125 index, which are declines in the share prices of the largest companies in Israel, were caused by the flight of investors. The flight could result from fear of a worse financial crisis or the need for cash for evacuated citizens and small business owners who suffered losses due to the war. Also, funds and provident funds prepared cash for client withdrawals.
Where should I invest?
You never know what the future holds. History tells us that the Israeli capital market rises over time, investing in it for the long term will yield its average return, and trying to time when to enter the market will not necessarily give a better or worse result. Therefore, it is better to stay in the market.
For example, at the beginning of the war, the security industries, the defense industry, and weapons production benefited from the multiple orders for equipment and tools. Hereafter, these stocks earned adequate returns.
Looking forward, to know who will benefit from the circumstances of war, you need to understand Israel’s Economy and Defence status. Ask questions about the developments of the war: whether it will escalate in the north or remain in the south. Will interest rates in Israel drop soon and allow companies to pay their debts? Will it stay high for a few more months? An investor should answer the questions that arise before making a decision. Therefore, investors should do in-depth research or consult with professionals to make the right investment decision.
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The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Licensed Investments Manager, license number 13587.
M.B.A. graduate in business administration, mastering in finance and operational research.
graduated at the Hebrew University.
Has extensive experience in customer service.
