Investors' concerns and uncertainty are high given the Russian invasion of Ukraine.

So it's no wonder that investors are currently playing it safe and reducing risk.

The other way of dealing with such situations is the stock market adage "buy when the guns roar".

This "wisdom" is often brought out in the event of military conflicts.

However, it is doubtful whether it is an appropriate course of action in the event of war in Ukraine.

Martin Hock

Editor in Business.

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Ultimately, what matters is the scope that this war could develop in the future.

If Russia and Ukraine simply settled the conflict, this too would remain just another regional dispute.

But the escalation already seems to have progressed too far for a quick return to the agenda.

In fact, the war has a harshness that hasn't existed for a long time.

Conflicts like those in Korea, Vietnam or Iraq were one thing above all: far away from Europe.

If some investors still buy now, it is not only because they expect exorbitant profits from risky deals or out of the naïve belief that everything will soon be the same as before.

It also has to do with the fact that investors need a maxim for action and then reach for the one that is closest.

However, if one assumes a higher level of escalation that will permanently change the face of the world, this could be the wrong approach.

In fact, a historical blueprint is missing.

Hardly foreseeable consequences

The path to the outbreak of hostilities was reminiscent of the destruction of Czechoslovakia by the "Third Reich" in 1938/39, but the condition of the world and the global economy is quite different.

Above all, the degree of globalization is many times higher today than it was on the eve of the Second World War or the Korean War.

The effects and, above all, the repercussions of sanctions are therefore completely different.

The degree of globalization today is more comparable to that on the eve of the First World War.

The world economy suffered from its shocks for far longer than the war itself lasted.

The Yom Kippur War in 1973 lasted only three weeks, but led to the oil crisis and had a lasting impact on the global economy.

The Corona crisis has already shown the effects that disruptions to supply chains can have today.

But while there was legitimate hope of an imminent improvement here, the shifts in the case of Russia could be permanent – ​​with the corresponding consequences for the price level and price structure in particular.

The long-term consequences are currently difficult to foresee.

That's why investors rely on the obvious, on defense stocks or higher commodity prices.

Rapidly rising energy prices could force central banks to raise interest rates faster than expected, says Sébastien Galy, senior macro strategist at fund company Nordea.

Above all, he recommends investing flexibly in order to be able to change the asset structure quickly.

All eyes on the central banks

A lot now depends on the work of the central banks.

High energy prices could lead to stagflation, but so could interest rate hikes.

In addition, the high liquidity of the financial markets and the economy in general could become a problem.

A lot of money is currently flowing into safe investments and the dollar, but they are missing elsewhere.

Increased volatility also means higher collateral needs to be posted, not to mention credit supply and demand.

According to many analysts, now is not the time to position yourself aggressively.

Higher inflation, lower growth and less strict monetary policy can be expected.

Central banks are aware that tightening too aggressively could overwhelm markets and exacerbate the problem, rather than addressing nasty liquidity problems, said Peter De Coensel, CEO of DPAM.

The most common advice: Investors should focus on their long-term goals and diversify broadly.

That may be cheap, but given the risk that is currently difficult to assess, investors seem to have little choice.

The attempt to react at short notice always carries the risk, especially for private investors, of arriving too late in the end.

For the time being, high volatility is to be expected.

Any positive signal, no matter how small, can cause stock prices to rise and the price of gold, for example, to fall - only for the development to reverse again as soon as the outlook darkens.