Latest / Best of Business / Sam Dickie: Fisher Funds expert on what investors should be thinking about when it comes to the Middle East crisis

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Sam Dickie: Fisher Funds expert on what investors should be thinking about when it comes to the Middle East crisis · Best of Business

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  Speaker 1: You're listening to a podcast from News talks'd be follow
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  Speaker 2: Of course, Iran has been extremely topical, so we thought
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  Speaker 2: we'd get Sam Dicky of Fisher Funds on talk us
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  Speaker 2: through what he thinks of this high Sam, hey here,
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  Speaker 2: that has a going very well, thank you. So let's
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  Speaker 2: talk about what investors should be thinking. What should they
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  Speaker 2: do first when one of these events hits.
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  Speaker 1: Yes, they are these tragic human events, that's the first
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  Speaker 1: and foremost thing, but secondly that they are kind of
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  Speaker 1: low probability potentially high impact events, and you can't position
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  Speaker 1: your long term portfolio around these events. Albeit they seem
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  Speaker 1: to be higher probability these days because they're happening more
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  Speaker 1: and more, but some foremost triards you risk. So have
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  Speaker 1: a really good hard look at your portfolio if this
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  Speaker 1: gets worse, how am I exposed? So, for example, do
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  Speaker 1: I have investments or trades on the lower conviction? Was
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  Speaker 1: I thinking about selling them yesterday? Anyway before the war.
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  Speaker 1: But equally, you need to be ready to play offense
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  Speaker 1: as well. So if your portfolio as well position you
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  Speaker 1: know your companies very well that they've got strong balance
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  Speaker 1: sheets and they've got long term thinkers at the helm.
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  Speaker 1: Was there something you were thinking about buying yesterday before
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  Speaker 1: the war started, and now you getting the opportunity to
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  Speaker 1: buy that high quality company that much better price.
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  Speaker 2: What framework do investors actually is?
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  Speaker 1: Well, a famous US investors said, when it comes to geopolitics,
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  Speaker 1: very few people really know anything at all. I'm not
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  Speaker 1: sure where they'd apply it. And plug applies to the
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  Speaker 1: people who are actually waging the war. But I think
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  Speaker 1: everyone thinks they're an expert. But really history is the
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  Speaker 1: only decent guy we've got that You want to make
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  Speaker 1: sure you look at the right history lessons. So you
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  Speaker 1: want to make sure the conflict has the same or
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  Speaker 1: similar most obvious risks. So when we're thinking about this one,
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  Speaker 1: we should look at historical Middle Eastern conflicts. And if
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  Speaker 1: you look over the past forty years, have been twenty
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  Speaker 1: one US air strike campaigns in the Middle East and
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  Speaker 1: North Africa region, and eight weeks later the S and
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  Speaker 1: P five hundred was high in ninety five percent of time.
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  Speaker 1: So that's the first and simple framework. But the most
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  Speaker 1: important thing after that is how is that most obvious
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  Speaker 1: risk transmitted to the big drivers of the game or
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  Speaker 1: the big drivers of market. So how is a high
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  Speaker 1: oil price going to impact global economic growth? How's it
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  Speaker 1: going to impact inflation, how's it going to impact interest rates?
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  Speaker 1: And how's it going to impact corporate earnings growth?
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  Speaker 2: What about the second and third round effects and the
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  Speaker 2: unintended consequences? How do the investors wait those?
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  Speaker 1: Yeah, I think that's a really good question, and that's
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  Speaker 1: where the market is today. So oil is obviously the
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  Speaker 1: first round impact. And then you've got to think about
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  Speaker 1: what sectors and countries are most sensitive to oil prices,
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  Speaker 1: and Asia in particular, while it has gone a long
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  Speaker 1: way to reducing its short bias to oil, I mean,
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  Speaker 1: they're their big net importers of oil, India in particular,
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  Speaker 1: and China they are still net importers, so they're very
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  Speaker 1: sensitive to this. And the other thing is when you're
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  Speaker 1: sitting at this is more simple stick when you're sitting
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  Speaker 1: in a boardroom and you're about to press the button
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  Speaker 1: on a billion dollar capital spending program building a few factories,
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  Speaker 1: and maybe you're a bit lying ball on it. I
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  Speaker 1: imagine you perhaps wouldn't sign the check. So look look
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  Speaker 1: at the real time indicators of confidence, both consumer and business.
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  Speaker 1: And the final thing I'll say on this is going
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  Speaker 1: back to when you look at your portfolio and you
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  Speaker 1: ask yourself how high conviction you are. I think crowded
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  Speaker 1: trades and investor positioning are really important. And look at
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  Speaker 1: the Korean stock market in the last couple of days.
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  Speaker 1: That was an extremely crowded trade. It's driven by two stocks,
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  Speaker 1: and maybe investors were not quite as convicted as they
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  Speaker 1: thought they were in that fill twenty one percent in
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  Speaker 1: two days.
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  Speaker 2: Okay, what does this all mean for investors?
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  Speaker 1: Then? I think, just again, make sure you really understand
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  Speaker 1: your company, make sure you know what risk you've got on.
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  Speaker 1: And if they are high quality, strongly positioned companies and
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  Speaker 1: they're a lot cheaper today and they were yesterday, that
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  Speaker 1: can be a buying opportunity, but just make sure you've
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  Speaker 1: triaged your risk first. Yeah.
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  Speaker 2: Sam, it's always good to talk to you, and thanks
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  Speaker 2: for your advice at Sam Dickie a Fisher Funds.
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