Warren Buffett – Don’t Keep Cash in a War [Investing Strategy During Russian-Ukraine War]

The war between Russia and Ukraine has caused the stock market to be volatile.

The war caused most commodities prices to surge further.

Russia is the world’s third largest producer of oil and gas, accounting for 10% and 17% respectively.

It supplies a third of Europe gas consumption.

It is also a major wheat, gold, nickel, palladium and fertiliser producer.

Whenever the war escalates commodity prices surge, USD strengthens but stock market and US treasury yield fall (see picture below).

When news of a Ukraine nuclear power plant was on fire and Russia threatened to use its nuclear weapon on those nations interfering with the war, market nosedived.

As long as the war is on, we will continue to feel the shock wave from the war front.

For long term investors who can weather the volatility and have the holding power, accumulation is the most appropriate strategy as most wars do not have long term impact on the stock market.

Warren Buffett once said do not keep cash during a war (see Exhibit 2).

He postulates buy when people are fearful.

Source: Warren Buffett, 24 Apr 2014:

“You’re going to invest your money in something over time.

The one thing you can be quite sure of is if we went into some kind of very major war, the value of money would go down.

That’s happened in virtually every war I’m aware of.

The last thing you’d want to do is hold money during a war.

You might want to own a farm, you might want to own an apartment house, you might want to own securities.

During World War II the stock market advanced.”

Buffett recalled that he bought his first stock in 1942, just after Pearl Harbor, when the macro situation didn’t look very good, either.

Happy Investing! 😉