| Hi Taylor
- There's always talk about financial impact with these conflicts
in the Middle East. Any insight as to what might happen with things
being so shaky in Iran? - Freddie
Hi Freddie - A lot of financial webs cross through Iran, Iraq,
Saudi Arabia and the rest of the region. Oil is the primary talking
point, but the military presence of soldiers from multiple countries
has a price tag attached as well.
As far as an economic impact from the acts of aggression that happened
at the beginning of the year, we've already seen it. After the retaliatory
strikes from Iran in response to the killing of Qassem Suleimani,
the markets got spooked and took a noticeable dive. In the days since
however, we've returned to all-time highs because it seems like tensions
leveled off a little. Unlike the drone strike in Saudi Arabia last
year, there's a less direct impact on the oil industry in the wake
of these airstrikes.
But, and this is the really important thing, we can't just look at
the short-term data. While we might not actively be at war, Iran is
still a major adversary. Anti-American sentiment in the region, while
not shared by everyone, is a steady undercurrent in both Iran and
Iraq. Geography alone makes Iran an incredibly important player in
Middle Eastern politics, and that's before we even consider the possibility
of the country developing nuclear weapons.
The scenario many fear is that the U.S. will get involved in another
conflict and spend a lot of money doing so, and that action would
quickly result in a spike in oil prices that would be a drag on our
overall economy. The Iranian government is on pretty thin ice already,
meaning any sort of escalation could go either way as far as uniting
Iranians or amplifying the country's internal chaos. Either scenario
will be pretty messy.
Unfortunately, there's no easy fix and no one can predict how things
will play out. We can expect to see the stock market twist and turn
as new developments come out of the Middle East and our government
employs different tactics, military or otherwise. Global markets being
what they are, we also are somewhat at the mercy of what other countries
do in terms of sanctioning Iran.
As with other conflicts, there's no reason to let this scare you away
from investing. The Dow gets jumpy for lots of reasons, and while
tensions with Iran give us plenty of causes for concern, it's nothing
that should have you thinking about cashing out.
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.