The first and most obvious is gold, known by most as the safe haven asset. Gold tends to rise, as people want to exit a more volatile market and allocate assets to this commodity. This type of play would be a buy and hold as the market rises in volatility. However, once the fear leaves the market, money is bound to flood back into equities.
Secondly, there are the government defense stocks that tend to react to negative news regarding national security. That seems to be obvious to some but not to others. The reason these stocks might increase is because their production would pick up in the event of a conflict. As investors, it may be difficult because no one wants a conflict, but should something happen you may be in a position to profit.
Lastly, there are the gun companies and manufactures of items that can be used for personal defense. Whether it is guns, pepper spray, or gas masks, these tend to pick up if the general public fears there may be a potential conflict involving the United States. You could also go as far as to look at non-perishable foods that people can store in the event of a food shortage or emergency.
There are always sectors that tend to react better to certain events and global fear and conflict is certainly one of those. Going forward, keep this in the back of your mind if you are searching for a hedge against market fluctuations. No one wishes for global crisis, but should something occur, know that you can position your portfolio to ride the wave of volatility and potentially increased risk. However, you still want to research the companies to know if conflict should be avoided, that it may still work as a long term investment in your portfolio, because if that is the case it works as a potential double edged sword.
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Try AI Portfolio ArchitectNathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
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