The panic around Russia’s war on Ukraine was swift and sharp. But, the panic also appears to be short-lived. The markets seemed to have regained some composure within a day. These reactions often keep changing.

Uncertainty, when prolonged, tends to bring out fear in ways that cause extreme reactions. While the markets have rebounded after a sharp crash on Thursday, one cannot be sure that the markets will not correct again on negative news flows. Also, there is no clear playbook on what the powers involved will do. Equally, it is evident that NATO and the US will not be willing to stake too much for Ukraine.

We are in a situation where we don’t know who will blink first. It is unclear as to how this whole issue will settle and what the contours of a settlement will be. We can’t say for sure that this won’t prolong until it ends. The markets will look for a speedy resolution of this crisis. If the crisis prolongs, the market will return to a state of fear. As an investor, it is important to be prepared for multiple outcomes and have an adequate response to a crisis in the markets.

Investors are not the best experts in judging wars, but there is no escape for an investor from facing up to these situations. From experience, one can say for sure that these are times that teach you more than even bull markets. They help you sense opportunity, participate effectively, and show temperament in the most testing times. An investor who does this will be richly rewarded.

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