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

Punishing strikes continue across the Middle East as Iran retaliates to US-Israeli attacks - with Gulf states busy blocking incoming fire.

Israel continues to pummel Tehran, and has launched fresh attacks on Hezbollah in Lebanon, while Iran has launched an attack on Kurdish rebels in northern Iraq.

Fisher Funds expert Sam Dickie revealed what this week's developments could mean for investors.

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Episode Transcript

Speaker 1 (00:00):
And now, of course Iran has been extremely topical, so
we thought we'd get Sam Dicky of Fisher Funds on
talk us through what he thinks of this high Sam, hey, yea,
there has a going very well, thank you. So let's
talk about what investors should be thinking. What should they
do first when one of these events hits.

Speaker 2 (00:15):
Yes, they these tragic human events, that's the first and
foremost thing, but secondly that they are kind of low
probability potentially high impact events, and you can't position your
long term portfolio around these events. Albeit they seem to
be higher probability these days because they're happening more and more,
but some foremost triard you risk. So have a really
good hard look at your portfolio. If this gets worse,

(00:38):
how am I exposed? So, for example, do I have
investments or trades on the lower conviction? Was I thinking
about selling them yesterday? Anyway before the war. But equally
you need to be ready to play offense as well.
So if your portfolio is well positioned, you know your
companies very well, that they're they've got strong balance sheets
and they've got long term thinkers at the helm. Was

(01:00):
there something you were thinking about buying yesterday before the
war started, and now you getting the opportunity to buy
that high quality company at a much better price.

Speaker 1 (01:08):
What framework do investors actually.

Speaker 2 (01:10):
Is Well, a famous US investors said, when it comes
to geopolitics, very few people really know anything at all.
I'm not sure where that apply it and plug applies
to the people who are actually waging the war. But
I think everyone thinks they're an expert, but really history
is the only decent guy we've got. But you want
to make sure you look at the right history lessons.

(01:31):
So you want to make sure the conflict has the
same or similar most obvious risks. So when we're thinking
about this one, we should look at historical Middle Eastern conflicts.
And if you look over the past forty years, have
been twenty one US air strike campaigns in the Middle
East and North Africa region, and eight weeks later, the
S and P five hundred was high in ninety five

(01:52):
percent of the time. So that's the first and simple framework.
But the most important thing after that is how is
that most obvious risk transmitted to the big drivers of
the game or the big drivers of market. So how
is a high oil price going to impact global economic growth?
How's it going to impact inflation, how's it going to
impact interest rates? And how's it going to impact corporate

(02:14):
earnings growth?

Speaker 1 (02:16):
What about the second and third round effects and the
unintended consequences? How do the investors wait those?

Speaker 2 (02:23):
Yeah, I think that's a really good question, and that's
where the market is today. So oil is obviously the
first round impact, and then you've got to think about
what sectors and countries are most sensitive to oil prices,
and Asia in particular, while it has gone a long
way to reducing its short bias to oil, I mean
they're their big net importers of oil, India in particular,

(02:44):
and China, they are still need importers, so they're very
sensitive to this. And the other thing is when you're
sitting at this is more simplistically, when you're sitting in
a boardroom and you're about to press the button on
a billion dollar capital spending program building a few factories,
and maybe you're a bit liing ball on it. Imagine
you perhaps wouldn't sign the check. So look look at
the real time indicators of confidence, both consumer and business.

(03:06):
And the final thing I'll say on this is going
back to when you look at your portfolio, and you
ask yourself how high conviction you are. I think crowded
trades and investor positioning are really important. And look at
the Korean stock market in the last couple of days.
That was an extremely crowded trade. It's driven by two stocks,
and maybe investors were not quite as convicted as they
thought they were in that fill twenty one percent in

(03:27):
two days.

Speaker 1 (03:29):
Okay, what does this all mean for investors?

Speaker 2 (03:30):
Then? I think, just again, make sure you really understand
your company, make sure you know what risk you've got on,
and stay a high quality, strongly positioned companies. And they're
a lot cheaper today than they were yesterday. That can
be a buying opportunity, but just make sure you've triaged
your risk first. Yeah.

Speaker 1 (03:46):
Sam, It's always good to talk to you, and thanks
for your advice at Sam Dickey of Fisher Funds.

Speaker 2 (03:50):
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