The Day the Economy Changed
9 March 2026
To all Financial Friends
Friday 27th February I was poised to write with good news. Forecasts were that our government was able to cut back on the borrowing it needs. Interest rates should fall and inflation with it! Oh joy of joys how wonderful to carry such good news! Saturday 28th February the United States attacks Iran with 900 strikes in the first 12 hours of war! Global and UK economies turned upside down in a single day from positive to negative.
On Wednesday 4th March the Financial Times reported that 'stocks and bonds tumbled as fears of a prolonged shock to energy prices rattled global markets.' A little research shows me that students investments are still remarkably stable (at least for now). So keep calm and carry on or step back and take a cool calm look at where you think your money needs to be?
Commentaries that you read in the financial press or here are not advice. Commentaries seek to provide accurate information and offer comparative insights. Our commentaries clarify and make you aware of your options and choices. What you could do, not what you should do. Information and guidance allows you to come to your own conclusions.
Better Than You Thought?
Reading our past commentaries, you will have seen that most students selected funds which have achieved significant growth over the last year and longer. But what about the last month to date? Has war meant disaster to your investments? Here are the results of your assets and funds over the last month through the onset of war to 6th March as I write:
Gold and silver gained 96.2% in the last 6 months to mid-February and lost -2.3% as war struck. Infrastructure gained +3.72%. Index Linked Gilts arose from the grave by +3.05%. Actively managed UK Equity fell by -0.13% while a passive FTSE100 Index tracker gained +21% over 12 months including +0.47% in the month war broke out. American Equity fund gained +5.47 while energy focused Natural Resources put on +5.6%. You will not be surprised that students favourite Defence fund gained a reassuring +7.5%. All that in the month that war broke out. Yes, investments fall sometimes as well as rise, which is why it is always sensible to look and plan two steps ahead of the market?
So Stay Calm and Carry On?
Maybe, but what is the outlook? Before war broke out, in our commentaries (please read again) we said there was a choice to make between traditional advice from the industry to diversify your holdings widely, or selecting specific assets. Our last two commentaries on our website set out the discussion there. The logic and reasoning for taking the risk of choosing specific assets are spelt out in those commentaries.
We asked if traditional advice looked to the past assuming the same patterns will continue or whether the world and the world of money has changed so that the past is no guide as to what will happen in the future? Is some fresh thinking needed in a new and challenging world?
Stocks AND Bonds Have Tumbled
The Financial Times tells us so. We discussed this possibility here in commentaries of recent times. However, it was not war but loss of trust in the bond market as a safer haven for money that we discussed. The bond market has always been perceived as a safer place for money when uncertainties unnerve investors. Uncertainties like the outcome of war and the burden of too much debt at too high an interest rate strangling an economy such as can be perceived here in the UK. So if faith in the safety of the bond market is lost or lessened where will investors money go?
How about turning to specific assets like gold, infrastructure, defence, consumer staples and certain aspects of technology? The logic behind such a selection is found in commentaries found on our website www.yourfinancialfriend.co.uk For the sake of your financial future read and be aware? Traditional wide-spread diversification depends on the bond market 'safety' to balance the risk of equity investment. What if the safety net becomes broken?
Financial Outcomes of War?
Donald Trump wipes the regime in Iran off the map and establishes a quasi-style of democracy. Peace reigns as like nothing before as Mr Netanyahu envisions. So the UK and global economy moves through a burst of high oil and energy costs, perhaps a shortage of supply of other essentials. The global economy is rocked, and we all feel it (rocketing inflation again) but it settles down and we come back to some kind of 'normal?'
OR
Enough is enough for the USA and its people, elections, preservation of the President’s popularity looms large and the war has no seeming end. A presentation of victory is made. Nuclear ability for Iran finally destroyed? We are back to a slightly different shaped square but out of control of our western democracy. Whichever happens, the hatred of nation against nation still seethes under the surface.
But the War is Miles Away From Us!
Yes, it is true that Iranian missiles cannot reach the UK. That is so good. However, right now, we have American B-1B Lancer bombers on the runway in the beautiful Cotswold countryside. The immediate effect upon us even now is increasing petrol and gas prices and energy costs in general. Tankers trapped before the Strait of Hormuz. In short, the fear is more inflation and economic disruption.
Two Steps Ahead?
With an uncertain outlook we know that where the money goes, supply and demand drives up the price of the asset involved. Will this be with assets like those we have mentioned?
Our recent commentaries have been discussing favouring the potential for certain specific assets benefiting from contractual income. This means assets where the companies whose shares are held are supported by long-term government contracts. Investors often move towards businesses that sell everyday necessities during times when taxes and the rising cost of living reduce disposable income and require households’ expenditure to be focussed on essential goods for living. Gold and silver and the US dollar represent a flight to safety when times are uncertain.
Get in Touch
As always and ever, I encourage you to get in touch. The new threats to financial survival and the cost of living means that those with money need to protect it to preserve the purchasing power of what they have. For those with little money it is so important to build up savings profitably and prudently. Growing and protecting your monetary reserves to defend your security and current lifestyle matters now more than ever?
Talk things over with Rob? Book a time and date right here www.calendly.com/yourfinancialfriend
PLEASE NOTE: A financial or economic commentary like these, are written to explain, interpret or give an opinion on economic events and markets to help readers understand what’s happening and why it matters. Designed to help you make informed decisions of your own by making you aware of opportunities, risks and potential rewards in the market.
