In times of war and uncertainty, individuals are confronted with a dual challenge: grappling with the immediate, often painful realities of conflict, and facing the daunting task of navigating their financial future. The turmoil extends beyond the battlefield to the economic sphere, where fear and paralysis can lead to hasty or frozen decisions in wealth management. Markets respond erratically – currencies fluctuate wildly, stock indices tumble – mirroring the chaos of the times.
“The current situation in Israel certainly raises concerns, with far-reaching implications that are not yet fully clear, aside from the undeniable painful human impact”, says to us Gerry Livnat, Country Head Israel for Rothschild & Co’s Wealth Management business, while he discusses the current economic outlook and market dynamics. “In such times, it's crucial to appreciate the resilience of markets, which often have the capacity to recover and evolve even after significant upheavals".
Rothschild & Co announced the opening of its wealth management office in Israel about a year ago, a short while after the significant tech frenzy of 2022. “Our presence in Israel reflects a deep-rooted commitment to the region's burgeoning market”, says Livnat. “For us, this is a significant, long-term endeavour. The nation has experienced a rapid pace of wealth generation and growth in the past few decades. The previous era of low interest rates led to a surge in startup investments, the impact of which we anticipate will continue to unfold in the future, given Israel’s resilience in recovering from conflicts, its ability to operate effectively under challenging conditions, and its inherent entrepreneurial spirit”, Livnat notes.
Considering the current geopolitical landscape, how should individuals approach understanding market dynamics?
"In times of crisis, the tendency to make financial decisions driven by fear can be strong. It is essential to seek perspectives that offer strategic planning and objective insights, rather than making hasty decisions based on the immediate situation. This approach is key to understanding the broader market trends and making informed decisions”, Livnat adds.
Can you provide insight into the current economic indicators and their potential impact?
“The latest macroeconomic data indicates ongoing disinflation alongside signs of economic resilience. This suggests a stabilization of interest rates, coupled with potentially healthy corporate profitability. Despite the Federal Reserve's recent interest rate hikes, their future trajectory appears more stable in light of these developments.”
Stocks or bonds then?
“In the current economic climate, the decision between stocks and bonds is quite nuanced. While historically stocks might have been favored, the present situation requires a more considered approach. The stock market's resilience, despite high interest rates, and the steady growth in corporate profitability, present an interesting dynamic. Bonds, while currently not overpriced, could be influenced by the ongoing geopolitical tensions.”
What is your observation on the movement of safe haven assets in current markets?
“During times of uncertainty, traditionally safe assets such as gold, flight currencies, and certain bonds might appear more attractive. However, recent market responses, including the relative stability in bond and gold prices, suggest a complex and multifaceted reaction to the current economic environment.”
“While there has been speculation about the potential impact on oil prices, so far, the effects have been moderate. Should there be disruptions in oil supply, it could lead to a shift in the market, but this remains a developing situation. The uptick in gold prices underscores its continued perception as a stable investment as well.
Rothschild & Co's expertise in wealth management is backed by over 200 years of experience in the financial markets. As a family-controlled business, Rothschild & Co has a history of focusing on sustainable strategies rather than short-term market fluctuations, a philosophy that has enabled them to navigate complex financial landscapes while maintaining wealth across generations.
Concluding the interview, Gerry Livnat emphasizes a key takeaway: "In an environment marked by rapid changes, it's important to remain informed and consider a variety of factors when making decisions. Keeping an eye on long-term goals and being cautious about reacting to short-term market fluctuations is a prudent approach."
This article does not constitute a recommendation or an opinion in connection with the purchase and/or marketing of securities of any kind, and/or the execution of other investment operations. It is in no way a substitute for investment consulting and/or investment marketing for those authorized to engage in the said acts, given the data and special needs of each investor. The article does not contain any items that may constitute an offer to purchase stocks. The authors and/or the Rothschild Bank and the wealth management representative of the bank in Israel may have a personal interest in the matter, and/or they may possess the stocks mentioned in the article, in accordance with the provisions of the Investment Advisory Arrangement Law, in marketing Investments and portfolio management, 1995-55.
This article was written in cooperation Gerry Livnat, Country Head Israel for Rothschild & Co’s Wealth Management business