Some of my financial planning clients are worried about how the war will affect their investments and some even want to go defensive. This could mean that they could lose twice, and so part of my job is to remind them that they are long-term investors and so we can’t change the portfolio of their investments every time there is a war, a threat from an unstable leader with nuclear capability in a rogue country, or talk about 10 interest rate rises in 10 months!

That was a latter concern some crazies were tipping a few months ago and media outlets ran with it! Of course, it’s always possible that there will be 10 rate rises in 10 months but I would put that in a very lower order of risks.

I interviewed portfolio manager at Pendal’s Mid-Cap Strategy fund, Brenton Saunders for last night’s Switzer Investing TV show and in our discussion I talked about what he’d invest in if the war ended sooner than expected and the globe resumed its fast rebound growth out of the Coronavirus lockdown.

He then wisely talked about how the focus would go back to inflation and interest rate rises, reminding us that stocks are always climbing the so-called “wall of worry”.

I always have laughed at that old market saying and the fact that the world’s stock market gets its direction from Wall Street where the New York Stock Exchange is based.

Yep, if you choose to run away from the safety of term deposits, which are lucky to be 1% nowadays, you have to go up the risk curve, which means sometimes you will be happy and other times you could be scared. That’s why creating a portfolio of investments that stands the test of time is crucial, while understanding that sometimes you have to take on board new developments that mean you have to drop some stocks or funds and pick up others.

But it doesn’t always work out as you’d like. Imagine if you’d dropped coal for lithium stocks because you know ESG and green inclinations of the world were coming down the road.

Well, have a look at this chart for Whitehaven Coal.

Whitehaven Coal (WHC)

When we get over this war, then we’ll worry about inflation and interest rates. The big issue will be: is inflation temporary?

This development (and others) tells me it will be temporary.

Once this war fear subsides, markets will worry about inflation and rising interest rates but I believe inflation will fall over the year ahead. Oil won’t remain at $US120 a barrel once the war ends.

Wheat prices will also fall and China will start making and shipping stuff like it did before the pandemic. Also, we will start buying services, which will lead to a stockpile of goods and this will lead to price cuts so that retailers can move the stuff.

Further, we live in a digitally disruptive world as an article in the AFR today reports: “Uber has  joined forces with logistics company Shippit to allow retailers like CUE, Sephora, Kathmandu, Big W, Target, Super Retail Group and Harvey Norman to deliver within the hour in the same way as food.”

Companies are fighting over the last mile between shops and consumers and they’re getting us to buy online and get deliveries using the convenience factor first but then they will have to compete on price, as more competitors using trucks and vans connected to the digital world join the new team of delivery logistics.

Inflation is threatened by the competition the Internet brings, just as demanding workers wanting more pay and to work from home will find competition from workers in Asia in coming years.

This is why I think tech companies will do well in the future and why they look like good value now, if you are a patient investor.

This chart explains why you should be patient with your investments and not be too panicked by short-term, crazy sell-offs created by odd things like wars and pandemics.

Stocks rise over time and history shows the All Ords Index has a habit of paying 10% per annum over a decade but you can get two or three scary years in those ten.

That’s why I and my clients are invested in quality businesses and funds that over time will deliver good returns. Once you are in good quality assets, you simply have to be patient and keep the faith.

I say: Never bet against Australia and its best companies!