What Ukraine means to you as an investor

Markets and Aussie dollar fall as worries rise over Ukraine crisis

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By now you have probably seen or heard about the rising tensions around the world over the current crisis in the Ukraine.

First we had mass demonstrations against the incumbent government, and then escalating violence that resulted in deaths and many people injured.

The former president of Ukraine is in hiding, and the country is trying to form a new government. Russia has moved to take control of the Crimean peninsula, resulting in Ukraine putting its military on high alert and threatening war against the superpower.

Markets are rattled, the S&P / ASX 200 Index (Index: ^AXJO) (ASSX: XJO) is down 0.8% in early morning trade, the Aussie dollar has dropped below 89 US cents, and oil and gold prices have both jumped.

So what does all this exactly mean for you as an investor?

In two words, absolutely nothing.

We’ve had crises before, most recently Iraq’s invasion of Kuwait, the US invasion of Iraq, the war in Afghanistan and terrorism and other conflicts around the world.

While markets may take a tumble in the short-term, over the long term, it’s unlikely that this current crisis in Ukraine will even show up as a blip on long-term charts.

What markets are of course concerned about is that the crisis blows up into something much bigger. But there is little likelihood of this – politicians eventually come to their senses the majority of the time. In 2008, Russia waged war with Georgia in a similar scenario, and there was little overall impact on the markets.

What it could mean though, is the chance to pick up stocks on the cheap.

So I should correct my statement above. What this crisis means is an opportunity for savvy investors to pick up shares in businesses that have been sold off on something that will have, very little or more likely, no impact on their ongoing future earnings. Will Australians stop buying groceries or stop trading shares – unlikely.

Foolish takeaway

I’ve got my eye on a few market heavyweights, including Woolworths (ASX: WOW), Computershare (ASX: CPU) and ASX Limited (ASX: ASX), as well as a watchlist of smaller companies. Should markets drop significantly, Foolish investors should get ready to become greedy as others become fearful.

Motley Fool writer/analyst Mike King owns shares in Woolworths. You can follow Mike on Twitter @TMFKinga

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