“Don’t sell stocks, but choose value and profits”

It can be very tempting to sell shares now and flee to “safe” cash. But according to Ewan Munro, CEO of Newton Investment Management, part of BNY Mellon IM, investors should resist the temptation.

Because money is not safe anymore. He wrote in “Because of the war in Ukraine, inflation will increase even more, and therefore the value of money will be eroded even more. At the moment, investing for income is very important.”Market reaction: the inherently inflationary effects of war”†

“If you don’t have to sell: don’t.”

“It’s tempting to sell stocks now, but with Russia facing severe sanctions from around the world, there’s a lot of panic selling. If you don’t really have to sell, I won’t.”

According to Monroe, high inflation is rooted in geopolitical conflicts such as the conflict in Ukraine, and with prices rising to double digits, the purchasing power of cash is likely to decline in the long run. “The additional cash is only useful for large investors who need to meet their short-term liquidity needs.”

Stock growth, dividends in

Not necessarily in cash, but investors have to make some shifts within the portfolio. “Exposure to growth stocks should be reduced because they are the most sensitive to recessions. They take a really hard hit.”

Don’t wait too long, because the turnover of growth-to-value and dividend stocks will accelerate, Monroe predicts. “Especially now that the impact of rising inflation and the consequences of sanctions against Russia is becoming noticeable.”

Choose local companies with pricing power

Then choose companies with pricing power or pricing power. “They are able to maintain profits in these circumstances.”

In light of sanctions and the “deglobalization” that it involves, it might be wise to choose companies that “don’t have to be good for everyone,” says Monroe. These, for example, are domestic companies with pricing power.

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