Following reports of major airstrikes exchanged between Israel and Iran over the weekend and into this week, oil prices and investments tied to the oil and gas sector have impacted investors by spiking on the theory that the conflict will escalate or impact oil exports from the wider Middle East region. Similarly, since President Trump’s tariffs have gone into and out of (and then back into) effect over the first two quarters of 2025, other investment sectors have experienced wild pricing swings that have also impacted the portfolios of retail investors. Given these seemingly random fluctuations in their portfolios, many investors are left asking, “why are events thousands and thousands of miles away impacting my investment portfolio?” We will help explain.
Now, more than ever, we live in a truly global economy. American companies are deeply intertwined with foreign entities and markets in the same way that foreign entities and markets are inevitably reliant on the United States economy. For example, in the oil and gas sector, although Exxon Mobil produces a considerable amount of crude oil in the United States, the company must still import significant amounts of crude oil from other countries, like Canada, Mexico, and Saudi Arabia, to meet the needs of their operations. If crude oil exports from Saudi Arabia are impacted by the Israel/Iran conflict, one would expect a detrimental impact to Exxon Mobil’s bottom line and stock price due to increased costs from finding new suppliers not impacted by the conflict. If your portfolio has suffered losses due to the recent price swings in crude oil, you should speak with an experienced investment loss attorney, like the ones at Malecki Law in NYC, to determine if your losses are recoverable.
In the context of tariffs, many American companies sell consumer products in the United States but manufacture such products, in whole or in part, in other countries have seen fluctuations in their share prices as the market prices in higher expected future costs due to tariffs. For example, Walmart imports a large portion of consumer goods from foreign countries that it sells domestically in the United States. If tariffs were implemented on the countries from which Walmart imports its goods, Walmart’s financial performance and stock price would be expected to suffer from increased costs. If your portfolio value has decreased on the heels of the recent tariff announcements, your portfolio might be overconcentrated and you should speak with a seasoned securities lawyer, like the ones at Malecki Law in New York.
Further, direct investing in foreign markets has never been easier than it is today with most major brokerage shops offering ways to invest in international equity. Investors must be aware of these dynamics to fully understand the ebbs and flows seen in their investment portfolios, as well as to recognize when their broker or advisor has failed to act in their best interests.
With these dynamics in mind, investors must remain cognizant of the impacts that global events can have on their seemingly domestic investment portfolios. A critical area for investors to keep an eye on is downside risk caused by overconcentration. Overconcentration occurs when an investment portfolio holds too many positions in a particular asset class, asset type, sector, industry, foreign market, market cap, company grow cycle, or individual stock. For example, if your portfolio holds a large % of equities in oil and gas companies, your portfolio is likely overconcentrated in equities as well as oil and gas companies. As another example, if your portfolio holds only Israeli government and corporate bonds, your portfolio is overconcentrated in Israeli investments, as well as fixed income investments. Overconcentration can lead to amplified or compounded price swings that affect an investment portfolio in either direction. If you believe that your portfolio is overconcentrated and has suffered losses, you should consult a tested investment fraud law firm, like Malecki Law in New York.
The primary tool financial professionals deploy against concentration risk is diversification. Diversification describes the investment strategy of investing in different asset types, sectors, and classes to reduce overall portfolio risk correlated with price volatility. A convenient, high-level way to determine whether your portfolio is overconcentrated in a particular asset class or type is to review the asset allocations included with your periodic account statements. Determining whether your portfolio is overconcentrated in other ways, such as in foreign equities, might require more due diligence into the specific holdings in your account or conversations with your financial professionals who likely maintain access to more in depth concentration reports. Malecki Law offers free consultations to harmed investors and stands at the ready to guide public investors through applicable proceedings to recover investment losses.