The world is turbulent, tumultuous, and other fancy modifiers that start with the letter t. It’s enough to make the average retail investor freak out and avoid the stock market altogether. That’s human nature, I suppose, but it’s an impulse you’ll have to suppress if you’re going to profit in the long run.

Caterpillar (NYSE:CAT) stock is one of those assets that represents old-school investing: solid, age-old, and blue-chip to the core. Caterpillar stock is a Dow stalwart with pedigree and almost serves as an economic bellwether, not just for the nation but for the planet.

Economies are interconnected, after all. Are the world’s troubles a valid reason, then, to shy away from Caterpillar stock lest there be a CAT-astrophe? (Sorry, I couldn’t help myself.)

CAT Stock’s Sensitivity to Global Issues

I certainly won’t deny that the Caterpillar stock price can be reactive to unsettling world events. The company’s global footprint spans multiple continents from South America to Asia, with lesser presences in Africa and the Middle East, with over 500 locations in total — not too shabby for a company headquartered in tiny Deerfield, Illinois.

As such, Caterpillar has its hand in not only construction and mining equipment (it’s the world’s largest manufacturer in this category) but also in natural-gas and diesel engines, diesel-electric locomotives, and industrial-gas turbines. With such a spread across continents as well as markets, there’s the downside of sensitivity to conflict and volatility abroad.

That’s a vital consideration for what many investors think of as a uniquely American stock. Latin America has recently brought this into stark relief, to the point of impacting the CAT stock price. That shouldn’t be unexpected, considering the fact that 9% of Caterpillar’s revenues were derived from the company’s business in Latin America last year.

Shareholders need to watch this region closely, then, as it has been a veritable hotbed of activity lately. Alberto Fernandez’s unexpected primary vote victory and Brazil’s disappointing oil-deposit auction provide just a couple of instances of unforeseen events with potential implications for the company and the share price going forward.

Santiago, Chile, was the site of even more disconcerting turbulence as riots rocked the nation’s capital while President Sebastian Pinera struggled to maintain control. Chile is the biggest producer of copper on the planet, so it’s not hard to imagine why CAT stock holders might get spooked by violence in the region.

William Blair Analyst Larry de Maria summed up investors’ concerns amid ongoing tensions in Latin America: “There’s the social unrest in Chile, which is an important mining market… Argentina has a difficult political situation and Brazil hasn’t really improved the way people hoped it would improve.”

And of Course, That Whole Trade War Thing…

Caterpillar stock investors might not be aware of the aforementioned Latin American issues, but they’re likely to take notice of the on-again, off-again tariff-war battles that have grabbed headlines on a daily basis. There’s also the Federal Reserve to contend with; Chairman Jerome Powell seems to have hit the pause button on rate cuts, leaving market participants to wonder whether borrowing costs (which directly impact mining and construction companies like Caterpillar) will remain low through 2020.

Shedding some much needed light — and imparting some sense and sensibility — on these ongoing investors concerns is Nejat Seyhun, the Jerome B. & Eilene M. York Professor of Business Administration and Professor of Finance at Michigan Ross. Neither Trump-Xi tugs-of-war nor Fed flip-flopping will deter Professor Seyhun from viewing a CAT stock position with fear, trepidation, or panic:

“The fact there is a current trade disagreement with China should not prevent a potential investor from considering Caterpillar stock no matter how far it has declined. All of these tariffs are already reflected in Caterpillar price.  What matters going forward is whether these trade disagreements will be resolved or whether they will get worse.  Second, if the Fed continues with rate decreases, this has the effect of benefiting interest-rate sensitive, cyclical industries, including construction, mining and energy – all of which would also benefit Caterpillar.”

That’s about as rational a view as I’ve seen on Caterpillar stock, to be honest with you. The Fed’s not going to jack up interest rates, and current tariffs are already known, parsed, and baked into the share-price pie. As for future events, these are unknown and unknowable — and thank goodness, for otherwise the stock market couldn’t exist.

The Takeaway on Caterpillar Stock

Neither you nor I can control what happens in the world, but we can control how we react to the alarmist, button-pushing media. With that, I implore you to remain calm, cool, and collected. Problems will recede in time, and CAT stock will be just fine.

As of this writing, David Moadel did not hold a position in any of the aforementioned securities.