Current Events: Russia/Ukraine Update
On February 24th Russia launched an invasion into Ukraine. Western powers have responded with unprecedented sanctions which have had significant effects on global financial markets. This is a very trying time for Ukraine and the world. While there has been conflict in the region for years, this time the scale is much larger and more severe.
While conflicts are nothing new to the markets, it is sometimes difficult to weather the storm. Markets dislike uncertainty, and there are a tremendous number of unknowns surrounding Russia’s agenda. To top it off, we are faced with higher oil/energy prices and higher inflation.
Our investment committee consistently monitors several data points to try to see if changes are warranted. Typically, these events are self-correcting over the following months. Some experts like to compare this to the Cuban Missile Crisis, where stocks declined 22% within a few short months but then recovered over the next 12 months to new highs. Or the invasion of Kuwait, with a 20% pullback and an amazing 4-month recovery.
Of course, we wish we knew what Putin is thinking (and so does the rest of the world). During last year, we made a handful of changes to the strategies in anticipation of elevated valuations, increased volatility, and higher inflation, but did not anticipate we would have an attack on Ukraine. Global markets have had a difficult time across the board, domestically the S&P 500 is down almost 9% YTD, while the Nasdaq is down 15% YTD. The MSCI European index is off over 16%.
In the past, we have used cash to protect principal, but even cash is a difficult option under the current circumstances. With inflation currently running around 7.5%, a large cash position might not make sense as purchasing power is being eroded.
We know these are difficult times, but we must stay focused on the long-term strategic plan.
As always, thank you for your continued trust and confidence.
The All Seasons Wealth Team
This is not a replacement for the official customer account statements or trade confirmations from Raymond James or other custodians. Activity details including time and price will be included in the official statements and confirmations. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
Any opinions are those of Jeff Hausinger and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The MSCI Emerging Markets is designed to measure equity market performance in 25 emerging market indices. The index’s three largest industries are materials, energy, and banks. Inclusion of these indexes is for illustrative purposes only.
