The war that is going on in Ukraine is extremely upsetting. Russia seems to have the military advantage, however, it is inspiring to see Ukrainians defending their country with everything they got . The images of fleeing refugees and bombed out buildings create strong emotions for sure.
My job as your financial advisor, is to help you keep those emotions in check as it relates to your financial plan and overall investment plan.
Markets were far from calm prior to the invasion and have become even more volatile over the past few weeks. As we monitor the situation closely, nobody can predict market moves. We’ve seen the markets react negatively to what's going on one minute and then the next, a turnaround. Sometimes within the same day!
Volatility will most certainly continue, at least for the short term, as investors size up the impact of increasing inflation, energy prices, supply-chain disruptions, and rising interest rates. Last but not least, the depth and length of the Russian-Ukrainian war will most likely add to the unknowns.
Amongst the uncertainty, what we do know is that markets are resilient. In fact, history tells us that major geopolitical events tend to have limited impact on markets after six to 12 months. So, sticking to your investment strategy may be the best approach. (Of course I am here to chat if something has changed in your life financially). As quickly as markets fall, they can also go back up.
As we see in the chart below, even going all the way back to World War II, these events didn't substantially impact the stock market adversely and the market generally recovered in a reasonable amount of time with the average being 43 days.
Source: LPL Research, S&P Dow Jones Indexes, CFRA, 1/24/2021. All indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.
Here at FPS, we believe in the resiliency of the American economy. We also feel that the underlying strength of today’s economy still bodes well for overall growth. We are taking measured steps to rebalance portfolios where necessary and doing some tax-loss harvesting if appropriate.
In uncertain times, our highest priority is helping our clients keep the emotion out of investing and ensuring they remain focused on their long-term financial goals. We are on top of the situation and will continue to monitor events. Please do not hesitate to reach out to us with questions, concerns, or for some reassurance. We are here to help.
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All the best.
Rick Fingerman, CFP®, CDFA®, CCPS®
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.