February 28, 2022
Avoid Panic Selling: War in Ukraine
As we witness the first significant conflagration in Europe in decades, we are first most concerned about the loss of life and injury in this war. Our thoughts go out to the citizens of Ukraine and to any of your family and friends in harm’s way.
The geopolitical environment is chaotic. Events are rapidly unfolding. After a day of selling last week, the market surprisingly shot back up – reflecting on how difficult it is to predict short-term performance. If you’re selling into this uncertainty, you risk the chance of getting whipsawed. Historically, shocks to investor confidence do not tend to last long and often represent buying opportunities. Review the table below from Vanguard.
Geopolitical sell-offs are typically short-lived
Sources: Vanguard calculations as of December 31, 2021, using data from Refinitiv.
Stocks have been performing poorly this year. The situation in Ukraine is partly to blame. However, inflation and the anticipated Federal Reserve rate hikes are arguably more to blame. Inflation readings are the highest in forty years. How much and how often the Fed raises rates will be pivotal to stock valuations. Sanctions on Russian trade, particularly agricultural products, metals, and energy, will exacerbate the situation in the short term. Supply chains are even more strained. Sticker shock at the pump and for various goods, especially cars, may lead to lower demand, affecting the economy’s growth.
Now is not the time for sudden shifts in your portfolio. Instead, maintain a calm stance and keep your eyes on the long-term horizon. The US economy remains strong with low unemployment, plentiful job openings, and a general reawakening after Covid – let’s hope it sticks this time. HG Wealth Management LLC has always emphasized the importance of a diversified portfolio. Now more than ever, diversification is critical.
Please let me know if you have any questions or concerns.
In peace,
Henry
Henry Gorecki, CFP®
HG Wealth Management LLC
10 S. Riverside Plaza, Suite 875
Chicago, IL 60606
312-474-6496
henry@hgwealthmanagement.com
