February 24, 2022: Market Update
“Russia Invades Ukraine”
This is the headline we all woke up to this morning.
Although this outcome seemed to be telegraphed by the actions of the Russian government for weeks, judging by the immediate investment market reaction, it appears to have not been fully priced into the global equity markets.
The investment markets have seen a lot more volatility and have generally been weak since the start of 2022. This is something we anticipated could occur, and spoke about this in our annual market outlook seminar (which was held virtually again this year). If you were not able to view the webinar live, you can see an archived version by emailing Jamie or I and we will reply with a link to the hour-long video.
Each individual client portfolio is uniquely allocated according to their own level of risk tolerance, time horizon and financial plan requirements. However, generally our client portfolios are conservatively positioned with a mix of high quality equity and income oriented assets that have successfully weathered many similar environments in the past.
In fact, if you examine each historical example of short-term investment market declines related to geopolitical upheaval behavior over the past 50 years, the investment markets have been very resilient. According to a study done by Vanguard, the broad equity market has recovered and reached a new high within 12 months of the initial shock 88% of the time. So, it’s important to remember that our investment time horizon is for the longer term.
There is also the possibility the current situation leads the Federal Reserve to be more dovish in its monetary stance and inspire them to move more slowly to remove liquidity injections to the financial system. They may also choose to take a more measured path to future interest rate increases. Both of these outcomes likely would be viewed in a positive light by the equity markets and could be the catalysts for a rebound rally.
In the very near term, we continue to monitor the markets and when the time appears appropriate will be looking for opportunities to acquire high quality holdings that heretofore were too expensively valued, or add to great companies already in our portfolios at more attractive values.
As always, please don’t hesitate to email or call if you have specific questions for us.
The team at YHB Wealth Advisors