Russia & Ukraine War
“The strongest of all warriors are these two – Time and Patience.” – Leo Tolstoy, War and Peace
Russia has declared war on the Ukraine. War is brutal and ugly. The forthcoming human stories of the harm done to those who are in these conflict zones break our hearts and trouble our minds. Though we are thousands of miles away, in the age of video, we are emotionally traumatized by the human toll. We desire and pray for peace.
So, what does it mean for markets? The short answer is volatility. Volatility has been rampant since the beginning of the year. Now, given the news of the Russian invasion, we are seeing more short term sellers than buyers. This market action is creating declines as this new information is processed by traders and algorithms. Market expectations in the near term are in greater flux and appear chaotic when evaluated over days and months.
Example of a Hypothetical Portfolio
Our portfolio(s) are made up of thousands of companies. These companies produce goods and services that consumers (ex. toothpaste, cars, houses), businesses (ex. computers, paperclips, equipment), and governments buy. Over time, we expect companies to adjust to market conditions (inflation, supply chain, etc.) and find ways to deliver a profit to investors.
We encourage you to think long term and stay patient regarding your investments. While there are always new challenges and conflicts, we remain optimistic long term. Major events around the world may have an influence on stock prices. But it is difficult to predict when these events will occur or how they will impact markets. What we observe from previous crises is that stock markets usually rebound.
Historical Perspectives on Markets in Times of War
The most important quality for an investor is temperament, not intellect. ― Warren Buffett