The immediate reaction to the war in Ukraine is pretty dramatic and it should be. Any war is a terrible thing and we pray for those that are suffering during this difficult time in Ukraine. However, from a financial perspective, this shouldn’t be that dramatic. It has shocked the energy markets and the world will scramble to make up for the 10% of the world’s oil supply that Russia produces. However, that region of the world does not account for much of our GDP.
Geopolitical events tend to be pretty short-lived in the markets. Much of this war was already built into stock prices and I think you are likely to have at least a relief rally fairly soon. No long-term investors should be doing any panic selling during this crisis. There will be people that will need to sell during down markets to pay the bills.
We have broken some technical support in the market and we have not seen the panic selling that you tend to get at bottoms. There may need to be some more work to the downside before we finish selling. There is no question that market bottoms are a scary place to go. However, we routinely get corrections and even cyclical bear markets within the context of secular bull markets all the time.
The goal of a long-term oriented, diversified portfolio is to be able to weather short-term market moves. Making changes to meet short-term market fluctuations is usually a bad thing. If anyone is concerned about their overall portfolio or the effects on your long-term financial plan should contact us right away.
I believe that at least for the next few days we should expect more volatility. However, I think we’ve already seen some of those sectors that were hit early in the selloff starting to bounce. That’s a good sign that we should maybe get a relief rally for the market relatively soon.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.