Russia Invasion of Ukraine
To our clients and associates,
I’m sure you would agree that it is genuinely sad to see what is happening in Ukraine. I can’t imagine what it would be like to wake up to Russian tanks driving down the streets of Glastonbury, CT.
After the human concern, the biggest worry of course is the impact on the world’s energy. Russia supplies 40% of Europe’s heating fuel, in the form of natural gas. One of two very old pipelines through which this gas is transmitted runs through Ukraine, which has been warming up to Western countries and NATO – a direct threat to Russia’s control and dominance.
That said, it is the reality we live in, so how do we respond to its impact on our markets and portfolios? The answer to this is never easy but it is simple. We act versus react.
First we recognize that our portfolios are designed to take advantage of the long term potential growth of the world’s greatest companies. Through diversification we provide a mitigation of the most common market risks. We also recognize that since 1980, the S&P 500, a measure of the US markets, has had an average dip of about 14% per year. The current pull back is just starting to approach this. Again, the 14% annual drop is an average - sometimes it’s less, sometimes it’s more.
No one can predict what Putin will do next or how this will eventually be resolved. Yet I know that in the 30 years I have been investing professionally, I have seen 9/11, war in the Middle East, several recessions, tech bubbles, the Great Recession and a worldwide pandemic. Never once have I pulled money out of the market as a reaction to these events. Yesterday the DOW dropped over 859 points, yet the market ended UP 92 points. The S&P 500 was down 2.6% at one point, yet closed UP 1.5%!
Of course I must say that past performance is not indicative of future performance. Loss of principal and/or loss of portfolio value are possible.
But as you know, I believe in the future and the great potential that companies all over the world provide. Time after time, the goal-focused, long-term equity investor has come out ahead.
As always, we will monitor this situation and your portfolios closely. If we feel a rebalancing is in order we will certainly do that for you. We regularly evaluate our “buy” and “watch” lists to determine if our specific investment choices are in line with our goals. So let us do the worrying for you.
Pray for peace and stay the course. This is the most important advice I can give at a time like this.
All my best,
Past performance is not indicative of future performance. Loss of principal and/or loss of portfolio value are possible.