Well, here we go again! The war drums are beating, and the sabers are rattling. Perhaps you are concerned, as I am about what is happening in Ukraine. All indications are that Russia is about to invade Ukraine and I wanted to share some insights that I have sourced for you on this geopolitical risk.
Brian Westbury of First Trust Monday Morning Outlook.
…we think an invasion of Eastern Ukraine will probably start soon after the Olympics, to avoid embarrassing China, which is a Russian ally (for now). Not invading at all after a big build-up of troops, arms, and equipment, would make it tough for Russia to bluff in the future. By contrast, re-incorporating more of Ukraine into Russia would seal for Vladimir Putin an esteemed place in Russian history.
An invasion would likely set off a flight to lower-risk assets, but we don’t think it changes the outlook for corporate profits over time, and so any downdraft in stocks would be temporary and a buying opportunity.
City National Rochdale: Ukraine-Russia Geopolitical Risk Analysis The full analysis includes commentary and investment implications for the most likely outcome, best- and worst-case scenarios, and some market history of other geopolitical shocks. They put the worst-case scenario at a 10-20% chance.
Barring a worst-case scenario of full invasion and severe sanctions, economic and financial market impacts should be manageable and may represent a buying opportunity for investors.
Stay the course on overweight to risk assets, markets tend to be resilient when fundamentals are strong.
JP Morgan Asset Management: Dr. David Kelly Notes on Week Ahead Blog Financial markets sold off last week as investors worried about a possible Russian invasion of Ukraine. Before engaging in any analysis of what this could mean for long-term investors, three broad points are worth emphasizing.
First, we should recognize that war is almost always a loser’s game. Whatever the goals of an invasion, its immediate effect would be in lives lost and ruined on both sides.
Second, quite often, despite the toll in human misery, economies prosper, and stocks rally over the course of a war.
Third, wars evolve in unpredictable ways. No one should assume that they can see all the impacts of war at its outset. For this reason, it makes sense to maintain a well-diversified portfolio.
The full commentaries are attached. Although I don’t want to be dismissive about the severity of these events and am under no illusion that this activity will not affect the markets, I don’t think that we need to panic right now. I believe the consequences will be felt more severely in Russia and Europe than here in the United States. With our economy’s current strength based upon the demand for goods, services, travel, and GDP growth, I don’t think we need to get too excited and make quick changes to our investments. If you feel otherwise then I would gladly welcome a call to discuss your situation and concerns in more detail. Thoughts about Vladimir Putin I saw Colin Powell speak at a conference many years ago. It was after the famous, “I looked into the man’s soul...” comments from President GW. Bush. Powell quipped that he looked into Putin’s eyes too and saw the KGB. Condoleezza Rice also spoke at the same conference a year or two later and she characterized Putin as a megalomaniac. I think he’s probably all of that and worse. Most dictators miss the wonderful opportunities to serve their people, build wealth and opportunity for their country, and in so doing forfeit a greater legacy than their lunacy could ever imagine. Shaking my head once again! Now beware of the following fraud alert. The perpetrator was a young boy who requested to use an unsuspecting victim’s cell phone to find his lost friends and family because his phone died. While he pretended to use the phone to make a call, he transferred money from her Venmo account, over $4,000, to another account he created just 30 minutes prior. The victim didn’t realize it until the transactions were posted a couple of days later. If you use Venmo or other cash apps regularly then implement the same security feature you use to access the phone such as facial recognition, other biometrics, or security codes. Watch the full news report here: Venmo scam: Boy asking for help instead uses app to take nearly $4K, woman says (wesh.com) That’s all for now. Feel free to call or write with any additional questions or concerns about your accounts or planning considerations. I have another update coming soon with important numbers and planning ideas to consider for 2022. Thank you for your business! Kind Regards, David J. Blount CERTIFIED FINANCIAL PLANNER ™ Investment & Insurance Planning Services, LLC 992 Palmetto St. Oviedo, FL 32765 407-719-0940 www.davidblountIIPS.com dblount@davidblountIIPS.com
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