Russia’s unprovoked and continued attacks on Ukraine has most of the world outraged, and many investors concerned. While we observe the immediate effects of turmoil across global markets, what these events mean in the long-term is difficult to diagnose. Most likely, we can expect continued higher degrees of volatility over the short term.
The question being asked by many investors as these events unfold is this, "should I make changes to my portfolio to prevent further losses which could be forthcoming?"
As you know, we like to call our clients "investors," but those who move to perceived safer havens during tumultuous times with the thought that, "I'll shift back into my current portfolio when things calm down," well, to engage in that behavior makes one a "gambler." We have seen time and time again, that trying to time markets, just like those who engage in gambling activities, normally ends up being a losing proposition.
Instead, realize that it is unusual for markets to be solely driven by geopolitical events over the long-term, and considering a look at history can provide some important perspective, as this chart shows:
Here's the key takeaway: while the human and social costs of war are terrible, and watching the current news is sad and sobering, geopolitical events tend to have few lasting effects on markets. Stocks rise and fall, and then they tend to rise again. If you invest with a disciplined, long-term, strategic approach, current events are unlikely to have a dramatic effect on your investments over the long term.
As we like to say at Henry Wealth Management, "Build a portfolio that you can live with and then, live with it."
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