With the Russian military actions starting in full last night, the markets are expected to react negatively as they usually do when there is uncertainty in the global economy. It has been many years since the world has witnessed this kind of aggressive activity and it is unsettling in many ways. What investors need to know is this kind of uncertainty has been survived in the past and it will be survived again. Russia invaded Crimea in 2014 and the markets returned over 16% in the year following the initial action. There are no guarantees of positive gains at any point following events like the ones we will witness over the coming week but keeping a sound investment strategy in place during the storm is critical. Much like trying to run out into a hurricane when it is upon you, chances for safety and success are diminished with panic.
The outsized market returns of the Covid era made many people forget that the sun does not shine year in and year out. The fact is some of the large gains made over the past two years are being adjusted to norms that have been realistic over rolling decades. Military activity in other parts of the world have diminished in recent years but in a tightly knit global economy, they have more impact today than in years past. We can hope the impact on human lives and stock markets are minimal and short lived. Accept these events as part of living in a complex world. As always, risk is what generates returns and those with a long-term vision are usually rewarded. Worry not about your temporary reduction in your account balance – these are things beyond your control. Focus on your physical and emotional health and be thankful you do not live in a country subject to these kinds of aggression.
We will watch the events unfold minute by minute with today’s technology and hope for a positive outcome with limited bloodshed.