Will Russia Invade Ukraine and How Will That Affect Your Investment and Retirement Portfolio

 

Chris Perras: Hey, I’m Chris Perras, Chief Investment Officer at Oak Harvest Financial Group. This is our investment team’s midweek release when we examine a news item, a headline, or news making the rounds from publicly available sources, and we ask, is it news or is it noise?

Before we continue, please take a moment to hit the subscribe button and the notification bell so that you’ll be notified when we upload new content. Here we go. This week’s news or noise topic, the potential invasion of the Ukraine by Russia.

What am I talking about? Well, here’s a quick recap. Ukraine was part of Russia for centuries before winning its independence as the Soviet Union broke up in 1991. When it left Russia’s command, Ukraine moved to forge stronger ties with the European Union. In 2014, for whatever reason, Ukrainian president decided to reject an agreement with EU and move government ties back towards favoring Moscow and Putin.

President Yanu was removed as leader on the back of mass citizen protests. However, Russia used this disruption to annex the Eastern Ukraine’s Crimean peninsula. For its part, Moscow has strongly criticized the US and its NATO allies for providing Ukraine with weapons, saying that such moves encourage the Ukraine to try to regain Eastern Ukraine by force.

Ukraine is not a NATO member, but it wants to be one. It is already considered a partner of NATO. Putin has repeatedly said Ukraine joining NATO is a red line. He’s afraid of the West gaining a military foothold in a region so close to Russia. However, Russia denies it has any plans to invade Ukraine and is accusing the West of aggravating the situation. The question on investors’ minds is this, one, will war break out in the region? Two, if it does, what does it mean for my investments?

The answer to the first question is easy, and I’ll be direct. We have no idea. Global political matters such as these are beyond our level of expertise and analysis on a micro-level. The answer to the second question is generally easier to answer. While over the short term events such as these have caused increased volatility in the markets, they are usually an excuse for a correction or pullback in the market that is already in progress and not the root cause. Longer-term, these events have proven to be noise over investment horizons measured in years.

I’ll point you to a table that can be found on our website under the accompanying article entitled “I don’t want to invest now because”. This table goes back to 1934 and it lays out the level in the Dow Jones industrial average and a few news stories each year that were the years’ main concerns.

Look at the list for a moment. Think of all the political crisis you have lived through and overcome throughout time over years. How the markets and the economy have not only persevered but grown, prospered, and compounded your investment savings.

Think of these political events that happened even closer to home than the Ukraine. In the 1960s, it was a Cuban missile crisis. It was on our back doorstep. 1970s had the Arab Oil Embargo and the Vietnam War. 1980s had our president shot. The 1990s were a decade of the US involvement in the Gulf War, and more recently, we endured the 9/11 terrorist attack on our shores and the economy, and the stock markets, over time, were able to adapt, grow, and prosper.

Viewers, the headline stories about Russia and Ukraine are interesting and can cause a little bit of extra short-term anxiety and volatility for the markets. However, overall, they’re noise.
Right now, as we suggested they would starting way back last November, higher market volatility and the equity market declines are being largely caused by investors and the market struggling in the near term with the upcoming Federal Reserve monetary policy changes just as the fiscal stimulus from 2021 starts to subside and the economic numbers peak and slow.

We continue to expect the first half of 2022 will be tough and it’ll be more volatile than last year and a half. If you’re watching your portfolios daily or weekly, we ask you try not to do it. We’re doing it for you. While we expect this volatility around the Federal Reserve and their policy to continue for the upcoming quarters, we do expect the overall markets to regain its footing and continue its bull market ways, but until then, the news you hear about Russia is not that big of a deal.

However, the news you hear hearing about the Federal Reserve, well, that’s news is investment newsworthy and will likely continue to cause tremors throughout the market in the months ahead.
From the whole team at Oak Harvest, thank you for your support and trust throughout 2021. We hope we can continue to be your partner and provide you with value-added service in 2022. Viewers, feel free to give us a call here to speak to one of our advisors. Let’s help you craft a financial plan that meets your retirement goals and needs first and your greed second. Give us a call here at (877) 896-0040. We are here to help you on your financial journey into, and through your retirement years. I’m Chris Perras and have a great week.
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News or Noise: Noise!!

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This content contains general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely.

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