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Market Review - 1st Quarter 2022

4/8/2022

 

Geopolitical Risk

2/24/2022

 
​The current geopolitical conflict between Russia and Ukraine is unsettling.  Over the next few days most media outlets will document the ugly aftereffects of Russia’s aggression.  When events like these occur, it is normal to wonder about the impact on our investments.
 
Market’s Adjust Quickly
Today’s edition of the Wall Street Journal provided an outline of the vast number of companies, both large and small, that have business interests in Russia.  Many are household names, like Citigroup and JPMorgan Chase & Company.  When events like these occur, our gut instinct is to think that the market price of these companies will be hurt (and perhaps hurt even further by increased sanctions imposed by the West, which President Biden is announcing as I write).  While it is true that these events can impact markets/prices in many ways, it is important to remember that investors have been watching and pricing in the impact of a potential invasion by Russia for over a month.  In short, we believe current market prices quickly incorporate expectations about the effects of these events on economies and companies. Much of the impact on pricing, based on an invasion by Russia, has already been factored into the market.
 
Diversification is Key
Geopolitical risk is one of many reasons we diversify our portfolios widely.  We don’t want any one event, market, or company to have an outsized impact on our investments.  
At the end of 2020, the total market cap of Russia was $281 billion.  Compare this to market cap of Apple, which is over $2 trillion, and you realize what small fraction of the global capitalization is represented by an emerging market economy like Russia (roughly .002% of the global capitalization).  Overall, a struggling Russian economy is likely to have little impact on a well-diversified portfolio.
 
As investors in capital markets, we’ve been here before (see the charet below, which I love!).  Sometimes it’s easy to forget the discipline needed to achieve long-term success.  As my mom used to say after many of my unwise boyhood decisions, “this too shall pass.”
​
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2021 Annual Market Review

1/11/2022

 

Market Review - 4th Quarter 2021

1/11/2022

 

Market Review - 3rd Quarter 2021

10/7/2021

 

Market Review - 2nd Quarter 2021

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Market Review - 1st Quarter 2021

4/8/2021

 

2020 Annual Market Review

1/15/2021

 

Market Review - 4th Quarter 2020

1/15/2021

 

Market Review - 3rd Quarter 2020

10/8/2020

 
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  • Home
  • Team
  • Services
    • Investment Management
    • Financial Planning
    • Retirement Plan Services
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  • Blog
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    • Client Portal
    • Client Accounts
  • Careers
  • Contact