Russian Aggression
IThe news regarding the conflict between Russia and Ukraine is disastrous and heartbreaking. I know the people of Ukraine are in all our thoughts and prayers. The uncertainty and volatility this has caused in the global markets is clear and has given the market, which was overextended heading into the end of the year, a reason to sell off. The SP500 is down around 10% year to date.
Despite the volatility that exists, the US economy remains very strong and leading economic indicators are healthy. The impact sanctions will have on the price of global commodities and inflation, as well as the possibility of conflict spreading outside Ukraine, continue to create uncertainty in the markets.
In the short term very little is known about how the markets will react. For long term investors, volatility and market drawdowns have typically presented opportunities. We are monitoring developments daily and have been working hard to review our investments for exposure and position ourselves appropriately given ongoing risk.
A few notes and reminders about the current volatility:
1. Assets which are needed over the next 1-5 years should be held in lower volatility investments.
2. Though difficult to bear, volatility is a potential benefit for investments which have a time horizon of 5 years or more.
3. Russia is a global power; however, their stock market represents only about 2% of the MSCI Emerging Markets index and an immaterial percentage of the global markets.
4. Russia accounts for about 10% of the global oil output according to the US Energy Information Administration (1). Conflict with Russia and Ukraine and recent international sanctions has the potential to cause oil prices to rise significantly.
While the current conflict has created many headwinds for the global market, news of any escalation or de-escalation could continue to increase market volatility. We remain committed to sound, long-term investment principals while being mindful the broader health of the economy. Please do not hesitate to reach out to us with any concerns or questions regarding the current market environment or your investments.
(1) eia.gove/outlooks/steo/report/global_oil.php
The information given herein is taken from source that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities, LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but is not guaranteed by us as to accuracy or completeness. This is for information purposes only and in no event should be construed as an offer to sell or solicitation or an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP's express prior written consent.