Post Invasion Update

The newsletter we sent two weeks tried to set expectations should Russia decide to invade Ukraine. Given that the invasion is now a fact, we thought an update might be helpful.

Just as the Covid pandemic was unprecedented for our generation, so is the current invasion of Ukraine. While we have seen many geopolitical events such as 9-11, Iraq, Afghanistan etc., this is the first invasion of a sovereign European country by a nuclear armed military. Because of this, there is probably a wider range of potential outcomes.

We don’t know how this will play out. But we do not believe that is a disadvantage, because it does not seem like anyone else does either. We just know it is a tragedy for a lot of innocent people.

As sad as the tragedy is, there does seem to be some potential benefits such as a more united NATO. We are also seeing many developed Western countries isolating Russia to a degree we have not seen, but we know these sanctions can not only hurt the Russians, but the people and economies of the countries applying the sanctions.

Financially, we are seeing a big surge in the price of oil and natural gas, along with other commodities including agricultural commodities such as wheat and soybeans. This will probably continue to keep inflation above the Federal Reserve’s (Fed) target of 2% inflation, which implies that the Fed’s plans to raise short term interest rates are probably still on track. But if we see a significant slowdown in the economy due to rising energy prices and continuing obstacles in the supply chain, the Fed may decide to be a little less aggressive than previously expected.

And the stock market has seen huge swings intraday, reflecting the confusion of those who try to trade on a short-term basis. We wish them luck.

For longer term investors like our clients, we thought the chart below would be of interest. It goes back as far as the attack on Pearl Harbor and shows the initial drop (in blue) in the stock market and how long it took to recoup those losses (in yellow).

As we know, past performance is not indicative of future performance. But since we are discussing geopolitical events, we thought you may find this helpful.

We continue to hope and pray for the citizens of Ukraine.

As always, we will be in touch but please don’t hesitate to call us with anything on your mind as we go through this together.

Thank you as always for your trust and confidence in us.


Any opinions are those of the author and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.