The recent unfolding events in Ukraine have no doubt left the world in complete shock. This type of blatant military aggression, on the European Continent, has not been seen since the dawn of World War Two. This will have ripple effects across the globe for some time to come.
How does this all pertain to your investments?
First, remember our core values:
- Successful investing is goal-focused and plan-driven.
- Failed investing is often market-focused and performance-driven.
- Successful investors are continuously acting on a plan.
- Failed investors are often reacting to the markets.
- Everything else is commentary.
The investment policy of a goal-focused, plan-driven, long-term equity investor should be unaffected by the Russian invasion of Ukraine. Everything else is commentary.
Speaking of commentary - The Russia/Ukraine event has nothing to do with “democracy.” It has to do with energy, which is the lifeblood of the Russian kleptocracy. Russia supplies 40% of Europe’s heating fuel, in the form of natural gas. One of the two aging pipelines through which the gas is transmitted runs through Ukraine, which had lately shown a growing desire for increased ties to the West. Putin could never allow this. (See Lukas Alpert’s essay on what Russia really wants.)
Second, take a look at the chart below. You will notice that the majority of the time, 12 months after a major military offensive, the stock market had rebounded. Continue to think long term. While these recent events may rattle you in the short term, in the long term they too shall pass.
As always, should you want to have a chat about all of this and discuss your specific concerns, please reach out to me. I will always be here for you.
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