The Ongoing Market Reactions to the Tragedy in Ukraine
By Gary Silverman, CFP®
My warning of last week continues: The column is written about a week in advance. Things change. Thoughts that seem obvious as I write this might seem foolish when the paper hits the presses. Such is the fear of a columnist. Nevertheless, here we go.
There has been a sentiment I’ve heard voiced that the west brought on the war in Ukraine by what they’ve done or haven’t done over the last many years regarding Russia. Wars always start for a reason. One side will think the reason is just (or at least convenient), the other side won’t. Whoever wins the war will feel vindicated and often gets to write the history. Decades later historians will take a renewed look and what is taken as truth can change.
I’m not a historian and this isn’t decades later. Yet I think I can state that Russia, and specifically Putin, does not have a reasonable reason nor an excusable excuse for their tanks rolling around their neighbors’ land. And while I’m not qualified to call Putin mad, he is certainly acting the part.
(Please remind me not to take a vacation to Russia after all of this—tyrants can be rather unforgiving when insulted.)
Since my column is supposed to talk about money now and then, let me tell you what you need to do in the next weeks or months given the war when it comes to your investments…
Do Nothing. (Okay, maybe a tweak.) Let me expand on that.
If you have a well-diversified portfolio, it has likely gone down since the war. The thing is, it was going down before the war. And over the last couple of decades, it has proven the ability to go down when there is no war, no Covid, and no inflation. It has also shown it can go up during a war, in the middle of a pandemic, and during periods of inflation.
This may be a bit of an assumption, but when you began investing you had a plan. You knew how much you were going to invest, knew when you would be needing to spend from those investments, decided on a mix of assets to accomplish that, and then built your portfolio with all that in mind. You used this to discern a reasonable rate of return you’d see and the variation in that return. You asked yourself several “what-ifs” and made sure the portfolio could work during them and still get you to your goal.
If you did all of that, then you need not do anything—except perhaps the little tweaks that are called for because they were part of your plan all along.
For those of you who didn’t quite get around to all of that you should do: Nothing. At least not until you build that foundation I described. Plan then do.
May Ukraine stay free.
Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing.