Our thoughts on the Russian Invasion

Our thoughts on the Russian Invasion

The recent Russian invasion has affected us all. From a humanitarian perspective, we hope this war is resolved quickly, and no further loss of innocent life will occur.

 

From a portfolio management perspective, we recognize that these events are reverberating across global markets as investors are trying to assess and make sense of the situation. To keep you updated, we want to share our thoughts and answer some of the questions that we have encountered this past week.

 

Is now a good time to buy or get more aggressive with my portfolio?

US markets have fallen 10% since the start of January, indicating we are in a market correction. As per our previous post, “What should you do about the recent market correction,” we go over how corrections are normal and part of a healthy market cycle. In lieu of trying to predict the future, our recommendation is to stay with your current portfolio mix and continue to rebalance, which will systematically have you buy low in a declining market and take profit in a bull market. If markets experience a sharp decline and start approaching bear market territory (a 20% drop from the January highs), then, yes, at that point, we would start to look at moving your portfolio towards a more aggressive tilt and/or activating cash that’s sitting on the sidelines.

 

Do I have exposure to the Russian or Ukrainian stock markets?

Combined, Russia and Ukraine only account for about 2% of global output, which is why they do not have any significant weightings in our portfolio.

 

How do markets perform around geopolitical events?

Historically, geopolitical events on stock markets have been short-lived. We expect the markets to fluctuate as investor sentiment is influenced by information on the war.

If history is to serve as a guide, markets tend to decline during the first three weeks after the initial event, only to recover shortly afterward over a three-week period.

 

Other Questions?

As always, our team is continuing to monitor events as they evolve. Please do not hesitate to reach out should you have any other questions. 

 

Colin Sabourin is a Winnipeg-based investment & financial advisor with Harbourfront Wealth Management. His specialty is working with farmers who are planning to sell or transition their farms within the next 5 to 10 years. 

Disclaimer: The views expressed are those of Colin Sabourin, Certified Financial Planner, and Investment Advisor, and not necessarily those of Harbourfront Wealth Management Inc., a member of the Canadian Investor Protection Fund.

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