Financial Insights
BRIEFING: THE RUSSIA-UKRAINE CONFLICT & MARKET VOLATILITY
Adding Fuel to a Highly Volatile Market
The stock market started off the year negative, with inflation and possible Fed rate hikes being at the forefront of the minds of investors. Going into this week, the tech-heavy NASDAQ was already in “correction” territory, down over 13% from its November high. The S&P 500 index was heading towards a correction as well, down over 8% off its December high.
One of the strengths of US and global economies has been strong consumer demand. However, would an additional geopolitical shock be just enough to tip the scales? Military conflict and instability in the Ukraine region will most likely create a negative impact on the price of certain commodities such as oil and grains. Consumers would feel that additional inflationary impact at the gas pump and grocery store.
Investors will now turn to the next Fed meeting on March 16th. The Federal Reserve has been rumored to raise interest rates .25% – .50%. They have made it clear that inflation needs to be addressed. However, it remains to be seen if their hawkish stance softens as the Ukraine-Russia conflict evolves.
Where Do Investors Go From Here?
Though the current Russia/Ukraine geopolitical event is new this week, geopolitical events overall are not. And stock market volatility is inevitable. However, timing investment decisions based on geopolitical events has not proven to be a successful long-term strategy. An interesting fact: Over the past 20 years, 24 out of the 25 worst trading days were within ONE month of the 25 BEST trading days (source: Blackrock).
What should investors do? We recommend investors review their goals, timeline and risk tolerance with their financial professional on a regular basis. Now is a great time to do so. Remember that historically, markets react to news events on a short-term basis. However, markets tend to reward patient investors over the long-term.
Max Rossiter is a native of Gilbert, AZ and a recent graduate of Arizona State University where he earned a Bachelor of Arts degree in Public Service and Public Policy from the W.P. Carey School of business. He comes to the team as a Financial Advisor Associate, focusing on providing financial guidance for the professional and private clients.
Jodi is originally from Redlands, California. She moved to Arizona in 1996 after receiving her Bachelor of Arts degree in Psychology from the University of Redlands. Her first job out of college happened to be as a receptionist at a small Broker/Dealer in Phoenix, and her interest in the world of finance was born. From receptionist, she moved on to larger firms and earned various securities licenses, working in Customer Service, Operations, Compliance, and finally, Trading.
Tim Carpenter started his financial career with Dean Witter 30 years ago. Tim serves as the Portfolio Manager and cornerstone of our Biltmore Wealth Management team. Tim’s primary focus on portfolio management provides a breadth of expertise and knowledge that enables the firm to manage risk and achieve financial goals for our clients.
Kevin is a native of Buffalo, NY, a graduate of Mercyhurst College (Erie, PA), and has been advising individual investors since 1999. Kevin focuses on providing financial strategies to the professional athlete.