A Look at the Market In Relation To Crisis
MODERNIST’S ASSET CLASS INVESTING PORTFOLIOS ARE STRATEGICALLY INVESTED WITH A FOCUS ON LONG-TERM PERFORMANCE OBJECTIVES. PORTFOLIO ALLOCATIONS AND INVESTMENTS ARE NOT ADJUSTED IN RESPONSE TO MARKET NEWS OR ECONOMIC EVENTS; HOWEVER, OUR INVESTMENT COMMITTEE EVALUATES AND REPORTS ON MARKET AND ECONOMIC CONDITIONS TO PROVIDE OUR INVESTORS WITH PERSPECTIVE AND TO PUT PORTFOLIO PERFORMANCE IN PROPER CONTEXT.
As we awoke this morning, we learned that Russia launched a large-scale invasion of Ukraine—one of the most significant geopolitical events in decades. As we reflect on the news, we are primarily concerned about the countless innocent lives that will inevitably be impacted by this war. Our thoughts go out to any of you that have friends, family or loved ones in the region.
How you can help
Please join us in supporting grassroots organizations that are caring for Ukrainians on the ground. (Organizations gathered through our Director of Client Experience Katia's leadership as Co-Chair of Human Rights Group for the UN/USA) These are just a few organizations, but there are many others.
🤍🇺🇦🤍 Explore more options, including ways to support independent journalism
Thank you! Дякую! Спасибо!
what this means for your portfolio & Plan
While we can’t predict what happens next or what future headlines will read, we know that this conflict could raise some questions about your portfolio. As in all crises, we apply our evidence-driven approach to planning and investing to help you navigate these uncertain times.
It’s also important to remember we have worked with you to develop a plan which takes uncertainty like this into account.
We’re monitoring several areas including:
Stock returns: Surprisingly, the U.S. markets closed slightly higher yesterday reinforcing how difficult it is to predict short-term performance. However, stock markets have been trending down since the beginning of the year with the U.S. market down roughly 12% and international markets down roughly 6% year to date. Although Russia and Ukraine both have relatively small economies and positions in your portfolio, the primary driver of market performance going forward will be driven by the continued global response to the invasion.
Volatility: Markets will be significantly more volatile going forward, which means that we should expect to see mid-to-high single-digit swings (both big gains and big drops) in the markets over the next few weeks.
Inflation: As the West reacts with trade and monetary restrictions, we could see continued supply constraints of oil and gas as well as agricultural and metal supplies. This could lead to higher commodity prices. Higher prices at the pump and potentially at stores could increase the level of perceived inflation, thereby taxing consumers and leading to lower demand for goods and services.
On a positive note
The U.S. economy remains strong with low unemployment, significant job openings and positive trends coming out of the pandemic.
Although the near-term impact to both the markets and your portfolio is uncertain, we know that markets price in new information quickly and tend to recover even from geopolitical situations such as this. The chart below provides some perspective on how markets have performed after various crises:
All of us at Modernist are here for you. We’ll continue to evaluate how global events may impact your financial plan. Moreover, we’ll continue to proactively seek opportunities to harvest tax losses, rebalance and make adjustments when appropriate. We look forward to continuing to help you in any way we can.
