I woke up this morning with a familiar feeling—“Here we go, again.” We live in a time where equity markets are very volatile. Last night, futures markets were showing the major US indices down in the range of 2-3%. As of this writing, markets are off their bottoms for the day.
Last month we sent out a note about volatility in the markets, the rough and tumble start to the year, and potential geopolitical tensions. Our hearts go out to the Ukrainian citizens and what they are currently enduring. Overnight, Russian forces began an operation to invade Ukraine and there does not seem to be a resolution in sight at the moment. This is not something that happened out of nowhere; it’s been telegraphed for a long time. You may recall over the past handful of years Russia has (on a smaller scale) taken over Crimea (2014) and Georgia (2008) as well. The US government has been talking publicly about what Putin was planning on doing since November 2021.
Going back to what we said last month, does what happens with Russia and Ukraine impact whether or not Disney’s stock price goes up or down? Will less people go to Disneyland or get on a domestic flight now because of what is happening? The short answer, in our minds, is “No”, even with the uncertainty, and even with the volatility.
At Anfield, we try to think from a market's perspective, and with this point-of-view we continue to stay fully invested (we actually wish we had some cash to be buying into it, even!). Below we’ve included a couple charts from our friends at First Trust and LPL that show the various geopolitical conflicts we’ve experienced over the last handful of years, and how the markets have more or less shrugged them off. We don’t think this instance will be much different. Additionally, as can be seen in the charts below, various stock indices have performed well over 1, 3, 5, 7, and 10 year rolling periods and we encourage investors to stay the course.
Please let us know if you have any questions, and we are happy to help.
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