Stivers Financial Services


What the Russia-Ukraine Crisis Means for Your Stock Investments?

Should you be worried about their stock investments?

Since the beginning of 2022 the stock market has really struggled.  As the reality of inflation has begun taking its toll on our economy and the likelihood that the Federal Reserve will raise interest rates in March, the stock market has had its worst performance since the Covid Crisis in March of 2020.  Now the Russia-Ukraine Crisis is adding additional pressure to an already unstable stock market.

The first place most investors will begin to feel the impact of the Russia-Ukraine crisis is when they look at their investment statements.  The possibility of an escalating conflict along with rising oil prices that will continue to fuel inflation means that it is likely that the stock market will continue to be volatile at best or enter a “bear” market at worst.  A “bear” market is when the market declines 20% or more.  On Feb 23rd the S&P500 closed almost 12% from its Jan 3rd high and the Nasdaq closed over 18% below its November 2021 record high.  So, it is possible that we are headed for a bear market.

For investors who don’t check their statements on a regular and rely on quarterly mailed statements, it is likely that they will have quite a shock when opening their 2022 first quarter statements.  Depending upon your investment mix the decline in value could be 10% or more by the end of March.  So, it is natural to be concerned about our investments in this volatile market that is partially a result of the Russia-Ukraine crisis.

So how should you respond to this latest stock volatility?

The best advice I give my clients as we review and discuss what has been happening over the past 2 months in the stock market, is the same advice I give them when they first start investing in the stock market.  That is that they need to have a long-term perspective when investing in the stock market.  When their investments are down due to world events or economic conditions, is not the time to panic and sell at a loss.  During the financial crisis of 2008 the S&P 500 dropped over 38%.  For those who panicked and got out of the stock market they took what we call a “paper” loss and turned it into a “real” loss.  But for those who kept their-long term perspective over the next few years they not only made up their losses but entered a record “Bull” market that lasted until 2020 and dramatically increased the value of their 401ks. 

I also recommend clients that have funds that they have had sitting conservatively in cash or bond funds, that it may be a good time to jump back in the stock market should it reach the “bear” market status.  In essence if the market is down 20% that means the stock investments are on sale for 20% less.  It’s important to never forget the secret of successful investing, “buy low, sell high”

I also recommend that volatile times are the perfect time to begin a working relationship with a financial advisor who functions in a fiduciary capacity.  Having someone to assist in developing a long-term retirement and investment plan can bring confidence in turbulent times.  They can also assist to make sure the risk you are taking in your investments is consistent with your personal risk tolerance and financial goals and needs.

This isn’t the first volatile times we’ve seen in the market and it likely won’t be the last!

The Russia Ukraine Crisis is only the latest event that has negatively impacted the stock market.  Just since the turn of the century we have experienced several major stressors on the market.  We began the 21st century with the S&P dropping over 38% from 10/1/2000-10/31/2002 because of the Dot-Com Bubble busting.  From 10/01/2007 to 03/31/2009 the S&P 500 dropped 47.7% during the Financial Crisis.  Trade fears in the fall of 2018 caused the S&P to drop over 13% and just 2 years ago from 2/1/2020-3/31/2020 the S&P fell almost 20% because of Covid.

The bottom line is this latest challenge isn’t the first and it won’t be the last.  But the American Economy has been and will be quite resilient due to the strength of the American People.  I’m encouraging my clients to keep the Ukrainian people in their thoughts and prayers, do their best to stay focused on a long-term perspective regarding their 401ks and to count their blessing each day.

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