Amid the chilling headlines of war breaking out in Europe and rising oil and gas prices, it’s best to sit still, especially for mom-and-pop investors, some experts are urging.
Instead of panicking in retirement and other investment accounts, financial planners said it’s best to view these geopolitical shock events as short-term. The biggest impact is likely to be on oil and gas bills, said Tim Chubb, chief investment officer at wealth management firm Girard at King of Prussia. “Higher energy prices, more than trade, is where we will see the impact for the United States”
Geopolitical uncertainty rocked stock markets, as measured by broad benchmarks like the S&P 500. The market already sold off for days before Kyiv and other Ukrainian cities were attacked and bombed by Russia and fell more than 10% from January highs, going through what is known as a “correction”.
Chubb points out that the plummeting market also presents, in cold, harsh Wall Street lingo, a buying opportunity. For professional investors, “I hate to say this, but it’s a stockpicker’s dream,” Chubb said.
Simply put, stocks are cheaper right now, and it’s usually the best time to buy, Chubb said. Relative to their growth prospects, for example, “these are the most oversold tech stocks we’ve seen since 2014 and 2015.”
“I always invest more money in my S&P 500 index fund during market shocks like these,” said Dan Young, who teaches finance and marketing to business doctoral students at Goldey-Beacom College in Wilmington, Of the. “Stay invested. There is no need to make drastic changes to an investment portfolio.
Wall Street is now watching to see if this will boost inflation even further and prompt the Federal Reserve to reconsider interest rate hikes at its next meeting in March.
The booming cybersecurity industry
There are growing fears that cyber warfare – a Russian specialty – is short-term for American companies, which could increase spending to prevent sophisticated cyberattacks against targets such as data centers and networks.
“With a significantly elevated level of cyberattacks on the horizon, we believe tailwinds for cybersecurity industry growth and well-positioned vendors should be a priority area for tech investors during this market turmoil,” said Dan Ives, technology analyst at Wedbush. Securities in New York.
With Russia’s high-profile cybersecurity attacks in recent years, “it’s a question of when, not if, heightened cyber warfare activity kicks into high gear,” Ives said. He thinks the cybersecurity companies most likely to benefit from additional Ukraine-induced spending are: Palo Alto Networks; Zscaler; CrowdStrike; Defensible; the Fortinet of Varonis; Telos; Beggar; and CyberArk.
Will the Fed raise rates further?
Yes, say bond investors – but maybe only a 0.25% rise in March, instead of the expected 0.50% rise that has been predicted.
“More Fed Governors will speak [Friday]and we may see the central bank raise rates by 0.25% instead of 0.50%,” said Patricia Healey, senior vice president of research and portfolio manager at Cumberland Advisors.
As for Russian bonds, “we are getting notifications from custodians and at least one of them has said that ‘these securities are restricted’ and that they are all Russian bonds. Thus, some institutions rate the value of their Russian bonds.
Perth Tolle, founder of the Life + Liberty indices, said the invasion of Ukraine “is just as surprising as a stock market crash or the mortgage crisis. Yes, we saw it unfold a few weeks ago, but we had no idea if it was going to happen.
“In a way, it’s worse, because these events were financial. It’s not related to the financial system at all. It’s the whim of a dictator,” Tolle said. The index she helped create has no allocations to Saudi, Russian, Chinese or Venezuelan companies, and is the underlying benchmark for FRDM, the Freedom 100 Emerging Markets ETF.
“We solve the problem of concentration of autocracy in emerging market indices by using what is called a freedom-weighted approach, for investors who need to invest money in emerging markets,” Tolle said. The strategy uses parameters of human and economic freedom as primary factors in the investment selection process.
“Freer emerging markets are like better institutions. When something like this happens, we see a flight to gold and Swiss francs, to US dollars and Treasuries, and to emerging markets which are freer than Russia and China.
Traders work on the floor of the New York Stock Exchange at the opening bell on January 25, 2022.