From the desk of Vance Howard:
Russia has invaded Ukraine and the markets are selling off this morning. Oil is the only thing that is up at this time, which is to be expected. Oil is one of the biggest things that will affect us negatively because gas prices will undoubtedly rise. We are sitting on a lot of cash and short-term T-Bills, but even with 30% plus in cash we are seeing volatility in our accounts.
Over the last five wars, the markets have sold off on the news and stabilized and moved higher after the event, every time. You remember when Russia invaded Ukraine in 2014? Don’t feel bad, I don’t remember it either, and that’s how big of an impact it had on everything. Is there geopolitical risk? Yes, but in my opinion the main risk is how close Russia and China have become. Now that bothers me.
With computerized trading, one must be very careful of being out of the market. Once the algorithms hit a buy signal you could see this market rally 10% in a matter of days.
I have been through markets like this before, and while they are not fun, they do work themselves out. One advantage we have is the fact that we have raised a lot of cash. When the market does turn back – and let me be clear, it will, we just do not know when – there will be some very attractive opportunities that present themselves.
Ask yourself this question, if you bought Apple and Microsoft this morning do you think they will be higher or lower three years from now? Try not to let short-term volatility overshadow a longer-term reality.
Stay positive and let’s spend some time hoping and pulling for the citizens of Ukraine.
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