Russia/Ukraine - What about my investments?

I have a lot of emotions related to what is happening in Ukraine right now… A lot! I have political beliefs, religious beliefs, social beliefs, and moral beliefs that all have to be acknowledged. They are real, they are not going away. Whenever there is a situation in your life that brings all of that to you at the very same time, you have to be so cautious! Decisions that are made now about investments can be to the detriment to your financial security and your ability to reach your goals. Do not move in and out of the market at inflection points in your life/the world. Do not make decisions based on emotion. Do not make decisions before you have enough information to know what the right decisions may be. 

This has been brewing for a while. There has been a lot of speculation about how it will affect markets. There has been a lot of speculation about how it affects politics, the world, your family. I have my own ideas about what it will look like, but those ideas can only be true if everything goes exactly as I imagine. That won’t happen. Do you know why Warren Buffett offers a million dollars every year for a perfect March Madness bracket? Because it’s fun, and it will never cost him a dime. Nothing ever turns out exactly the way that anyone predicts. The media, economists, defense experts, they all have educated guesses. The thing to remember is that they are all still guesses. No one knows what will happen. No one knows what all the players will do, or how they will act. Do not let the talking heads speak for you! Be patient about everything that you hear, observe, and make thoughtful choices.  

There will be opportunities in the stock market to make money. There always is when there is uncertainty. There will be a lot of volatility, and some pops in specific companies because of speculation. It is not a bad strategy, for some of your money, to sit down and think about what kinds of companies may benefit or struggle because of  what’s going on right now. I’m thinking commodities, energy, and defense on the upside. Travel, Europe and Russia on the downside. You get the idea. If you want to play that game, properly research the companies. Make sure they fit into your portfolio, and don’t overweight yourself in any one area. Get help from a professional if you need it. If you don’t know what your weighting should be in a company or sector, you absolutely need help from a professional. This is the type of market that will humble a lot of people who have started day trading in the last five years. You will see a lot of unexpected things happen. If your long term goals/cash flow don’t have room for this speculation, (i.e. if you took losses in all of your choices.) don’t do this. 

Having said all of that, my real recommendation is to stick closely to the guidelines in your financial plan. Things like this are going to happen in the world. There is no way to stop them from happening. There is no way to control everything in your life to always have things going your way. There are going to be ups and downs. There will be HUGE bumps in the road. There will be political, global, economic, and family crises everyday somewhere. They will happen to people you know, people you don’t know, and also to you. We can’t stop bad things from happening, so we have to decide what we are going to do when they do. Our financial plan is the roadmap to keep us on track when our emotions want to take over. The financial plan that you have has to account for volatility. It has to account for the worst case scenario. If it can’t meet the challenges of a worst case scenario, then it can provide the steps we need to take to meet those challenges. We can’t account for everything that will happen in a person’s life in a financial plan, but we can plan to make adjustments that still keep us on track. 

I would encourage caution in several scenarios that you may find yourself in, in times of uncertainty. 

1. If you have multiple financial advisors, stop that. Find someone that you actually like, trust and want to work with. Your financial plan can’t be good if someone doesn’t have all the info. You won’t be able to quickly adjust when things change.

2. If you are managing your own investments make sure you understand all of them, and that you really know how to research them to insure they are worth having. If you have been successful recently, so has everyone else. We are in a period where volatility will punish a lot of people. You need to be able to evaluate if a slump is temporary, or if the company will never recover.

3. Buy and hold is not the same as set and forget. Buy and hold is a real and great strategy if the investments are truly right for you. If you have an advisor that doesn’t explain why they aren’t making changes to your portfolio don’t stay with that advisor. If you need reassurance that is fine, but if you don’t understand your investing thesis that’s a problem. If your advisor hasn’t created a financial plan for you, or you don’t understand all of your investments, get a new advisor!

4. DO NOT move all of your money to cash. If you feel like you need to do that, get a new advisor, you don’t trust the one that you have. If you are managing your own money and feel like you need to move to cash, get a financial advisor/planner. You need help to manage your emotions. When you move to cash you sustain losses, it is very difficult to recover on your goals when that happens. 

I feel like this is a difficult time in history. We are facing a pandemic, supply change problems, political divisiveness, inflation, a housing boom. Another layer has just been added. It can all feel overwhelming. It can all feel a little hopeless. We can’t control what happens around us, only how we react to it. I suggest taking proactive steps in the areas of your life that you can control. Believe it or not, your finances is absolutely one of those areas. Now is the time to get your finances in order to better weather the storms. Schedule an appointment if you need help to do that.