Ukraine…

The invasion of Ukraine is, above all, a humanitarian and political disaster. From an investment perspective, however, we expect the economic impact to be relatively muted.

Over the past 115 years, there have been 54 crisis events that led to an average market decline of 7.1% in the Dow. Historically, the market has taken about six months to recover. For example, in 2014 — when Russia annexed Crimea and parts of Ukraine — the stock market still ended the year in positive territory.

This current invasion will clearly damage the economies of Ukraine and Russia. However, Ukraine accounts for just 0.2% of global GDP, and Russia accounts for about 2.0%. Furthermore, many of Russia’s essential exports to the global economy are not currently being sanctioned. As a result, the direct impact on the U.S. economy is expected to be limited. Europe may feel more economic strain, but appears willing to absorb it in the name of long-term stability.

The S&P 500 had already entered a correction by the time the invasion began, falling more than 10% between January and February 2022. This was largely expected. After an above-average performance in 2021, many anticipated a pullback. While it’s difficult to separate how much of the decline was due to geopolitical tensions versus normal market behavior, both were likely at play.

It may feel counterintuitive that markets remain relatively unaffected by geopolitical crises, but this resilience often helps keep such events from escalating into broader global conflicts.

Our portfolios are designed to weather these periods. We invest in safe, high-quality, value-driven growth stocks. Declines like these tend to prompt emotional selling—which can create excellent long-term buying opportunities. We cannot predict short-term market moves. But history — and extensive data — support a long-term positive trend.

Katz Family Financial