The Market Impact of Wars
Since Russia’s invasion of Ukraine last week, the US stock market has actually gone up. Some people have asked me why that is. It turns out, it’s not that unusual.
As horrific as the events unfolding in Ukraine are—and as inspiring as Ukraine’s and other countries’ response—the markets have apparently turned a blind eye towards the war overseas.
Looking back at 22 (non-financial) geopolitical shocks going back to Pearl Harbor in 1941, the US stock market has proven volatile in the short term but no less dismissive for the long-term throughout the better part of the last century.
The total market downturn after these events before bottoming out and recovering averaged just 4.8%. It took an average of 19.7 days to hit the bottom and 43.2 days to completely recover.
Even the US entry into World War II, the worst geopolitical market shock in the last century, took the stock market just a year and a half to recover from: 143 days to hit rock bottom and another 307 days to fully recover.
These events can and certainly have had much more dramatic effects on more vulnerable countries and economies in the past. We may just be seeing the start of continued aggression overseas, but it’s important to remember the market’s resilience and avoid drawing a straight line from global news to performance in the market.
All that said, if you’re invested in a diversified portfolio built for the long term, I urge you to stay the course and tune out the noise. This too shall pass!
Do you have questions about your portfolio amidst these unsettling global events? Reach out to me at Ben@coveplanning.com or schedule a free consultation call.
Sign up for Cove’s Build Your Wealth Newsletter to stay informed with the latest personal finance insights!
Ben Smith is a fee-only financial advisor and CERTIFIED FINANCIAL PLANNER™ (CFP®) Professional with offices in Milwaukee, WI, Evanston, IL and Minneapolis, MN, serving clients virtually across the country. Cove Financial Planning provides comprehensive financial planning and investment management services to individuals and families, regardless of location, with a focus on Socially Responsible Investing (SRI).
Ben acts as a fiduciary for his clients. He does not sell financial products or take commissions. Simply put, he sits on your side of the table and always works in your best interest. Learn more how we can help you Do Well While Doing Good!
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Ben Smith, and all rights are reserved. Read the full Disclaimer.