Thus far 2022 has been challenging for stocks, with the S&P 500 down about 8% for the year through February. Pressures from inflation and potential tightening by the Fed in the coming months, as well as the ever-worsening Russia/Ukraine crisis, and fears about rising energy prices, acted in concert to weigh on the market.
Geopolitical uncertainty came to an end on February 24, when Russian President Putin launched a “special military action,” otherwise known as an invasion, violating Ukraine’s sovereignty, and triggering the worst crisis in Europe since World War II. While markets tumbled immediately following the invasion, the major indices recovered soon afterwards, most likely because the uncertainty around Putin’s actions had been removed. President Biden, along with European allies, acted quickly to impose harsh sanctions on Russia. Unless Russia ends the conflict quickly, more sanctions will certainly be coming. While Russia’s principal trading partners are Europe and China, the country is one of the world’s top oil producers. Sanctions will have a ripple effect around the world, with oil prices surging and US consumers experiencing higher energy prices and another bump up in inflation. However, keep in mind that Russia is less than 2% of the global economy.
Ongoing upheaval and uncertainty, as well as higher prices and rising interest rates, will continue to put pressure on the market. And we can expect volatility for at least the next few weeks. Still, investors are well advised to sit tight. We’ve seen serious geopolitical and economic crises before. We will see them in the future. But in time, what seemed serious and even terrifying in the moment, becomes just another blip in the long march of history.
Articles of Interest
It’s difficult to maintain a positive outlook when the media inundates us with stories of economic and geopolitical doom and gloom every day. Events like Russia’s war with Ukraine are concerning and have an impact on markets. However, when you take a look back, you can see that the market has recovered from all kinds of challenges.
After a strong year for the value premium, investors are curious about what that means for value performance for this year. Value stocks are expected to perform better than growth stocks everyday, because a lower relative price is associated with a higher expected return.
Over the next twenty-five years, Americans are expected to inherit an astonishing $72.6 trillion. Yes, that is TRILLION with a T. Many of these inheritances will be delivered to beneficiaries of IRAs, 401(k) or other retirement accounts.
While you don’t have much choice when it comes to paying taxes, there are deductions available to reduce the amount you owe Uncle Sam. Deductions shield a portion of your earnings from income tax, and they have become especially important in recent years.
It’s been a long winter. Between the pandemic, record storms, and a punishing — and surprisingly accurate– prediction by Punxsutawney Phil, we are quite ready for spring. Now’s the time to dive headfirst into spring-fresh ingredients for brighter, more sprightly cocktails…
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