For the past two weeks the world has watched as the war in Ukraine has taken center stage. News cycles are covering it constantly and we see reports daily about how it is impacting our daily lives and business operations (some of it obvious, some it not as much). War is horrific and, oftentimes, a means for talking heads to chime in about what you should do with your money while a war is ongoing.
Before you talk with your clients about how the war may impact their investing strategies, it’s important to get the full lay of the land.
War Means Market Disruption
While this war is certainly not the scale of WWII and will have less impact on the economy, it would be foolish to think that this will slip by without some economic anomalies. Oil has already climbed to $110 per barrel, a price that the American public hasn’t seen in almost a decade. Supply chain issues are still ongoing and the uncertainty of the future of Russian airspace has many wondering what will happen to manufacturing.
The largest impact that your clients will likely feel is fluctuation from the European markets. The EU and neighboring states are a massive trade partner with the U.S. and upheaval over there, as refugees pour into foreign countries, most certainly means that there will be fluctuations in their stock exchanges.
Commodities on the Rise
Although it may sound crude to think about silver linings while lives are lost, there is still opportunity inside of armed conflict. Commodities tend to be a safe investment strategy for the short-term. Everything related to agriculture is seeing solid gains due to the disruption of the Ukrainian wheat market and similarly, the pesticide and fertilizer markets, of which Russia is a major producer. If your clients are bullish, recommending a commodities basket should see a decent return, at least in the short-term.
Keeping the Perspective for Clients
In many regards, the COVID-19 pandemic and the associated measures implemented by governments were drastically more disruptive to the market as a whole than what is currently an isolated war in Ukraine. The markets recovered from COVID faster than many people who got sick, and it is fair to expect the same to happen with this conflict.
Hopefully, the massive economic damage from sanctions and private corporations to the Russian economy will put an end to the uncertainty in Eastern Europe sooner than later. In the meantime, you can recommend investments that focus around the U.S. economy and support business here at home while keeping assets safe.
The United States is still the top-producing economy and has a high per-capita GDP. Plenty of people from around the world, Ukrainians included, want to come to live, work, and invest in our country. We’re confident that despite the cage rattling overseas, the United States economy will continue to be efficient over time.