We all have concerns regarding geopolitical events that worry us from time to time. The fact is, our world has always had these types of events and will continue to have them in the future. The question is, “How do these events affect our investments in the stock market?” Paul Dietrich, of LPL recently came out with a very interesting research piece showing geopolitical events over the past 80 years and how they have impacted the stock market. In essence, the markets in their perverted ways tend to look beyond these events in fairly short order. In other words, there may be some additional pain, but it’s usually quick … and the markets move onto longer term risk/reward factors. The chart below shows the geopolitical events and tracks the performance of the S&P 500. It shows the one day move, total draw down, percentage drawdown, days at the bottom and the number of days to recover.
The bottom lines to the averages above reveal a lot during these geopolitical events. We will see if today’s events fall in line with history. Don’t let the geopolitical events distract you from the real elephant in the room, which in my opinion is inflation. Inflation is a tax on everyone regardless of your economic status. This is why you are invested in commodities, energy, healthcare and the financial sector, with the bulk of our portfolios invested in cash, bonds and treasuries. We want you to know we are watching your money very closely and we will go wherever the economy is telling us there is money to be made. History has shown that markets recover quickly from geopolitical events. We should stay patient and realize we are invested for the long haul. Currently the cost of living is running at 7.5%. The market remains one of the few hopes we have to keep pace with inflation. I don’t think you will find a bank paying 7.5% on any of their products. Let us know if you need help navigating through these challenging times.