February 24, 2022
By Scott Wohlers
No matter how you say it, the invasion of Ukraine by Russia has long been feared and is now real. Putting aside the human tragedy of this event, investors need to consider the economic implications and assess the risks and opportunities. In fact, markets have been adjusting and anticipating this for weeks. The U.S. stock market has already declined by more than 10 percent. It may decline a little more, but much has already happened.
If you are waiting for someone to ring a bell, it just happened. Can you hear it? The Bull and his partners are rebalancing many accounts to reduce positions that have held up well to purchase more of what has been viciously sold off out of fear. These should rebound the most and quite quickly. This war may be short lived. Our lives here will be minimally affected.
Expected effects have to do with inflation, which will stay higher for longer. Fear of significant economic slowing will force our Federal Reserve to slow their retreat from monetary accommodation. Thus, winners and losers in our markets will depend on how well each can deal with this reality. Growth stocks that have been pummeled may now be well placed to weather this business environment. Look for good rebounds here. Taking advantage of this is what our rebalancing is designed to do. Stay steady, my friends.
El Toro Solo
