Russia’s invasion of Ukraine in February 2022 ignited volatility in global commodity and energy markets that spilled over into broader markets, reminding investors that market risk can strike quickly and dramatically.
This ‘black swan’ event has since been driving uncertainty about longer-term supply disruptions and even concerns about potential nuclear war, complicating challenges for conventional approaches to portfolio allocation and risk management.
Geopolitical Risks Pile On Existing Economic Headwinds
Geopolitical risks can often emerge quickly and unexpectedly. It is imperative investors are prepared for the potentially far-reaching impacts of war in Ukraine, which may exacerbate the existing headwinds for the US economy.
While Russia’s invasion of Ukraine impacts markets, tensions continue to mount between China and Taiwan. Looking out the next several years, strategies that can mitigate market risk while remaining invested for the longer-term growth may help investors navigate challenges both seen and unforeseen.
The Russian invasion of Ukraine has far-reaching and potentially long-lasting ramifications upon the global energy and agricultural commodity markets.
While there was some posturing by Russia for a few months in late 2021, the invasion of Ukraine was not on the radar of most 2022 market outlooks published by market experts. So trying to predict the timing, duration, or final outcome of this, or any crisis, is a fool’s errand. That’s why we’re Always Invested and Always Hedged.
As leaders in hedging and option overlays since 1997, we’ve seen market crises of all shapes and sizes.
The key to navigating markets in crisis is to remain always invested, yet always hedged using an active risk management approach in often rapidly changing environments.
In times of market turmoil, don’t leave the market, hedge it.
PREPARE FOR MEETINGS
“Buy the dip, or get out?” “Is this the bottom?” In a market crisis, investors should be reminded of missteps to avoid when facing uncertain times.
How to help retail investors avoid being caught up in emotion and tweaking portfolios in response to short-term “noise” and recent performance.
Loss aversion is the most powerful yet least addressed investor bias. Learn how to identify, explain, and successfully address it in your practice.
The risks to capital are always present. Define risk and return with portfolio overlays tailored to client objectives.
Global hedged equity can help investors access return potential in global equities, while mitigating risks like COVID-19.
Know the truth about risk. Avoid missteps and assumptions about black swans, bear markets, and portfolio construction.