Figuring Out Your Stock Market Risk During Geopolitical Events
How Do Crises Affect Investments?
We are monitoring market conditions closely as geopolitical events unfold.
It is important to remember that when we build risk-appropriate portfolios, we consider all of market history. By using market history as a guide, it allows us to quantify the expected risk and return of portfolios consistent with an investor’s risk profile.
Guidance From Market History & Precedence
History also provides insight into how markets have responded to different historical events.
Similar to 2022, 1990 was a midterm election year. That year, Iraq invaded and occupied Kuwait. An oil price shock ensued where the price of oil nearly doubled in a matter of weeks.
Negative news dominated the headlines, inflation was near 5%, GDP growth was below 2%, and the US was on the verge of launching Operation Desert Storm.
The equity market was wobbly for most of the year. However, despite the headwinds, the market was able to begin a robust relief rally after the midterm election into year-end that ultimately continued and took the market well above all-time highs throughout 1991.
While history does not repeat, it often rhymes.
Protect Your Investments During Turbulent Times
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