As the conflict between Russia and Ukraine intensifies, should you hold on to your portfolios? With Russia bearing the brunt of economic sanctions, the markets are permeating volatility.
Investors are now figuring out what this ultimately means for their investments.
Should You Hold On To Your Portfolios, or Should You Shake Them Up A Bit?
In the largest military operation in the area since World War II, Russia placed 190,000 soldiers at Ukraine’s border. Last Thursday, Russian President Vladimir Putin finally gave the go-ahead to invade its neighbor.
Meanwhile, the US, UK, Japan, and others banded together to impose sanctions on Russia. This included cutting off Russian banks from international networks and freezing assets of known Putin associates.
Consequently, the markets initially panicked at the developments. First, stocks plunged, then they rallied. Afterward, they fell again under renewed pressure.
Meanwhile, oil hit $100 a barrel the first it did so since 2014. Russia is the world’s second largest exporter of oil in the world.
Hold On To Your Portfolios…For Now
However, experts are decrying that investors might be panicking too much over the developments. Since Putin ordered his troops to attack Ukraine, many are letting go of riskier assets in favor of safer ones.
This means stocks and cryptocurrencies are out, while gold, treasury bonds, and hard currency are in.
Instead of shifting your investments, experts advise that you should hold on to your portfolios. Lisa Shalett is Morgan Stanley Wealth Management's chief investment officer.
She believes that no matter what happens in Ukraine, the markets won’t quickly go back to business as usual. “I think it's a big deal. And I think it's a risk-off factor in the next few weeks,” she said,
Responding Quickly Is Not A Good Long Term Strategy
Shalett added that Morgan Stanley continues to be cautious towards markets. She said whenever there are crises somewhere in the world, investors tend to react.
“These things tend to make people want to reduce their exposure to the most risky assets,” she added. Shifting from one type of asset to another remains the usual strategy most investors adopt in times of trouble.
Once Russia actually invaded Ukraine, investors ditched riskier assets like stocks and crypto. Instead, they went back to typical safe haven instruments like gold, bonds, and the dollar.
“The situation in Russia-Ukraine is completely fast moving and fluid,” Shalett noted. “People are de-risking portfolios. But that's not something that you can base a portfolio asset allocation or portfolio construction decision around.”
‘You’re Going To Get It Wrong’
Investors should consider the possible duration of the Russia-Ukraine conflict. Shalett said that anything short of a full-blown war is likely short-lived in the context of long-term investing.
This is the exact thing Shalett encourages investors not to react to immediately. “Invariably, you're going to get it wrong,” she added.
Watch the SF LIve video reporting that investors are fleeing Into GOLD & SILVER and not Bitcoin:
Did you shift your assets from high-risk, high reward to safe haven instruments? Or, did you hold on to your portfolios for the time being?
Does it make sense not to overreact to the current global issues and keep your current asset mix intact?
Tell us what you think. Share your comments below.
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