When markets are volatile, it is only natural to worry about the impact the volatility will have on your investment portfolios. Individuals should not react!
The Russian invasion of Ukraine likely won’t tip the world economy into a recession. The short term effects on a range of commodities will boost Canadian companies, equities and the loonie according to a report by National Bank Financial. In this report, the firm pointed out that most of Russia’s top exports including energy, agricultural products and minerals are also major export categories for Canada.
With increased sanctions and other economic measures in response to Russian aggression, the global prices for many of the commodities such as oil, gas, green energy, wheat, platinum, potash, nickel and pipeline companies will soar! Customers will have to look beyond Russia to purchase these commodities and Canada is well positioned to meet some of these needs. Higher commodity prices will boost Canadian trade, fuel corporate income and government revenues.
Make no mistake, Canadians are shocked, saddened and angered by the Russian actions. Despite the unfolding tragedy, there are significant near term implications to support Canadian trade, equities, currency and credit markets.
Investment Managers follow tried and tested investment policies to put their portfolios in the best position to brace for a market correction. Keep your eye on the long term! Stay diversified. Avoid the temptation to move out of the markets as market corrections can force individual investors to make rash decisions. Impulsiveness and fear are no basis for sound financial advice. In fact, they hinder the reaching of long-term financial objectives more so than actual market volatility.
Market blips caused by world events such as Brexit, the terrorist attack on the United States on September 11, 2001 or September 29, 2008 when the United States bailout plan failed and global panic caused the S&P 500 Index to drop approximately 30% in a short time are all examples of market declines which did recover and return to previous levels.
A balanced portfolio will help to neutralize the ups and downs in the markets. Market volatility is a part of history and is tracked over the last 65 years. Investors who hold on and have balanced portfolios that match their investment goals and time horizon are often less stressed and are less impacted by geopolitical and financial events.
No advisor has a crystal ball to predict the future. Make sure your investments have been reviewed at least annually to help ensure that your future income, healthcare needs and investments can stand the tests of time and future financial “blips”!