Market Update

A multitude of cross currents have challenged financial markets and the global economy. Persistent high inflation, intensified by energy price shocks from the European conflict, triggered a shift in monetary policy, showing a willingness to use aggressive measures to tame inflation. This higher inflation and tighter financial conditions have weighed on consumer and business confidence.

Tensions between Ukraine and Russia had been bubbling to the surface for some time, but in late February they took a meaningful turn with Russia embarking on an invasion of its neighbor that is broader in scope than expected. First and foremost, our thoughts are with any clients, family, and friends who may be impacted by developments in the region. While we have a responsibility to focus on the financial impacts of such a crisis, it is important to recognize the human toll these conflicts can have.

Global financial markets have responded in a somewhat expected and orderly fashion. Volatility has increased and global equities have sold off. For the time being we are likely to remain in a period of elevated volatility and markets may remain vulnerable in the near-term. However, history shows that while these geopolitical crises can temporarily roil markets, they don’t typically have long-term consequences for investors. As a result, fund managers are unlikely to shift around portfolio allocations in a meaningful way. They will however remain vigilant, flexible, and continue to take advantage of the stocks currently selling at a discount.

Every investor has a unique set of financial goals. No matter what happens in the markets, these long-term goals probably won’t change. That is, you likely still want to help send your kids to university, buy a home, enjoy a worry-free retirement, or leave behind an inheritance. When you began investing, these underlying goals helped determine the mix of investments in your portfolio and set a long-term financial plan in motion.

Short-term market fluctuations can be stressful. This stress can lead us to make poor investment decisions like moving to cash during a bout of negative market performance, only to miss out on the market recovery shortly thereafter. These sorts of mistakes can ultimately have harmful impacts on our long-term financial goals. That’s why, when markets are bumpy, it is vital to maintain a long-term perspective and avoid behavioural bias when you invest.

As always, we are here to be of service and answer any questions you may have. Please do not hesitate to reach out should you like to discuss further or schedule a review.

Enjoy your family, friends and the upcoming season!

Allison Stone