Geopolitical Tremors

Will Russia invade Ukraine? If so, how might such an invasion play out?

Russia is not a significant trading partner with the U.S. It is a more important trading partner with Europe, especially regarding natural gas and oil imports.

We would probably see sanctions designed to punish Russia for an incursion into Ukraine, but it seems likely that sanctions that create undue pain on the U.S. economy would be avoided.

The questions posed at the top, and more, are difficult to answer with precision.

Outcomes are never certain. But when the range of outcomes increases, short-term investors usually take a more cautious approach, as we’ve seen in recent days.

Investor’s corner

Historically, geopolitical tremors have created short-term volatility. Over the medium and longer term, volatility recedes as the impact on the U.S. economy and corporate profits is usually limited or nonexistent.

What happens in Asia could have a short-term effect on oil prices. Recently, oil prices are up as investors attempt to discount heightened tensions.

Overall, the impact on consumer psychology at home will likely have the biggest impact on the U.S. economy. At this time, a more significant impact seems limited.

That said, investors with a long-term focus and a holistic financial plan have historically better-weathered market turbulence.