We’ve all been keeping an eye on the events happening in Ukraine and many people have been asking us what it might mean to the economy in the near term and the long term. Today we’ll share an article we came across recently that looked at some of the biggest news events over the past few decades and how markets reached right after.
(Click the featured times below to jump forward in the episode)
The past couple of years have been busy from a news standpoint and 2022 isn’t taking any time off. It feels like there’s a major news event every month, and the latest story is unfolding in Ukraine and it’s no surprise that a ripple effect is being felt all across the world.
How worried should you be about the impact it will have to global and domestic markets? That’s a question we’re hearing from clients as they try to get a better understanding of what might happen in the short and long term. We’ve already seen so much up and down over the past two years that it’s natural to be worried.
But Is it logical to think that a war in Ukraine will keep our stock market down? Not necessarily. We found this article on ThinkAdvisor.com that looked at 11 major global events of the past few decades, and found that the trends are very similar. We typically see a quick pullback and then a recovery in most cases.
The article points out that drawdowns in the stock market average about 5% with a recovery happening in less than two months. Larger conflicts can cause a deeper dip and longer recovery, but it’s very interesting to look back through history to see these similarities.
Dan will share his thoughts as well on the podcast, but this goes to show you that it’s critical that investors don’t react to news by selling when the market drops. It might end up costing you much more over time and those losses might take years to recover from if you don’t stay invested.
Listen to the entire episode or click on the timestamps below to hop around to different topics.
[0:33] – Background on the article
[3:24] – Events of the 1980s and 1990s
[6:58] – Events of the 2000s
[8:20] – Market reactions
[10:35] – How will this affect you?
[11:52] – Question on Social Security
The Full Picture:
“News events such as this will typically trigger a reaction from the markets if they’re fully unexpected.”
– Dan Cuprill
Click the image to get a free retirement rescue toolkit.