Skip to content
Laird Norton Wealth Management
  • Services
          • Wealth Planning
            • Business Owner
            • Equity Compensation
            • Estate Strategies
            • Philanthropic Giving
            • Tax Strategies
          • Investment Management
            • Tax-Aware Investing
            • Risk Management
            • Alternatives & Private Market
            • Impact Investing
          • Trust Services
            • Beneficiary Services
            • Family Legacy
            • Trust Administration
            • Trust Benefits
            • Understanding Trusts
          • NonProfit Clients
            • Request RFP Participation
  • About
          • About LNWM
            • Fiduciary Financial Advisor
            • How We Help
            • Our Team
            • Corporate Social Responsibility
            • Careers
            • Community
            • Board of Directors
            • FAQs
        • two people in a kayak on water
  • Insights
        • Blog

          Top-of-mind at LNWM and elsewhere.

          Papers

          Expert insights and analysis.

          Videos

          See what we're up to.

          Media

          Our published work and media coverage.

  • Contact
Search Icon
Client Login
mobile-login

Home » Insights » Investment Management » Initial Thoughts on the Ukrainian Conflict

Initial Thoughts on the Ukrainian Conflict

Ron Albahary | Investment Management | February 25, 2022 (February 25, 2022)

Excerpted from an email sent to LNWM clients by CIO Ron Albahary, CFA® on Feb. 24, 2022:
—————————————————————————————————–
While this note will focus on your portfolios, let me start out by saying our hearts and our thoughts go out to the people of Ukraine today. We hope this is a very short-lived conflict and peace returns to the European continent as quickly as possible.

Given the escalation in the Russia-Ukraine conflict last night and the negative subsequent reaction from investors, we wanted to provide you with a communication framing the situation. Russia has moved aggressively as it seeks to reduce NATO’s presence in eastern Europe and increase its own dominance in the region. Russia’s bombardment of military installations throughout Ukraine coupled with cyberattacks have increased the prospects that Putin’s ultimate aim is to shift the balance of power in Europe to what prevailed during the Cold War. In response, Western powers are formulating additional economic and financial sanctions against Russia. While extensive, these sanctions are not likely to impact the global economy in a material way.

The greater risk, if the conflict continues to escalate, is ongoing disruption to energy, food and the overall global supply chain, which is already fractured due to the global pandemic. This risk, if it plays out, has the potential to exacerbate inflationary pressures and challenge global growth. From a more positive perspective, threats to global growth tend to create a flight to safety (i.e. high-quality bonds) thereby lowering yields and can cause the world’s central banks to defer their current bias toward increasing interest rates and curtailing economic stimulus.

As wealth planners and long-term investors over many decades, we have shepherded clients through a variety of shocks to the capital markets — wars, a credit crisis, a pandemic, just to name a few. We draw on all that experience as well as market history to provide context when downside volatility fuels investors’ emotional and cognitive biases. While each conflict is different, and this one has the potential to change the complexion of Europe, geopolitical market shocks since the 1960s have tended to be short-lived.

Market Performance in Context
Recent market weakness, while rapid, should be put into perspective. It is fair to say the wind was at our backs for the past three years, with cumulative returns of 100% for US large-cap equities and 75% for global equities (through 2021).

As I am writing this, the S&P 500 is down roughly 11% from its 52-week high, putting it back to where it was in June 2021. Consider that since World War II, the S&P 500 has experienced 28 corrections (drops of 10% or more from recent high), usually one every two years with an average decline of 13%. The average performance one year later: 9.3%. (Source: Dow Jones Market Data).
Other major US indexes have performed worse recently, but still in keeping with their historical averages.

Interestingly, foreign equities outside of Europe have performed relatively well, reaffirming the value of diversification. Emerging market equities are down 6.5% so far in 2022, while global stocks are down around 10%.

What Now
No one can predict how this conflict will evolve. In the meantime, we believe the greatest risk to achieving your goals is not downside market volatility; it’s making a suboptimal, emotionally driven investment decision. Please keep in mind these things:

Adherence to your wealth plan and the strategic allocations in your Investment Policy Statement is key. These are the components of your personal “business plan” and were built for these moments; they provide you and us with a long-term, unemotional investment blueprint for achieving your goals. If you have excess cash and/or are underweight equities, and can tolerate drawdown risk, speak to your LNWM advisor about starting to incrementally dollar-cost-average into this sell-off.

Diversification is a risk mitigator. We have infused LNWM portfolios with exposures designed to provide stability in risk-off times like these. This includes core fixed income, an allocation that has been questioned by many during the strong stock market of the past three years but is serving its purpose as equity markets decline. We construct portfolios very thoughtfully with each exposure expected to play a distinct role in diversifying the types and level of risk being taken as well as the opportunities they are targeting.

Good portfolio performance over the long run is based on occasionally experiencing losses in the short run. We don’t know how deep or how long the current sell-off will last – we cannot possibly know. We do know that sticking with a disciplined approach to investing (and not allowing downside market volatility drive bad decisions) works.

There are likely to be more opportunities developing, even as investor psychology acknowledges an elevated level of uncertainty. As we sort through the confusion brought on by recent events, we feel confident in our approach to risk management, the universe of opportunities resident in portfolios and new ones we are exploring.

Russia’s attack on Ukraine is an evolving situation—one the entire world is trying to assess in terms of the short-term and long-term implications for the global balance of power and the global economy. Our 13-person investment team is engaging with our asset managers from around the world tapping into their expertise and access to information to glean insights on a real time basis. As events unfold, we will continue to update you.

  • Share:

Ron Albahary

Ron Albahary, CFA® is Chief Investment Officer at Laird Norton Wealth Management. A 30-year veteran of the wealth and investment management industry, Ron heads LNWM’s Investment Strategy and Research Group, determines the firm’s investment strategy, and works in tandem with LNWM’s client services teams to deliver investment solutions to meet each client’s unique needs.

Sign Up For Monthly Economic Flash

Find out how all major financial markets are performing and why.

Site Logo in footer footer logo
facebook Twitter Opens a news tab Linkedin Opens a news tab Youtube Opens a news tab

About

  • Board of Directors
  • Careers
  • Community
  • Contact
  • FAQs
  • Our Team
  • Sign up for Navigator

Services

  • Investment Management
  • Sustainable Investing
  • Tax Strategies
  • Trust Services
  • Understanding Trusts
  • Wealth Planning

Address

  • Laird Norton Wealth Management 801 Second Avenue, Suite 1600 Seattle, WA 98104 United States
  • 206.464.5100
  • 800.426.5105
© 2023 Laird Norton Wealth Management. All rights reserved.
Form CRSOpen PDF in a new tab Legal Terms and Conditions Privacy Policy
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to customize your settings.
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesThis cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
bcookie2 yearsLinkedIn sets this cookie from LinkedIn share buttons and ad tags to recognize browser ID.
bscookie2 yearsLinkedIn sets this cookie to store performed actions on the website.
langsessionLinkedIn sets this cookie to remember a user's language setting.
lidc1 dayLinkedIn sets the lidc cookie to facilitate data center selection.
UserMatchHistory1 monthLinkedIn sets this cookie for LinkedIn Ads ID syncing.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
CookieDurationDescription
_uetsid1 dayBing Ads sets this cookie to engage with a user that has previously visited the website.
_uetvid1 year 24 daysBing Ads sets this cookie to engage with a user that has previously visited the website.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gcl_au3 monthsProvided by Google Tag Manager to experiment advertisement efficiency of websites using their services.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
_hjAbsoluteSessionInProgress30 minutesHotjar sets this cookie to detect the first pageview session of a user. This is a True/False flag set by the cookie.
_hjFirstSeen30 minutesHotjar sets this cookie to identify a new user’s first session. It stores a true/false value, indicating whether it was the first time Hotjar saw this user.
_hjIncludedInPageviewSample2 minutesHotjar sets this cookie to know whether a user is included in the data sampling defined by the site's pageview limit.
_hjIncludedInSessionSample2 minutesHotjar sets this cookie to know whether a user is included in the data sampling defined by the site's daily session limit.
_hjTLDTestsessionTo determine the most generic cookie path that has to be used instead of the page hostname, Hotjar sets the _hjTLDTest cookie to store different URL substring alternatives until it fails.
_omappvp11 yearsThe _omappvp cookie is set to distinguish new and returning users and is used in conjunction with _omappvs cookie.
_omappvs20 minutesThe _omappvs cookie, used in conjunction with the _omappvp cookies, is used to determine if the visitor has visited the website before, or if it is a new visitor.
calltrk_session_id1 yearThis cookie is set by the Provider CallRail. This cookie is used for storing an unique identifier for a user browser session. It is used for tracking the number of phone calls generate from the website.
vuid2 yearsVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
_fbp3 monthsThis cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
_mkto_trk2 yearsThis cookie, provided by Marketo, has information (such as a unique user ID) that is used to track the user's site usage. The cookies set by Marketo are readable only by Marketo.
fr3 monthsFacebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
MUID1 year 24 daysBing sets this cookie to recognize unique web browsers visiting Microsoft sites. This cookie is used for advertising, site analytics, and other operations.
test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
_ce.gtldsessionNo description
_dc_gtm_UA-41670453-11 minuteNo description
_hjSession_275188330 minutesNo description
_hjSessionUser_27518831 yearNo description
AnalyticsSyncHistory1 monthNo description
BIGipServerab10web-nginx-app_httpssessionNo description
BIGipServerab47web-nginx-app_httpssessionNo description
calltrk_landing1 yearThis is a functionality cookie set by the CallRail. This cookie is used to store the landing page URL. It helps to accurately attribute the visitor source when displaying a tracking phone number.
calltrk_nearest_tld9 years 10 months 8 daysNo description
calltrk_referrer1 yearThis is a functionality cookie set by the CallRail. This cookie is used to store the referring URL. It helps to accurately attribute the visitor source when displaying a tracking phone number.
CookieLawInfoConsent1 yearNo description
li_gc2 yearsNo description
SAVE & ACCEPT
Powered by CookieYes Logo