When it rains it pours – a fitting analogy to describe the onslaught of headlines that have roiled global equity markets to start the year. From sticky inflation and rising commodity prices fueling market speculation about central bank response, to pandemic aided policy tailwinds starting to show their age in corporate earnings results, to growing unrest in our nation’s capital and now escalating geopolitical tensions overseas. The culmination of these issues has done well to elevate uncertainty and drive investor sentiment to lows not seen since the beginning of the pandemic.
At times like these, we are reminded that while history doesn't repeat itself, it often rhymes:
“In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
- Warren Buffet
This perspective frequently serves as a healthy reminder to investors that it is important to stay focused on longer-term outcomes - to distinguish the signal from the noise. However, this is easier said than done when faced with the prospects of war and both social and traditional media weighing in on every small detail in real-time. Looking at the current situation in Ukraine, we expect that the risks associated with Russia's attempted annexation of breakaway states — assuming it doesn’t escalate beyond a regional conflict — to remain relatively contained for developed markets. We build this view on recent history (the annexation of Crimea by Russia in 2014) and the longer-term history of geopolitical conflicts and their impact on markets:
The messaging here is that on average, declines are shallow and short-term in nature. As illustrated (below) by research group Fundstrat, the uncertainty created before an actual invasion is responsible for most market downside; with recoveries taking hold just before an invasion occurs:
Is it possible we're close to this inflection point today? Absent further escalation, we most certainly could be (and we surely hope so). The fact is no one can be sure. For that reason, we remain vigilant in evaluating all new information as it presents to determine its impact on the long-term outlook of our portfolio companies and strategic allocations.
Sudden market drops can be a frightening event for many investors. Maintaining focus in the midst of market turbulence can help avoid making hasty decisions that could derail your long-term plans. If you have concerns about these recent events, we will be happy to set aside time for a more detailed discussion about these issues.
Being widowed and an executor
When drafting their wills, many people select their spouse or common-law partner to be a primary executor (or liquidator, in Quebec), which makes the widowed individual legally responsible for settling an estate. Being recently widowed is hard enough. However, making important decisions amid your grief is harder.
Here is a helpful guide outlining many of the duties required of a widowed individual who is also tasked with being an executor to their partner's estate. Each estate will unfold in its own unique time and way. Keep in mind the sequence of tasks is not critical, nor are all tasks applicable in every estate. Moreover, the estate's size and nature may require the executor to complete additional tasks.
Diversion: On a more optimistic note