The recent Russian invasion of Ukraine may have heightened our awarness of not being in control, and hence here we share our thoughts about what we know, and what might emerge out of this event. I do not mean to beliitle the events here and by no means do I want to panic anybody; indeed, the opposite is true. It is though worth us all pausing to see what we do know, what this might mean and what is likley to happen.
Here then is the TWP Wealth view on this.
The Russian invasion of Ukraine – what we know.
Vladimir Putin’s decision to start a large-scale invasion of Ukraine marks the end of almost 50 years of political understanding that large scale land war is not a political option across Europe’s political landscape. As such, this event will almost certainly mark a major shift of European politics towards Russia, wherever we end up. The West in general has to accept that our dependency on traditional fuels has provided Russia the ability to generate the currency reserves and economic prowess that has emboldened them to attack their neighbour and in so doing accept the risks of potentailly crippling global sanctions that the war on a significant European neighbour brings.
As a consequence, Europe will not only wish to end energy dependency on Russia but also cut them off from further funding for any more territorial expansion aspirations. This narritive has already begun. More importantly, perhaps, Russian aggression will provide European policymakers with the public support necessary to significantly ramp up government debt-financed investment in the energy transition we all know we need. The subtext here is that any support for post-pandemic grants and subsidies will draw to an end, especially in Europe. In fact, if this were to happen this financial impetus of investment in new eneregy infrastructure could have the result of providing a significant catalyst for growth over the next three to five years.
How are the markets?
In an attempt to be objective here, I do not mean to dismiss to diminish the dreadful and harrowing human tragedy that is unfolding; I wish merely to provide some objective commentary that we can base any decision upon. Market uncertainty and a fall in the valuation of stock markets is a state that occurs with some frequency and this can present buying opportunities. It also brings with it some perfectly understandable nervousness. However, it’s worth remembering that we are still in the early stages of this conflict and it’s quite likely that there will be more market volatility over the coming weeks just as we see in any ‘new event’. History is a good teacher.
Markets are not behaving irrationally but there is considerable uncertainty as to how long and how widespread the conflict will be. As responsible guardians of your money, TWP Wealth still take the view that ‘timing the market’ is a high-risk gamble and that ‘time in the market’ is the best way to build long-term investment returns. In that regard, nothing has changed. This logic still holds true. I am not trying to be clever or glib here, but to use history as our guide.
How can I keep up to date on my investments?
While our general advice is to do nothing, this does not address the worry and concern you might have. Therefore, if you have any questions at all about your investment I would urge you to speak with your Financial Planner who are familiar with your personal circumstances and will be best placed to discuss your investments with you. We are most definitely ‘open for business’ on this subject and I can assure you we are taking it very seroiously. Please do not spare a second thought in contacting us.
Thank you.
Mark Shotton
Don’t Forget The Fish – December 2021