Ukraine and Russia
Like all of you, we have been disturbed to see the events unfolding in Europe. We are hoping and praying for peace.
Given what's happening during this current crisis, it is understandable to wonder what the impact will be on investment strategy as well as global economics. Please understand that we are not minimizing in any way the human cost of this horrible situation. Instead, we hope to provide you some insight as to what we believe will be the resulting impact of this conflict.
- Oil prices will remain high and may spike higher if Russia decides to retaliate and cut off supplies to Europe.
- Equity markets will continue to be volatile based on day-to-day headlines and an overall assessment of the current path of this war.
- Oil price increases will spur additional inflation, but we do not expect oil prices to remain high for a significant period of time.
- The Federal Reserve will attempt to walk a fine line as it relates to inflation and the global economy.
- We believe there will be an impact on the Fed's decision-making process and cause them to hesitate to raise interest rates aggressively given current uncertainties.
- Inflation will likely continue throughout the summer and fall with any hope of moderation coming in the fourth quarter of this year when the economy is fully reopen.
- Companies that have benefited from a closed economy will continue to be under pressure as life moves more towards normalcy.
- The technology equity asset selloff and volatility will likely continue throughout the summer as investors try to determine what the real value of these assets are.
- Dividend assets will continue to be an important part of many investment strategies as they provide some stability in times of significant market fluctuation.
- Intermediate and long-term thinking is important in these types of market downdrafts; it's important not to get trapped into a sense of complacency or a full belief that opportunities exist without seeing more detail on how current events will affect the financial condition of investable assets.
DWM Portfolio Positioning
As a response to today’s uncertain environment, DWM continues to invest portfolios towards capturing as much profit as possible while limiting risk profiles for portfolio strategies.
- WE HAVE NOT AND WILL NOT BE INVESTING IN RUSSIAN SECURITIES. Additionally, we continue to underweight international positions relative to standard allocation models. (Note some ETF/fund positions may hold minor amounts of Russian assets. We are monitoring these positions for any change in weightings).
- Focus on assets that have clear long-term goals for profitability.
- Lean towards dividend assets and positions that generate high cash flow.
- Lower durations than the aggregate bond average to reduce interest-rate risk.
- Diversified fixed income strategies in case of economic challenges related to global geo-politics.
- Positioning select assets towards future technologies to capture changes in market opportunities.
- Rebalancing of portfolios to avoid overweighting any one position, sector, or asset.
- Taking profit on names that have grown in value to reposition towards more discounted assets.
- Invest in assets that may not have appreciated significantly to lower average share prices.
- Remain flexible as conditions change to adapt portfolios to short-term as well as long-term expectations.
As you know, we are a firm that does consider volatility when we make investment judgments. Your planning goals and what you are trying to achieve for the long-term matter to us; we keep this in mind as we research and invest in portfolio strategies. We will continue on the path that we are on and feel confident that the portfolios we have constructed make sense for today's uncertain environment.
As you consider current volatility and your personal feelings about the market environment, we are open to discussions if you wish to be more conservative or if you wish to be more aggressive. Each person's situation is different. We're ready to have dialogue with you about how you may like to adjust your strategy.
If you did not have a chance to attend our most recent webinar: 2022: Tax Considerations with Geoff Cable, MS, CFP®, Managing Director & Senior Executive Partner at DWM we have provided the link below. Hope you will find it useful.
Destination Wealth Management constructs portfolios and investment objectives based on asset allocation principles coupled with tactical adjustments. The firm employs research analysts with relevant and diverse experience to conduct asset and economic research. DWM allocation philosophy will adjust based on market conditions and economic environment. Allocations are not static and will adjust as needed. These strategies may not be suitable for all investors. For additional information and disclosures, please refer to Adviser’s Form ADV Part 2A.