Financial professionals were surprisingly unruffled today as Russian President Vladimir Putin set off an invasion of Ukraine—focusing instead on the longer-term picture for markets, interest rates and the post-Covid economy.

Interviewed advisors viewed market disruptions as short-term and reactionary, as the immediate reaction to the European crisis included a wild swing in equity prices and a surge in oil prices. Cryptocurrencies also cratered, while gold was on the upswing as investors fled to safe havens.

Investors and advdisors “should seek to avoid getting caught up in dramatic events as they unfold. It rarely leads to wise decisions,” Jeff Kleintop, managing director and chief global investment strategist at Schwab, said in a morning blog.

“Markets have already reacted to the threat of a Russian invasion of Ukraine in a textbook manner akin to prior similar events," he said. "Today they are further reacting to the potential for spillover effects as financial conditions tighten and inflation pressures increase….but a wider war involving NATO or the U.S. is highly unlikely, with all major powers making it clear this isn’t in the cards."

Advisors interviewed by Financial Advisor agreed and were already looking for buying opportunities.

“I think we’re close to a bottom. Markets have been sliding the last few weeks over fears of an invasion and now it’s come. Markets like certainty and they just found it,” said Matt Bacon of Carmichael Hill & Associates in Gaithersburg, Md. “This is an event to buy, in my opinion. It’s not an event to sell and rebalance on.”

That doesn’t mean that Bacon isn’t focused on specific sector performance. “Russia’s economy is about the size of Italy’s and Ukraine’s economy is about the size of Morocco’s," he said. "A war between these countries won’t derail global GDP. No major U.S. corporation is so dependent on Russia that the sanctions that are coming will completely derail them."

Major oil company stocks are rallying today, the wealth manager acknowledged, and “oil and gas will go higher, but they’re most at risk. Some have decently sized operations in Russia and they could lose out on sanctions.”
 
Meanwhile, Bacon noted that chipmakers will see a hit since much of the world’s palladium supply comes out of Russia and neon comes from Ukraine. “But they’ll rework their supply lines. They’ll be OK,” he said.

Scott Bishop, executive director at Avidian Wealth Solutions in Houston, is also looking for buying opportunities.

To quell client fears, he is sharing charts with clients that depict how quickly the stock market recovered to the past six wars, starting with the U.S. war in Vietnam in 1964.

In all but the Afghanistan War, the stock market went on to new highs within two years of dramatic military invasions.

The message is they shouldn’t “react to any market correction. The message is, don’t just sell on fear. At least consider history as a guide,” Bishop said.

Bishop also shows clients a chart depicting all of the “sell” events between 2009 and 2021, including flash . Since 2009, the stock market has consistently returned an average 15.83% per year, not performance most investors would want to miss out on.

“I believe this will be more of a rebalancing opportunity or a good time to start deploying cash for those that missed the Covid rebound. I am further waiting to see if the Federal Reserve slows their rate hikes to avoid an over-reaction at this time that could cause a recession,” Bishop said.

Leon LaBrecque, executive vice president and head of planning strategy at Sequoia Financial Group in Troy, Mich. said the invasion is already accelerating his firm’s shift from growth to value stocks and from large- to small-cap U.S equities.

The advisor said he has already started rebalancing. "In our equity portfolios, we have been bringing our holdings into our target ranges but mostly on sells. This has paid off so far.”

Aside from the defense and energy stocks, “small caps are winners in non-domestic conflicts and are pretty solid in inflationary times. We like the U.S. small cap space. In volatile markets like this, direct indexing really shines and provides tax alpha,” LaBrecque said.

Clients are “well-versed” in Sequoia’s investment style, added LaBrecque, who said that he hasn’t had a single client call to ask “should we get out of the market,’’ but has fielded a few investor inquiries about China’s possible aggression in the wake of the Ukrainian invasion and what the war in Eastern Europe will mean for oil and inflation.

George Gagliardi, a financial advisor with Coromandel Wealth Management in Lexington, Mass., said he was concerned with market valuations last year, before Russia started moving troops to the Ukraine boarder.

“Inflation and interest rates added to my concerns. Ukraine is clearly a shock to the system, much as Covid and Brexit were back when they hit and, like them, I think that the markets will adjust to the disruptions over time—sadly for Ukraine, which won't adjust to their disruptions quite as readily,” Gagliardi said.