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.