The current Russian invasion of Ukraine will create a great deal of uncertainty and speculation. We can expect there to be ripple effects through the energy markets, investment markets, and possibly the European economy to a limited degree. At present, this remains a regional conflict whose global impact is likely to remain limited.
The current bout of price volatility in the financial markets reminds us of March 2020 during the onset of OVID where we saw the market averages decline 30-35% in a matter of weeks. Although the current environment is not nearly close to that experience percentage wise, it can still be quite unsettling during the short term.
2021 Year End Thoughts
It is becoming more evident each month that our world may never be the same as it was a mere two years ago. The arrival of the COVID 19 virus and its mutation into the Delta virus and most recently Omicron seem to take us back one step for each that we’ve moved forward. Although science and the pharmaceutical companies will most likely provide vaccine protocols to eventually reduce the danger of this virus to flu-like statistics, the way many of us work and live has changed forever. Stay at home schooling, working from home, restricted traveling and entertainment all have taken their toll on us as social human beings. On the other hand, the popularity of Zoom meetings online as well as online education courses have allowed us more free time in our daily lives to pursue other interests and family time.
A Change in Sentiment?
Recent market trading may be signaling a change in investor sentiment. Retail investors have been buying individual stocks lately at a record pace. The lack of sports, concerts, and other activities due to the virus lockdowns have left plenty bored and looking for something to do. The stock trading fee wars have produced multiple trading firms that allow trades as little as $20 with little or no fees. This has led to an astounding number of people using their government stimulus checks to buy stocks as if they were in a casino hoping for big hits.
May 1, 2020 Lesjak Planning Perspective
Since our last communication in March which touched on the potential impact of positive news on equity markets, the U.S. financial markets have staged a dramatic recovery coinciding with the gradual positive developments on the coronavirus and economic fronts. Although there is still a considerable amount of ground to make up to reach the previous market highs of February, tremendous progress has been made since the March lows. During our forty years in business, we have never witnessed a period of extreme volatility such as this. The following chart and accompanying statistics put the decline and ensuing recovery into perspective.
Year End Thoughts
Economic decline caused by lockdowns due to the Covid-19 virus is being confronted on a number of fronts. Congress has recently agreed on another stimulus bill that will help individuals and businesses to the tune of $900 billion.
The Federal Reserve is also optimistic and in a recent meeting said that the economy has potential for strong growth in the latter part of 2021. The Fed left interest rates unchanged at their current low rates and stated it remains committed to doing whatever it can to ensure a strong recovery.