How Geopolitical Events Affect the Market

How Geopolitical Events Affect the Market

In light of the current events taking place globally, WPWealth’s team of trusted advisors has compiled several key insights for your consideration that are relative to capital markets and your investments.

A recent article from Reuters detailed 29 different geopolitical crises and the stock market’s response over multiple time frames. Specific events and details can be found by following the link, but a summary of the research can be found below.

  • Positive stock market returns 62% of time 3 months following event
  • Positive stock market returns 69% of time 6 months following event
  • Positive stock market returns 83% of time 1 year following event
  • Average return of 12.3% 1 year following event

Each historical event has provided its own unique set of challenges and market response, but data suggests geopolitical driven pullbacks are most likely temporary. One potential, additional consequence of the current conflict is further disruption of a recovering global supply chain. Our supply chain issues are not exclusively responsible for higher than average inflation but adding fuel to its existing drag on consumers purchasing power may create more persistent levels of inflation. Stocks historically have been a strong hedge against inflation. Recognizing that the recent market pullback may be temporary, current market prices could be seen as an opportunity to purchase at a discount and further protect your purchasing power. Depending on your circumstances, an additional purchase may not be fitting.

As we anticipate additional volatility, our experienced and knowledgeable advisors are closely monitoring the current conditions with your portfolio front of mind. Please feel free to reach out to us with any questions, as we are here to help guide you towards reaching your financial goals.