In big geopolitical events, anxieties are high, conflicting headlines are the norm, and everyone anchors to the worst-case scenario. Sometimes there are lasting effects, sometimes the world has moved on in 3 weeks. It’s really hard to know, and that’s why market volatility soars. Secondly, markets experience 10%+ drawdowns about every two years – and while it’s not enjoyable in the moment, the start of 2022 is delivering right on cue.
Russia’s invasion of Ukraine has certainly added to the price pressures and market uncertainty. Rising prices, rising rates, and a rising dollar will be headwinds to the global economy this year, but we see this as a mid-cycle slowdown rather than an end-cycle event. The longevity of the crisis matters of course, but the economy is taking on these headwinds from a position of strength.
Uncertainty and corrections are never comfortable, but investing in stocks you can stay invested in is a superpower we use to our advantage. Our attention remains on high quality businesses and we let the economic cycle keep our big picture views in check. We’ve been rebalancing around the core and letting good diversification do its job. Doxa’s perspective remains the same – what you see today is the result of actions taken a year ago, and actions today affect results a year from now. Enjoy!