Remember, Crisis Creates Opportunities—Be Ready

QUESTION:

How worried should I be about Russia’s invasion of Ukraine?

ANSWER:

Very, but it’s not a time to panic. In fact, it’s probably a good time to look for opportunities.

Geopolitics and their impact on investments are extremely difficult to predict. That’s partly why AMG prepares multiple economic scenarios every year for clients to consider. While war in Ukraine was always a possibility, most experts and investors thought Russian President Vladimir Putin was saber rattling, trying to extract concessions from the United States and Europe. Few foresaw a full-scale invasion, followed by massive, coordinated economic sanctions imposed by western democracies, including historically neutral Switzerland.

Going forward, investors need to expect the unexpected, or more accurately, be prepared for the unexpected, including a broadening of the war or even peace breaking out.

How do we invest for the unpredictable? Look for likelihoods, look at valuations and use good judgment to pick the best places to invest—and areas to avoid. Then ask yourself: What if I’m wrong? What if inflation spirals out of control, what if this turns into a recession, and, yes, what if it all works out and boom times return? If your portfolio can handle all those situations, you can sleep at night, even when the market is pinballing.

And the most important thing to remember in a crisis is that a crisis presents opportunities. Market volatility will make your portfolio statement difficult to look at, but it also causes others to panic and sell at lows. Now is no different. As the fog of geopolitical events lifts, be ready to seize the opportunities.