A Message from Jeffrey Deans on the Ukrainian Crisis

Jeffrey Deans

The terrible events unfolding on our televisions and mobile phones are truly shocking and tragic for the people of Ukraine, a vibrant modern country just a week ago. As well as looking at what we, as a business, can do to support the people of Ukraine, we have, of course, been looking closely at our clients' portfolios, and to how history can help to inform our strategy.

I have been in the investment world for over forty years, and since I launched Save & Invest in January 1985, I have witnessed and guided clients through many crises. The 1987 stock market crash, the Kuwait and Iraq Wars, the 9/11 terror attacks, the global financial crisis of 2008, Covid and now the Russian invasion of Ukraine.

My experiences in these past times of crisis are built into the way we at Save & Invest manage money today. Our focus is global, diverse in terms of asset types and investment management style with firm house rules which we test to see that they are effective in postive markets or volatile times. Each individual's investment strategy is underpinned by their individual stratgey for how they will cope during the times when their portfolio value is volatile.

Markets across the globe, unsurprisingly in the face of such horror and uncertainty, have fallen, but as yet, not to the same magnitude as at the start of Covid. Indeed from the lows of 23 March 2020 it took under a year to return to the general trading levels prior to the Covid driven slide. So history tells us that patiently remaining invested, is an effective policy.

Charting History

The chart below shows, in blue, the return that the US stock market produced during each of these wars. In orange is the amount of volatility (in simple terms, how much values are going up and down) that it experienced. In all these previous crises, the US stockmarket, the biggest in the world, produced a positive return by the end of each war.

Source: Ken French Data Library via First Trust Global Portfolios Limited. Past performance is no guarantee of future results. Ken French data library uses the CRSP database. Universe includes all New York Stock Exchange (NYSE), American Stock Exchange (AMEX) & NASDAQ stocks. Returns are market-cap weighted. Dates used for each war are as follows: World War II: 8/12/1941–2/9/1945; Korean War: 27/6/1950–27/2/1953; Vietnam War: 8/3/1965–29/3/1973; Gulf War: 2/8/1990–28/2/1991; Iraq War: 20/3/2003–15/12/2011. Total market returns use data from 1/7/1926–31/12/2021. Standard deviation is the measure of dispersion of historical returns around a mean rate of return, and a lower standard deviation indicates less volatility. An investor cannot invest directly in an index. The information presented is not intended to constitute an investment recommendation or advice.

How are our typical portfolios responding

All portfolios have fallen in value since the highs of November, but it is worth considering that from the low point of the Covid crisis, 23 March 2020, our typical portfolios are still showing significant growth, even after recent falls.

When, like all wars this tragedy eventually ends, the path to clean energy, digitalisation and innovation will return. Like Covid it will bring a paradigm shift in global thinking. There will be a new focus on security and in particular energy security, which in return we expect to support the recovery in areas which have been adversely affected in the short term. For these reasons, and the lessons from previous crises, we remain confident in the diverse range of quality investment funds held in our clients' portfolios.

As a company, we are doing the practical things we can do to support the people of Ukraine and are aware that many of our clients are doing the same.

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