Brandy Auterson:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of Nelson Corp Wealth Management. Welcome back, David.
David Nelson:
Thank you very much, Brandy.
Brandy Auterson:
So the stock market has had some pretty volatile moves since Russia’s invasion into Ukraine last week. How do you attempt to gauge the potential for lasting effects on risk assets of this type of geopolitical event?
David Nelson:
I’m a financial advisor, not a political expert by any means. So while my message today will be focused on financial economic conditions, nothing compares to the human damage that’s taken place and the costs have taken place in Ukraine, so very sympathetic to that. So having said that, I’ll start with the chart that I brought along today, which is a chart that’s looking at various crises events, and we’re looking at the SAP 500, and I’ve got all these squiggly lines on there. I want people to focus on the blue line primarily in between because that’s the average as far as of these.
David Nelson:
So what we’re looking at is various crises and the examples would be a war, invasion, terror attack, bombings, Brexit, COVID. And we’re looking again over a 50 year period of time, as far as these actual events that have taken place. Historically the geopolitical crises are surprisingly short lived as far as much less than what people would think. Take the Cuban missile crises, the world has never been closer to a nuclear war during those nerveracking 12 days that we experienced back in 1962. The Dow only fell 1.2% shockingly. By the end of the year, the Dow is actually up 10%. Another one was when Iraq invaded Kuwait, that was in 1990. The Dow declined more than 18% immediately after the event started, and it recovered in a few months and actually was up 38% as far as over the next two years.
Brandy Auterson:
David, thanks so much for joining us.