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Feb 23

History says geopolitical events lead to short and shallow selloffs

  • February 23, 2022
  • CWM Investment Team
  • Richard Barrett

Here’s a fairly comprehensive list of geopolitical events dating back +80y. Consistent with last week’s TalkingPoints – What do geopolitical events mean for stock returns? (2-14-2021), negative/stressful/upsetting geopolitics events develop over the course of a few weeks, lead to sell-offs in risk assets in the range of 5-10%, and generally recover as quickly as they went down. Not trying to downplay some very negative moments in American history here – just trying to draw a circle around what those moments have meant for markets.

Three things I like in the market right now:

  1. Corporate earnings have been very good/great. Top line revenue growth for 4Q of +16% and EPS growth for 4Q of +26% YoY.
  2. Investor sentiment has been obliterated. Sentiment as measured by either bull/bear ratio, put/call ratio, fund manager survey – you name it – all flashing extreme pessimism. Advanced markets NEED to climb a wall of worry.
  3. More and more talk about the Fed going slower when it comes to 2022 rate hikes than two weeks ago. The yield curve hasn’t steepened yet – but it should going forward. That’s something big to watch.
Source: JonesTrading LLC as of February 22, 2022

Richard Barrett
Chief Investment Officer


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    Congress Wealth Advisor Solutions (CWAS) is a division of Congress Wealth Management, LLC (CWM), which is a registered investment advisor with the U.S. Securities and Exchange Commission. For additional information, please visit the Investment Adviser Public Disclosure website by searching with CWM's CRD #310873. Investment Advisory services are offered and rendered through CWM. CWM acquired Pinnacle Advisory Group, Inc. (Pinnacle) on April 30, 2021.