A Note from Our Founder: Reflecting on War and Its Implications

I write this update from a place of collective heartbreak many of us are experiencing over the war in Ukraine. I’man air force “brat” or kid who moved around a lot because my father was a Colonel and lawyer in the air force. My two brothers both joined the forces - the navy and army respectively. The latter served in Iraq.

My personal and admittedly removed experience with war is that there are no winners. Everyone suffers, whatever the cause, however just or unjust it may be. Of course, the civilians and people just living in their homes with no desire for a conflict suffer, but so does anyone fighting, anyone hurt and anyone killed on either side of the conflict, as well as an entire network of people who are safe in their homes across the world worried and concerned about anyone affected.

All that said, I’m a financial planner, and though I contemplate these matters in my own time and with friends and loved ones, my training equips me to explain how this affects the financial system in this moment.

For starters, a fund family we use heavily at Brooklyn Plans due to its alignment with our approach to evidence based investing, Dimensional, has begun divesting in Russia holdings, so clients can rest assured that their investments are not supporting a country that has waged war on another. From Dimensional : “On March 1, 2022, Dimensional removed Russia from our list of approved markets for investment. We previously reduced the weight of Russia in our emerging markets and global equity portfolios after sanctions were imposed in 2014 following the annexation of Crimea. Our plan is to divest all Russian holdings from our portfolios as market conditions allow.”

The stock markets have taken a beating in the past two weeks. I’m not worried. Remember that stock markets have existed for over a hundred years, through two world wars, the Vietnam War, both Iraq wars, and now a Russian war. Markets don’t like surprises, and though some monitoring the situation closely didn’t find the escalation to war surprising, it clearly wasn’t baked into stock prices. There’s a period of adjustment as the markets process new information.

This war is not good for numerous humanitarian reasons, but it’s also potentially bad for the economy short-term. It could increase inflation, increase gas prices and have other unforeseen consequences. I’m still not worried. An evidence based approach to investing means we stick to the facts and the research.

As long as you have an appropriate portfolio for your risk tolerance and timeframe, this changes nothing. We change portfolio approaches when goals change, timeframes change or risk tolerance changes, not when oil goes up or stocks plummet. Making changes now would constitute a reactive approach to investing, not a strategic one like the one we use with clients at Brooklyn Plans.

If you’re checking your portfolio daily and feeling very anxious, you may not be correctly invested for your a) timeframe or b) your risk tolerance and that could be a cue to reassess. Not because of what markets are doing, but because of your relationship to the market movements. So pay attention to your own relationship to your investments and if you know you’ve done the legwork upfront that we do with our clients when we manage investments, then try taking a break from checking your balance.