In the note Myles Zyblock, Chief Investment Strategist, discusses how Investors who were already grappling with uncomfortably high inflation and the prospect of central bank policy tightening must now pile on the current geopolitical climate. Surprisingly, and in a rather counter-intuitive manner, he points out that geopolitical flare-ups have typically led to shallow and transitory weakness in the major stock price indexes. Looking historically at major geopolitical events back to World War II, the median selloff for the S&P 500 has been -6% and spanned a period of 16 days (see illustration below).

While the current geopolitical climate is discouraging, as investment managers we must continue to be calculated and pragmatic, and view markets in an objective fashion during periods like we’re currently experiencing. If we do continue to see equity markets sell off we’d never be sellers, but rather look to opportunistically buy into stocks we favour at what we feel are good entry points based on valuation.