How to Manage a Portfolio Amid Inflation and the Invasion of Ukraine
On Monday, News Now’s Brian Loftus spoke with Russell Price, senior vice president of MPI Wealth Management, about recent market corrections and how to maintain your portfolio.
Read the full interview below:
Brian: First market correction in some 21 months, when you combine the double whammy of inflation and the war in Ukraine, what can people expect in terms of nuts and bolts with the market in the weeks and months to come?
Russell: When you look at what we’ve had in 2022 it’s been really tough for investors, we started with COVID-19, still concerned about a spike in it, we’re talking about inflation and the upside interest rates by the federal government, then we were affected by the Russian-Ukrainian conflict. The first thing we look at is the degree of diversification, and right now investors understand whether they are diversified or not. What kind of impact do they have? Do they have different styles of assets in their portfolio? A good example of asset styles would be value versus growth. Value was down Friday about 5% where growth is down about 15% so you can really start looking at a lack of diversification in a portfolio and that’s probably the first thing you should do to improve yourself for the future market .
Brian: Experts like you look at every scenario, if there’s a situation where China invades Taiwan, or if Russia somehow enters a NATO country, that’s going to increase volatility. , but if that does not happen, if the conflict remains in Ukraine, if there are better days ahead, what can we expect in terms of recovery? We saw today that the United States might fare a little better than expected.
Russell: I think recovery starts with diversification. What depth of hole are you in? The second part is to select some sectors that you expect to do well, be it the financial sector with rising rates, those that tend to do well, the banks in that sector. You can also consider possibly adding energy stocks, even though energy stocks have had a huge surge, talk about a negative market, energy stocks are up 22% this year, so you can still put one part of the portfolio that allows you to participate in the upside while benefiting from some downside protection.
Brian: In terms of energy defense technology, some of the things that might come up, what about the person watching and doing a lot of cyber warfare with Russia, and if they hit our banks, hypothetically, how many cash should I have on hand? What do you recommend to people to have a little more money aside?
Russell: I think before diversification you have to look at the type of planning that you put into your portfolio, so a lot of what we do is look at three segments of a portfolio and put them into these different segments, or three buckets if you will, the first one is the cash bucket, for an individual who is retired it could be a year of income that is in that bucket. Maybe if you know you want to buy a house it’s in that bucket so emotionally it’s a better conversation to have with your advisor or with yourself so you have a year to spend and you don’t have to worry about those day-to-day market ups and downs.
Brian: We have to wrap up here, but a quick response on that, how much of the COVID recovery that’s already happened, the fact that we’re descending from Omicron, how much will that help moving forward, economically ?
Russell: That’s going to be a big help with inflation because the dollars that we’re spending as consumers move away from goods and into services and hopefully Vegas will be part of that and have a lot more good months ahead.
Brian: Hey, tourists keep coming back, we appreciate your expertise, thank you very much.