Russia’s incursion into the Ukraine has roiled international markets. Investors are concerned about the potential impact of the conflict on the financial services (banking) sector and energy prices (oil). And with those two sectors serving as linchpins to much of the global economy, how long might it be before other sectors begin to be affected?

To be sure, any skirmish involving a global superpower is bound to create jitters in the markets. But history shows that market volatility tends to remain fairly constant—or even decline—during periods of military conflict. After an initial shock, market recovery comes quickly, and most stocks stay the course.

Given the societal and economic miseries experienced by markets in the last two decades—the dotcom crash, 9/11, the Great Financial Crisis, the Covid-19 pandemic—it may also now be the case that investors have simply become accustomed to jarring events and thus don’t lose their heads when considering if they should take action in their portfolios.

In any case, the best decision you can take about your portfolio during times of turmoil is to simply maintain your current course and speed. Keep to your strategy and don’t get caught up in the headlines. The managers of the high-quality, well-run businesses in your portfolio will find their way to future profitability despite any short-term challenges.

To be sure, we abhor the human suffering being inflicted on unwilling participants in the current European conflict, and hope for a fast and peaceful resolution.

In this issue of the SmallCap Informer, we revisit one prior selection and introduce a new company, both offering compelling valuations and sturdy fundamentals, despite what may come in the markets for the rest of 2022 and beyond.

Now more than ever, stay the course!

• DOUGLAS GERLACH

Reprinted from the March 2022 issue of the SmallCap Informer.

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