The Putin Put: Ukraine Dragging Down Your Portfolio?

On the first of each month, I send a letter to our investors describing what we see in the world relative to their portfolios. We always try to identify some “big picture” issue, usually one that is overlooked. The goal is to have our clients understand our thought process.

One of my favorite analytical devices is to compare quantitative data with investor sentiment. Pitting the cognitive versus the quantitative often reveals a “perception gap” — a difference between investors’ emotions versus the underlying market data. Think of it as “what people are thinking” versus reality.

The news out of Eastern Europe is a perfect example of this. Russian President Vladimir Putin’s aggressive military grab in Ukraine has been dominating global media coverage. Markets were off dramatically yesterday, with Russian’s bourse down 10 percent for the day. In the U.S., markets fell about 1 percent, although the accompanying media angst might have made you think it was triple that.

Regardless, it is merely the latest global event that is dramatic, dangerous — and mostly irrelevant to investors.

Why is that?

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