Short Term Decisions, Long Term Repercussions

 We are 7 months removed from February 24 2022, when Russia invaded Ukraine creating a point of no return. The explosions carried out on that day from air strikes have killed more than 100 Ukrainians and many more injured. Many after effects have been seen. The conflicts between the two countries have lasted almost 10 years with much tension leading up to the invasion. This is the beginning of the largest Ground war in Europe since World War II. In weeks leading up to this Ukrainian has been training its citizens to defend themselves, declared martial law, and Ukrainian Allies – The United States included – rained down sanctions on Russia in an effort to de-escalate the situation but it didn’t stop Russia from bringing forces through the north via Belarus and pursuing Kyiv, the capital of Ukraine. Russia staged a three-pronged attack by also striking in the east via the Donetsk and Luhansk separatist region and another strike in the south from Crimea (Associated Press, 2022). It’s a shame. War never ends well. Things that are done now always have a strong influence over the long-term view.

         In my economics studies over the years I remembered that war is the worst threat to an economy because of the destruction. Not the destruction of buildings and roads but the destruction of human capital. People dying and families being destroyed changes the course of history. When a building is destroyed a newer and better one is erected soon after during the healing process. When a person is killed in war, the life lost could have been prevented. Without people, countries and societies lose ingenuity, innovation, production, influence and so much more. Those lives can never be replaced. What’s more, is the fact that lives unnecessarily lost also means that there will be wounds followed by scars. World history is marred with this destructive behavior. 

         When a country invades another and kills its citizens (military or civilian), they have to be willing to deal with the repercussions or – much worse — they are clearly displaying that they do not care about the repercussions. The moves Russia’s president Vladimir Putin made will now follow him through history and no one knows exactly what that will look like. The United Kingdom has issued sanctions such as freezing the assets of large Russian Banks and barring Russian companies from raising money on British markets. This invasion, this war, however big or small, will be lived over and over by the Ukrainian people for decades to come. The decisions made by adversaries and allies do not simply affect today, but they affect global relations over the next 10, 20, 30, 40 years and more. If you look back at conflicts such as the Gulf War, the Cold War, the Vietnam war, World War 1, and World War 2, there are still reminders of those events. Refugees either saved or left behind, cultures destroyed, new cultures created, tensions remaining high and passed down through generations.

         In the short term, we see uncertainty in the financial markets, as well as energy and materials companies, but in the long term, those companies will recover and be fine. Everyone is saying the word “recession”  but the truth is stock prices will rebound, but what about the conflict and future conflicts that will arise? Does this conflict reflect the support that allies will provide during future conflicts? Does this open the door for other countries to do the same? What does the future hold for Ukraine? How will this conflict end? Is Russia putting itself on an island of isolation for the foreseeable future?

Now

As of September 29, 2022 the world markets have felt a ripple effect. There have been more than 14,000 casualties, over 14 million people have been displaced, property damage is estimated at $350B and the United States has invested more than $16.9 billion in security assistance to support Ukraine according to the State Department. This doesn't include the hundreds of businesses that have severed ties with the Russian economy and closed operations there for good. Big companies like Google, Nike, Apple, McDonalds, Starbucks, consulting firms, retail business and technology companies are among many who have banned operations in Russia in a show of solidarity with Ukraine. 

Ukraine was a major passageway for Russian oil distribution to other European countries.  European nations as a whole are scrambling as they prepare for a cold winter without Russian oil as the European Union vowed to wean itself off Russian oil. Countries all over the world have felt the sting of inflation and lack of Russian and Ukrainian goods. According to the Wilson Center, 40% of the World Food Programs wheat supplies come from Ukraine. An impact like that is felt all over the world including in Ghana where I have many extended relatives. 

How does this apply to you?

Think about it, apart from the economic imbalance triggered by the war, there are things you do on a daily basis that either deposit or withdraw from your better future. 

Investing and war are more alike than we want to recognize. The small sacrifices that someone makes over time for their money to grow in the stock market are parallel to the microaggressions and disagreements that lead to war. This conflict with Russia and Ukraine did not start in February 2022, it was a long time coming because of smaller actions leading up to the invasion. There is an imbalance of misunderstanding and power. Small deposits into friendships and relationships can flourish into allyship similar to how regular contributions to your retirement account can blossom into a fruitful future.

Ask yourself, Are you committing small offenses to yourself right now that will trigger a tumultuous future or are you making the right modest choices in order to build for the next generation? Do you understand how to invest as a beginner? Are you buying stocks when the market is low? Do you have concerns about a recession? Are you concerned about midterm election results? Do you know how to eliminate your debt in order to meet goals? Do you have a brokerage account? Are you investing or are you trading? Are you building generational wealth? Are you invested in stocks, ETFs and mutual funds? The S&P 500 is currently down 24% for the year. Do you view a down market as a sale or does it scare the living daylights out of you?

It's one thing to worry about the short term but what will it do for your future?

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Mawuli Vodi and Financially Present are not a financial advisor, accountant, fiduciary, or legal advisor. All information present is for informational and educational purposes only. Mawuli Vodi and Financially Present assume no responsibility or liability for any errors or omissions in the content provided. The content in the literature, videos, and/or presentation is provided on an "as is" basis with no guarantees of completeness, accuracy, usefulness, or timeliness. When investing in the stock market, investors are to understand that past performance is no guarantee of future gains.
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