Since Russia invaded Ukraine, there has been pain at the pump for Americans where gas prices have hit new records everywhere. We were told that the cutoff from Ukraine supply and now Russian sanctions were the cause of constrained supply and high gas prices.
Common sense says that if we had our own steady supply of domestic oil and didn’t have to rely on foreign oil, events halfway around the world shouldn’t affect our pocketbooks.
The Ukraine situation and the oil prices should be a lesson to investors. The lesson is, if you stick to local – oil supplies and investments – your pocketbook and portfolios should be insulated from international geopolitical storms.
If you’re invested in public stocks or crypto, you are tied to the international market – whether you like it or not. That’s why events halfway around the world directly impact your portfolio. Since the start of the Russian invasion of Ukraine, the Dow is not only been down but has also experienced extreme volatility. The same can be said about Bitcoin and other cryptocurrencies.
Because of liquidity, public markets are at the mercy of a jittery investing public market. The speed of news and stock trades (through apps and free trading platform Robinhood) ensures that the slightest alarm projected on the news or social media will spread like wildfire and trigger herd behavior in a big way.
How do you insulate your portfolio from events like the one unfolding in Ukraine or anywhere else?
Don’t invest in liquid public markets where the masses control price movements. Instead, turn to alternative investments in the illiquid private markets.
Private investments with long lockup periods not only protect investments from herd behavior but protect investors from themselves. Accordingly, even if investors had the impulse to retreat or liquidate their investments, they would be prevented from doing so because of legal and regulatory failsafe measures. That’s why smart investors seek out private alternatives – for the security and steadiness of their investments.
While the average investor – who is invested in the worldwide economy through public stocks or crypto – panics in the face of chaos like the events in Ukraine, investors with private assets at home don’t blink. They invest in local assets for the long haul to insulate their portfolios from world events and for peace of mind.
Investing long-term and knowing that they couldn’t liquidate their positions even if they wanted to, smart investors can breathe easy knowing their portfolios will not only be insulated from volatility but will be allowed to take root and mature – providing a reliable and consistent ROI over time.
Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.
Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.