For the past couple weeks new of Russia’s occupation of Crimea, a section of Ukraine, has dominated the news. Russia’s president, Vladimir Putin, allegedly would like to see Russia return to its Cold War superpower status by creating a zone of influence that can rival the European Union. The West, which used to be led by the United States, has been wagging the obligatory “you can’t do that” finger at Mr. Putin, and yesterday, the U.S. House of Representatives passed House Resolution 499, condemning Russia’s occupation of Ukraine. The resolution calls for the U.S. to lead in considering whether to kick Russia out of the global good-old boy club, the G-8, and to place visa, financial, and other trade sanctions on Russia and its senior officials.
The financial markets, for the most part, appear to be shrugging off the events, even though while watching Bloomberg and Fox Business News during the first week of the occupation. On 28 February 2014, the day before the Russian parliament approved Vladimir Putin’s use of Russian troops in Crimea, the Dow closed at 16321.71. It fell 164 points on 3 March 2014 closing at 16168.03. But while President Barack Obama and Secretary of State John Kerry have been telling Mr. Putin “no, no, no”, the market has been saying, let’s go, go, go, with the Dow climbing 183 points to close at 16351.25.
What I’ve found interesting over the past several days is the flight to safety investors have been pursuing. For example, in addition to a stock market that apparently is taking in stride world events, the bond market seems to be doing so as well, at least in the short term. Yields on three-month U.S. treasuries fell from .05% in February to .02% today. I’ve heard analysts on a number of business news channels opine that the crisis in Ukraine may be good not only for natural gas production here in the U.S. but also for the bond market as investors seek to protect returns. Returns seek security in government.
Investors show that by leveraging the freedom the movement of capital brings that in even in the face of uncertainty and turmoil the investor can protect her interests.
The capital-less have not learned that lesson yet. If anything we should have learned from the housing meltdown, flat incomes, and increased unemployment in the wake of the 2007 recession that diversifying our capital holdings would best protect us from economic downturns. We should probably also think about how moving our personal human capital abroad may help in buffering us against dysfunctional labor markets.
There are roadblocks to just up and moving of course. Heck, it’s tough to move across the country to chase job opportunities at home much less in another country. For those who have penchants for other languages and are adventurous about living in another culture, the move may be easier. For those of us who prefer keep our feet and flag planted in the U.S. we may have to put to use more marketing skills and technology to seek out opportunities abroad.
A global mindset is in order.