March 2022
Allocation Percentages for March 2022
F Fund
0%
C Fund
100%
S Fund
0%
I Fund
0%
As I write this, there is word of a 40-mile-long convoy heading for Kyiv. Obviously, the markets this month and probably well into the near future will be impacted by what has happened (e.g., SWIFT suspension) and what will happen (e.g., further escalation). In crises like this, we have to take stock of what we know, what we don't know, and attempt to make the best decision with the facts we have and assumptions we have to make.
What we know: inflation is high, energy prices are increasing, COVID has ended, war in Europe is a reality.
What we don't know: When will the Federal Reserve raise interest rates, true impact on disruption of energy supplies (natural gas is still flowing to Europe), how long the conflict will last, will the US be directly impacted, completely unknown unknowns-to paraphrase the late, former Sec Def, Donald Rumsfeld.
With the details listed above, I have to rely on my experience, history, and other economic indicators to best allocate my investments to maximize my returns while minimizing my risk. However, at this point there are not too many good options. In this scenario, I'm going to take the reasonable man approach and assume this war will not continue beyond a couple of months, but the impacts could last for many years. With this in mind, I think inflation and energy prices will continue to rise in the near to mid-term depressing our GDP and limiting the Federal Reserve's ability to raise interest rates. A safe harbor does not exist. I'm going to maintain a position with companies largest enough to absorb both energy increase and inflation and remain 100% in the C Fund. Keep Investing!
