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Mid-Quarter Update - February 2022

Frank Pinkerton
Feb 25, 2022

"Buy when there is blood in the streets,
even if it is your own."
- Baron Rothschild

With Russia invading Ukraine, the financial markets are facing a new, near-term uncertainty. At Crawford Investment Counsel (Crawford) we are not day traders or seeking to make money on near-term, knee-jerk movements in markets, but we do understand how significant news events impact our clients’ portfolios.

Over the last several days leading up to the conflict, the broader domestic equity markets have all traded down. At Crawford, our goal is to provide an equity investing experience that can participate with market upside, but also dampen losses on the downside. We do this through higher-quality investments that pay a sustainable dividend. We feel that the current positions in your portfolio remain capable of generating sufficient fundamental improvement to provide satisfactory returns over the longer term. We are very confident in these companies’ abilities to continue to provide income in this uncertain environment.

One of the biggest concerns for investors over the last six months has been inflation. At the base of most economies is the price for energy, and prices for oil have risen further given increased tensions and the resulting sanctions on Russian oil exports. The Ukraine is a large supplier of agricultural products (wheat, corn, barley) for the Middle East, Africa, and Oceania, as well as iron ore and iron for European manufacturing. Our broad takeaway is that the Russian invasion will likely exacerbate existing supply chain problems globally and could potentially prolong the existing inflationary environment. These investor concerns are manifesting in volatility and lower securities prices.

It is almost impossible to talk about inflation without mentioning the expected actions of the U.S. Federal Reserve (Fed). Many view our central bank as being behind the curve in raising short-term interest rates to combat the inflation seen in the last six months. Russia’s invasion of the Ukraine places the Federal Reserve in an even more precarious position. Now, the Fed will need to balance raising rates from the current zero rate interest policy, while ensuring enough liquidity for larger U.S.-based banks that may see funding dislocations or other challenges as the global financial system digests stricter U.S. and EU sanctions against Russia.

We started off with the famous quote by Baron Rothschild who was an 18th-Century British nobleman and member of the Rothschild banking family. Most credit him saying, “Buy when there is blood in the streets, even if it is your own,” during a market panic following the Battle of Waterloo. It is famously used by contrarian investors as a rally cry to purchase securities that are out of favor and at a deep discount due to uncertainty or turmoil.

We do not view ourselves as contrarians at Crawford, instead favoring quality over absolute value. Our interpretation of Baron’s quote relies more on the fundamentals behind what the financier actually did, as the Rothschild bank used reserves to purchase outstanding notes of their own issuance at steep discounts. Our focus is not changing. We will continue to look out for the best interests of our clients. To us that means investing in companies with superior competitive positioning that produce excess cash flows and that reward investors through dividends.


Crawford Investment Counsel is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Crawford Investment Counsel, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request.


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