- Billionaire investor Mark Cuban suggested market reactions to Russia-Ukraine tensions might be exaggerated.
- "Markets always overreact and overcorrect to news, or anticipated news, particularly after a big run-up," he told Fox Business on Monday.
- Cuban said investor worries about Fed rate hikes are overblown, and there aren't many other good places to get good returns.
"Shark Tank" investor Mark Cuban downplayed the chances of Russia's escalating crisis with Ukraine driving investors out of financial markets in the long term, saying they don't have much of an alternative if they want good returns.
Stocks around the world have fallen in bumpy trading in recent days, swayed by developments in the Russia-Ukraine situation. Asked about the effect of those geopolitical events, Cuban suggested it was just the normal run of action.
"Markets always overreact and overcorrect to news, or anticipated news, particularly after a big run-up because speculators and investors want to protect their profits. So people run to cash," he told Fox Business' Neil Cavuto in a Monday interview.
Russian President Vladimir Putin recognized two breakaway territories in south-eastern Ukraine as independent states on Monday, and ordered Russian troops to enter the country for what Moscow described as a "peacekeeping" operation.
US stock markets have fallen in the early months of 2022 as investors nervously assessed the prospect of a more hawkish Federal Reserve making a series of interest-rate hikes to cool inflation.
If the Fed raises interest rates by 25 basis points for nine consecutive meetings, as JPMorgan expects, the benchmark US rate would go from its current record low of 0%-0.25% to 2.25%-2.5% in less than a year.
Rate hikes encourage companies to cut back on spending, which means they are investing less into the business. That weighs on their earnings potential, which ends up hurting share prices.
Cuban said even though investors may now be holding back from investing in financial markets, due to worrying too much about rising rates, they will return.
"But the reality is, whether rates go to 3% or 4%, there aren't a lot of other good places to put your money," he said. "And so, while there may be a lull now — just like we've seen in the past — people will come back to the markets."
If Western governments do go ahead with harsh sanctions, and there's a further deterioration in Russia and Ukraine's situation, Goldman Sachs predicts the benchmark S&P 500 index could tumble another 6%. The investment bank also expects the tech-heavy Nasdaq to fall 9.6%, and Europe's continent-wide Stoxx 600 to drop 9.3%.