“I took a speed-reading course and read War and Peace in twenty minutes. It involves Russia.” — Woody Allen

I’m reminded of that funny one-liner from Woody Allen, whenever I listen to the fatuous punditry on television about Russian and Ukraine. I get the feeling that a lot of these geopolitical “experts” have been speed-reading CliffsNotes on Russian history.

The West sees Russian President Vladimir Putin’s military invasion into eastern Ukraine as a threat to the post-Soviet democratic order in Europe. Putin views Ukraine as part of Mother Russia’s sacred patrimony. Hence the standoff, with Putin ordering “peacekeeping” troops into Ukraine. On Tuesday, the United Nations security council began emergency meetings.

You can expect a flood of disinformation and Orwellian distortions of language from Putin, who cut his teeth as an officer with the Soviet-era KGB. But I can tell you one thing with certainty: the crisis will eventually blow over. Global capitalism will prevail. It always does. Don’t make drastic moves with your portfolio, on account of the Ukraine crisis.

Not surprisingly, Putin’s aggression has prompted investors to scoop up hedges, with gold at a nine-month high. In early trading Tuesday, global equities were trading in the red, energy prices were surging, and Treasury yields were falling.

The stock market’s focus will inevitably shift from scary video clips of soldiers, tanks, and helicopters to economic fundamentals. In the meantime, expect volatility, and occasional selloffs followed by bargain hunting that lifts stocks again. Last week, the handwringing over Ukraine pressured stocks (see table).

We’ve witnessed two straight weeks of stock losses. The main sector to keep an eye on during this crisis is energy. Russia is one of the world’s largest oil producers, comprising part of the “plus” in OPEC+. Russia also supplies about 40% of Europe’s natural gas, which gives the country leverage over the West. Imminent sanctions will disrupt that energy supply from Russia.

Crude oil prices have spiked during the Ukraine standoff, but that rise has been mitigated by the chances of a diplomatic breakthrough with Iran over a nuclear deal that would allow that country to again contribute production to global oil markets.

Read This Story: Inflation and Geopolitics: A Double Whammy for Stocks

Over the near term, the Russia-Ukraine brinkmanship is creating seesaw conditions in financial markets and driving a flight to safety. Investors have been fleeing to safe-haven assets such as U.S. Treasury bonds, the U.S. dollar, and gold.

When the Ukraine drama no longer dominates the news, investors will again turn their attentions to monetary policy, inflation, corporate earnings, and the broad economy.

Last Wednesday, the Federal Reserve released the minutes from the January Federal Open Market Committee (FOMC) meeting, which gave investors a sigh of relief. The minutes contained no hawkish surprises.

The Fed will kick off its tightening cycle in March with a 0.25% interest rate rise, but it has given no indication that it will take the more drastic step of a 0.50% hike. Fed Chair Jerome Powell has been taking great pains not to give Wall Street any nasty surprises.

I think the Fed will probably move aggressively during the first part of its tightening cycle this year, perhaps with 0.25% rate hikes at each meeting through the first half 2022, before moderating its stance, particularly if inflation shows signs of cooling.

How to trade now…

Amid current conditions, you should adopt a “defensive growth” posture. As interest rates rise and economic growth continues, make sure you have exposure to cyclical sectors, e.g. energy, financials, basic materials, and industrials.

Also consider sectors that benefit from economic growth but provide a more defensive posture, e.g. consumer staples and health care.

Don’t ignore bonds. Fixed income has struggled due to rising rates, but you can find value in U.S. investment-grade bonds. This asset class provides a higher yield than cash and equivalents, as well as exposure to highly rated corporate borrowers. These bonds can add ballast to your portfolio, during a time of elevated volatility among equities.

In the meantime, if you’re looking for proven ways to make money under the conditions that I’ve just described, I suggest you follow the advice of my colleague Jim Fink.

Jim Fink is chief investment strategist of the elite trading services Options For Income, Velocity Trader, and Jim Fink’s Inner Circle. He has agreed to show 150 smart investors how his “paragon” trading system could help them earn 1,000% gains in just 12 months.

We’ve put together a new presentation to explain how it works. Click here to watch.

John Persinos is editorial director of Investing Daily.

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