“Buy on the sound of cannons, sell on the sound of trumpets.” — Financier Nathan Rothschild

The cannons roared late last week as Russian planes, missiles and tanks attacked Ukraine. Stocks sold off in the early trading on Thursday, but then recovered an 800-point loss and rally another 800 points on Friday.

Bonds and commodities were also volatile. The yield on the 10-year Treasury fell to 1.85%, rebounded to 1.97%, and dropped again. Oil rose more than $10 a barrel, gave nearly all of that back, then hit a new high. Many times before I have seen such knee-jerk reactions — some to buy, some to sell. I don’t recall any turning out well.

Institutional investors and money managers are not the main drivers of the stock market’s daily moves, the kind of volatility we’ve recently seen. Blame computer models and traders, who do what traders always do. They trade, often with no fundamental or even technical reason other than to make some fast money. They are useful. Without traders liquidity would dry up, but let’s not attach great significance to the market’s daily moves. They don’t.

Over the long term, investors determine the level of stock prices. What is happening to Ukraine, tragic indeed, will play a minor role on the market over the years. Investors focus on the earnings outlook and as best they can on factors that will determine future interest rates and economic growth. Earnings soared in last year’s fourth quarter and will continue higher in the first half. Ed Hyman, a top economist, expects S&P earnings this year to reach $300, which means the index is trading for 13 times earnings. Earnings growth will be enough to offset the negative impact of rising interest rates.

The market will be hard-pressed to make much progress amid such news, or so it would seem. For the past two years I said that given the very low rates on alternatives stocks will be the best place to be. That is still true, but will be true to a smaller degree as rates rise.

Should we wait for higher rates to invest cash or will that take too long? There is no single right answer to that. And consider that what investors expect — sharply rising rates, slowing inflation, slower GDP and profit growth — may not come to pass. Things can happen. Look at Ukraine. Who a year ago thought it would come to this? I always like to have at least some exposure to other outcomes. One never knows.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.