Russian invades Ukraine, what should you do? Well, for starters, don’t panic. No one ever made a dime making investment decisions charged with emotional nonsense.
The chart below shows Russian stocks tanking 50% today. To be clear, Russian stocks have bounced massively off the lows this morning, but investors still lost 3 years of gains in one day! Extraordinary!
What is the fallout for Russian? Without a doubt sanctions will cut deep into foreign investment. As a result, investors will look elsewhere for opportunities. Furthermore, if Russia seeks a regime change, they’ll have to take on the onerous financial obligations related to Ukraine. With this in mind, how will Russian finance itself if they are shutout of international markets? The price tag is going to be enormous.
Geopolitics
Indeed, this is a huge geopolitical event right now. At least for now, it is still not obvious to me if it will have a persistent impact on non-Russian markets. Looking back at previous wars: Vietnam, Gulf War, Iraq War and Crimean annexation, all turned out to be major bottoms and legendary buying opportunities. Certainly, wars are scary and tragic but don’t seem to impact corporate earnings or equity markets for very long.
Is this time different? Maybe, maybe not.
The trouble is stocks were weak before the invasion. Markets are trying to balance the massive Fed gasoline fueled stock speculation party of 2021. Despite this, next month higher interest rates will be a reality as global Central Banks gear up to fight inflation. Bottom line, party’s are fun but hangovers not so much.
Conclusion
All things considered, Russia’s invasion of Ukraine has rattled global markets. Volatility is up big time and this usually signals a bottom. For a risk point of view, as I finish up this post the QQQs (NASDAQ 100) technology heavy index is up on the day after opening down >3.5%. This reminds me of the Wall Street proverb, “buy weakness and sell strength.”
One possible outcome could be permanently higher energy prices. Russian relies heavily on exported energy products as a source of revenue. So, energy prices might be the primary weapon used by both Russian and the West.
–
Yesterday I wrote a piece about opportunities in QQQs and how to setup a low risk/high reward trade –>
–
DISCLAIMER: Content provided in this document is for your informational and entertainment purposes only. This document is not a solicitation for an investment, is not comprehensive, and should not for the basis for any investment decision. This document is not an offer to sell or a solicitation of an offer to buy any securities, commodities, or financial instruments, and my not be relied upon in connection with the purchase and sale of any instruments or interests in investment vehicles. This document should not replace professional investment advice based upon your particular situation. Duties are not assumed, intended or created by this document.
Mikehoganonline (“MHO”) strongly suggests that you obtain independent advice in relation to any investment, and with respect to any financial, legal, tax, accounting or regulatory issues resulting form such an investment. In addition, because this document is only a high-level summary: it does not contain all materials terms pertinent to an investment decision. This document should not form the basis for any investment decision. Information contained in this document has been obtained from sources that MHO believes to be reliable, however MHO make no assurance or guarantee that such information is true and/or accurate, and MHO expressly disclaims liability arising form the use of information contained herein.
This document contains statements of opinion. These statements of opinion include, but are not limited to, MHO’s analysis and views with respect to: digital assets, projected inflation, macroeconomic policy, the market adoption of digital assets (including Bitcoin and Ethereum, and Blockchain), technical and fundamental analysis, financial planning, and the market in general. Statements of opinion herein have been formulated using MHO’s experience, research, and/or analysis, however, such statements also contain elements of subjectivity and are often subjective in nature. In addition, when conducting the analyses on which it bases statements of opinion, MHO has incorporated assumptions, which in some cases may prove to be inaccurate in the future, including in certain material aspects. These analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing in this documents represents a guarantee of any future outcome, or any representation or warranty as to future performance of any financial instruments, credit, currency rate, digital currency or other market or economic measure. Information provided reflects MHO’s views as of the date of this document and are subject to change without notice. MHO is under no obligation to update this document, notify any recipients, or re-publish the content contained herein in the event that nay factual assertions, assumptions, forward-looking statements, or opinions are subsequently shown to be inaccurate.
© 2022 mikehoganonline.com, All Rights Reserved
