Two lessons for our stocks.
+ When it goes parabolic, get out. Because it will drop. Always. Here’s a couple of charts showing parabolic moves of six stocks. The charts show one-year movements.
+ When it drops 15%, get out. Because it will drop further.
The day after you sell your stock (because of above), it will go up and you will curse Harry.
It’s doing that today. going up. Curse Harry.
Don’t get too crazy. Harry has a sensitive ego.
Ukraine
+ Take off a week. Fly to Poland and help out. A roundtrip ticket from NYC to Warsaw is less than $800. They could use your help. Many Americans are signing up for every task — from fighting in Ukraine to handing out meals in Poland to Ukrainian refugees.
Beginning this Saturday, I have a week with the kids in Colorado. But then I’m going to Poland for a week or two. Maybe I can be of help handing out food or clothing? Anyone want to join me?
+ Give money to the World Central Kitchen. I just gave my third round. Click here.
+ Give money to the International Rescue Committee. I’ve given them also. Click here.
Australia thanks Putin
I have a very smart friend in Australia, David Krasnostein, who travels (or used to) constantly. Here’s his brilliant take:
Regarding your latest missive (yesterday’s blog), I do agree with your rather pessimistic view of the short term impact of Russia invading Ukraine. However, if we shift our view to the long term I think it is a gift to the West.
Russia is, and always has been, an enemy of the West. Churchill figured that out even before WWII came to an end. Whether in a Cold War, or just lurking the shadows, they are trouble makers and against just about everything we stand for. They have spent a huge percentage of their national wealth on defence which gives them an overblown reputation. Being a nuclear power only turbo charged that image. However, their Achilles heal is their economy. With 140 million people they have a GDP about the same size as little Australia with 27 million people. And a fair percentage of that GDP has been stolen by a couple of dozen Oligarchs, plus Putin.
Putin massively misjudged Ukrainę. But he has done a bunch of favours for the West?
1. He has re-energised NATO. After a slow decline and then disparagement by Trump, NATO has been re-energised. American troops are once again on the increase in Western Europe and being welcomed with open arms.
2.Germany who has long avoided rearming to any great extent post WWII, has now committed to a massive increase in defence spending to rearm. 2% of their GDP and likely to rise.
3. Russia’s main exports are oil, gas and wheat. Nordstrom 2 is dead (an $11billion capital investment). America pleaded with Germany and Western Europe for years not to become dependent on Russia for energy. Russia countered that it had always been a reliable and non-political supplier of oil and gas in all its ups and downs with the West. And Europe swallowed that. That’s now over. Europe is accelerating ways to minimise its dependence on Russian energy which is bad for Russia in the medium/long term.
4. Its domestic airline business is dead. Most of its planes are leased from the West – Boeings and Airbuses. Putin just passed a law to stop them repossessing the planes at the end of this month under defaulted leasing agreements. With no spare parts from the manufacturers because of the sanctions, the planes will lose all their value and will be grounded within months. In a country the size of Russia with 11 time zones, that is a really big problem. Having destroyed their credit rating with global aircraft Lessors, it is hard it see how that industry will ever recover.
5. Russia is a supplier of various rare earth minerals and strategic metals i.e. neon, nickel and the various rare earths. Australia has all of them. But because China and Russia had the lead in producing these at low cost it was always difficult making the numbers work for Aussie miners to raise capital. No more. Capital is pouring in now and within a fairly short time China and Russia will lose their strategic supplier advantage. And customers are prepared to pay more now that risk mitigation is up front in decision making. It is always cheaper to run a business if you have no insurance costs. But once you realise that you need fire insurance, theft insurance, D&O cover etc, you pay the premiums because it is a necessary part of running a business. In the past only cost factored in and no one cared that we had become dependent on China and Russia for critical supplies. The world has now woken up and it can’t be good for either economy.
6. He has about $400billion of foreign reserves frozen. He ain’t getting that back. It will be secured for rebuilding Ukraine and war reparations.
7. Their slow, dumb and weak invasion strategy for Ukraine makes them look like the Wizard of Oz with the curtain drawn aside. They made every dumb mistake in the book. If it had been Germany they invaded using these tactics it would have been their version of the 6 Day War – with them as the Arabs. They have lost a huge amount of credibility.
8. In a world racing for superiority in AI and computing, losing at least a decade with no access to Western technology, investment partners, and capital, is a game changer.
9. And when he finally takes all of Ukraine, he will need to occupy a country of 42 million people. Very angry people. The Pentagon estimates he will need 500,000 troops stationed in Ukraine. The US burned $3trillion in Afghanistan. For nothing. The cost to Putin of the war, and the occupation, will be crippling. He will run out of money before he runs out of ammunition.
10. Putin can never back down. The only hope for Russia is to replace him with someone the West can deal with who can distance himself from Putin, withdraw from the Ukraine, and try and rebuild its economy free of sanctions. If Putin wasn’t paranoid before, he will be terrified now. Lots of job openings for food tasters I expect!
11. Putin thought he’d take Ukraine in a few days, the Americans would impose a few sanctions that he could manage with his large foreign reserves, the EU would meet and debate and in the end do nothing, and in a couple of years everyone would forget all about it eg. Crimea. China has seen how the West can mobilise and stick together. Food for thought for their ambitions with Taiwan. When they think America is weak enough they will eventually take it, but this may buy us a decade or two.
So, not all bad?
Free advice for Mr Putin
From The Borowitz Report
Trump Offers to Help Russia File for Bankruptcy
“Bankruptcy is scary the first time you do it,” Trump said. “But once you’ve done it five or six times it’s the easiest and most beautiful thing in the world.”
— See you tomorrow. — Harry Newton
