Far East Happenings and Asymmetric Bets



I know it looks like Putin is just chilling. But make no mistake Vlad the Impaler is ready to give the order to invade Ukraine any minute. A bluff looks less and less likely as President Putin continues to deploy more battalions across the Russian-Ukrainian border (see graphic below).


I don't know 100% when or if the invasion will happen. It looks very likely at this point. Here's something I do know, there are some good hypothetical investments to be made on the eve of this war.


First off, look at buying stock or call options in the natural gas sector. For example, Chesapeake Energy is as pure a natural gas play as there is. There are others you can check out here. The logic is this: since Russia is a major exporter of natural gas, a war with Ukraine and sanctions from the United States are likely to lower the supply of natural gas, thus raising demand, and ultimately raising prices. The expectations of a price rise will be immediately priced into the markets in a matter of days as soon as the tanks roll over the border. So, the move is now, then wait and see what Mr. Putin decides. He's chosen invade a few times before. This could be the real feather in his cap, and legacy cementer, the annexation of Ukraine.


Second, look at shorting the SPY and QQQ with puts expiring over summer or fall. This trade should have optimagically been put on around the holidays. Right now, you will pay a premium since the market has sold off over a good stretch of days and weeks. The market, especially Tech, has looked frothy for months. There are bubbles ready to burst across all major asset classes according to some. It's hard to say how much is bubble and how much is inflation. Because inflation is really high and the numbers out of Washington D.C. are bullshit, expect anything different? They are grossly under-reporting the true inflation to keep the public pacified. The truth is, inflation is in the double digits, if you go by the BLS's (Bureau of Labor Statistics) methodology from 1990 we'd be well over 10% inflation. If you go by the 1980 methodology, we'd be at nearly 15% inflation. At least according to the website Shadow Government Stats. Now you see why they have no choice but to turn off the the air compressor and stop pumping up the stock market and economy with loads of debt and easy money. The market pullback of late looks like de-risking by people with much better information than the average joe. Let's say you have fifty million in the market, and you're a centimillionaire, or a billionaire, or whatever, some species of rich guy or gal, you hear some unsettling but reliable intel, "Putin is definitely going to invade Ukraine." So, what do you do? You sell, sell, sell, and wait for the dust to settle and possibly scoop up some good companies at cheaper prices.



Third, assuming an invasion and occupation of Ukraine is fast and does not cause World War Three, the markets will bounce back within 3 months after the initial invasion, if past history is any teacher. Of course, history is a great predictor of what can happen, and not what will happen, but what else can you rely on? Such is the way of the intellect and logic, it must play with the clay of old data and mental impressions. The investment move here is to go long for the end of the year with SPY and QQQ calls. These calls may have to be sold after the war from any hypothetical war settles and the restoration of peace leads to irrational exuberances and good moods in the equities markets in Europe and the U.S.


Fourth, and briefly, you could buy into US defense-industrial stocks like Raytheon. They may get a nice bump as the cannons did thunder and blow the Ukrainians asunder.


I can't yet say for certain what second-, third-,fourth-, and n-th order effects could spiral out of a war between Ukraine and Russia. Aside from, WW3, it's anyone's guess. I'll have to think about this more and get back to you. I sincerely hope, nothing happens. War never changes, politicians talk and people die.


Some war's are necessary, but does Russia really need to expand again? Just looks like ego, greed, and fear at work. Just on a national consciousness level. From the outside looking in, Russia seems still to be traumatized by the travesties and immense tragedies of WWII. Losing a fourth of your population due to invasion will make you a bit defensive when a pseudo-peacekeeping force ( NATO (((US))) ) wants to move bases and missiles within 200 miles of Moscow. Looks like madness to me, who knows, maybe it's all elitist theatre. Who my analysis helps.


In other news, who cares about the news? It's all so pervasively negative, why would you choose to infect your consciousness and mind with such crap? I read a good bit of news for this article. And it's just crap. I'd rather read a novel, or a textbook, or a technical paper, or a blog by a real person, half the mainstream stuff is click bait and the other half is propaganda. I think taking weeks, even months, away from news and, if you can manage, social media, can do worlds of magic for your health and wealth. Human beings didn't build the pyramids with phones in their hands, alien help or not, and human beings didn't fly to the...well, you get the picture, get off your phone and enjoy the bigger game that is life.