Late Wednesday night I laid on my bed and cracked open Don’t stop the Carnival by Herman Wouk. My nightly routine before I let the remainder of the day pass into a sleepless dream state. I was pretty exhausted from the day-to-day routines of everyday life in white collar America. My goal was to read a couple chapters and pass out until the sound of my alarm chirps me awake in the morning.
I began to read and enjoyed the following passage right before my phone vibrated:
It is that, under all the parade of human effort and noise, today is like yesterday, and tomorrow will be like today; that existence is a wheel of recurring patterns from which no one escapes; that all anybody does in this life is live for a while and then die for good, without finding out much; and that therefore the idea is to take things easy and enjoy the passing time under the sun.
When I finally looked at my phone I saw that Russia started their first attack on Ukraine. With war on the horizon, I then proceeded to spend the next few hours on my phone digesting a doomsday timeline as the entire world prepared for the unimaginable. I awoke the next morning with a limited amount of sleep and a market that was ready to puke.
The day started with a bang. Stocks sold off as Russian troops entered Ukraine. Energy stocks started the day off high as oil and gas prices skyrocketed. Tech and high growth names collapsed as investors began to de-risk their portfolios. Coal equities plummeted as fears of China getting involved would cut demand from potential sanctions.
As the day progressed markets and global sentiment continued to get worse. Videos of Russian paratroopers were spotted on TikTok. Some even feared a nuclear holocaust could occur. However, as more time passed, tech stocks started to increase as the Nasdaq turned green. Biden gave his speech and said that massive sanctions will be piled on Russia, but as long as Russia doesn’t invade NATO countries, we will not go to war. The market turned green and we ended up on the day big.
The big question, what should you do if we go into war with Russia? As a millennial in the United States I have never really experience a major war before. In fact most of my cohort is absolutely surprised that war can even happen in this global age.
To understand the investing formula on what one should do in the case of a global war, I turn to the wisdom of the greats. And as Warren Buffett would famously say, buy more stocks:
"Well, if you tell me war and all of that is going to happen, I will still be buying stocks. You're going to invest your money in something over time. The one thing you could be quite sure of is if we went into some very major war, the value of money would go down. American businesses are going to be worth more money, dollars are going to be worth less, so that money won't buy you quite as much. I was convinced of this in World War II. I was convinced of it during the Cuban Missile Crisis, 9/11, the financial crisis — that nothing can basically stop America. We faced tougher problems, and the American miracle, the American magic, has always prevailed, and it will do so again." - Warren Buffett
So what am I going to do if we go to War? First, I won’t panic when it comes to my portfolio. I’m not going to sell any of my stocks based on fear. I will keep a level head and act in the most businessman sense that I can. If undervalued equities get cheaper, I will continue to buy them as their future value should be worth more than their present value. All bad things come to an end. And if the absolute worst thing occurs in my small portion of the world, then my entire portfolio doesn’t even matter. All that matters during a crises is keeping a head more level than the next guy and thinking farther into the future than the next couple of days.
Bloomberg: “Where Wealth Managers Would Invest $1,000,000 Right Now”
With tensions in Europe rising, inflation accelerating higher than 7.5%, and the S&P 500 sliding deeper into correction… Many investors are wondering where the investment opportunities are.
Recently, Bloomberg asked several wealth managers where they’d invest $1,000,000, right now. The result? One said, “Art, hands down.”
Diversifying with art isn’t new. When the housing bubble burst in 2008, tons of wealthy investors stored their money in art. And you know what? I’m doing the same right now.
These stats explain why:
Contemporary art prices appreciated 13.6% annualized (1995-2021)
Deloitte projects wealth in art to increase by $1 trillion by 2026.
Art has a low correlation to equities according to Citi
With Masterworks, the $1B fintech unicorn securitizing art, you can invest in multimillion-dollar paintings without buying entire works. In fact, They were the first company ever to file a painting as a Reg A offering with the SEC.
Although not an indication of Masterworks’ overall performance, since 2017, Masterworks has successfully sold 3 paintings, each realizing a net annualized gain above 30% per work.
But wait there’s more: My readers get VIP access with this Alpha link
See important Reg A disclosures
Tech jumps despite Russian invasion of Ukraine (Seeking Alpha)
There is no way food prices don’t go up a lot (Capitalist Exploits)
Oil tanker rates from Russia’s Baltic surge more than $100k/day (Twitter)
These are the companies most exposed to Russia and Ukraine (Zero Hedge)
China refuses to call Russian attack on Ukraine an ‘invasion,’ deflects blame to U.S. (CNBC)
JPMorgan’s basket of defensive stocks aims to outperform during market volatility like this (CNBC)
SEC reportedly probes Tesla CEO Elon Musk and brother over recent stock sales (CNBC)
These 20 S&P 500 stocks are down at least 5% after Russia invades Ukraine (MarketWatch)
Energy prices fall back to earth as Russian sanctions make room for exports (Seeking Alpha)
Teck Resources committed to cutting coal despite boost to Q4 profits (Seeking Alpha)
CF Industries rallies to record as Russian invasion threatens fertilizer supply (BNN)
Thermal coal - Newcastle prices hit all-time high as Europe scrambles for fuel (Seeking Alpha)
Oil surges above $100 for the first time since 2014, before paring gains (CNBC)
As Russia moves into Ukraine, here are the oil stocks that might benefit the most (MarketWatch)
Top Ten Worst Performing Stocks Of The Day
Peabody Energy Corp: down 20.32%
Gentherm Incorporate: down 7.8%
Ocean Thermal Energy Corporation: down 7.14%
Booking Holdings Inc: down 7.08%
Gannett Co: down 6.78%
Flowserve Corp: down 5.95%
Summit Materials: down 5.92%
Netapp Inc: down 5.71%
Philip Morris International: down 5.34%
Arconic Corporation: down 4.84%
For new readers, I love buying companies when no one else wants to own them. When there is blood on the street, get greedy.
Earnings season is here. For paid subscribers to Alpha Letter Pro, you will be receiving updated newsletters on all companies that I cover when earnings are released. I recently updated subscribers to my biggest coal holding here and plan on shooting out another update on a different company either Friday or Saturday.
In addition, I highlighted to subscribers that I have been busy digging into a new retail name along with an investment in the oil and gas industry. With oil prices at $100/bbl, knowing the E&P industry very well will payoff down the road. My goal is to study and understand various businesses in the E&P space to take advantage of the surge in oil prices.
The next couple of weeks will be busy with incremental information we can use to make smarter market decisions. Feel free to reach out if you ever want to chat. Let’s stay at it.
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Fantastic write up! Will you becoming out with a separate letter for oil/gas companies? I have been debating scooping some up, looking at Exxon now
Excellent, as usual. Thank you.