If You Don't Like The Market Action
Just Wait A Day Or Two
It’s a new world out there, isn’t it? That’s what “traders” want you to believe and it’s a real effect, something we all need to “watch” and take notice of. I’ve been involved in this arena long enough to know that over time “things” change but in reality they stay the same. In the interim periods however, these newly minted “soothsayers” come out smelling like a rose. Remember, however that roses have thorns and they undoubtedly lose their petals and sweet smell over time.
I’m a “long-term” position investor and trader, a hedger by nature and quite frankly, I am a little on the boring side. I’ve earned the reputation I profess to be and that is one things that isn’t going to change. Remember, I have a long-term objective so days we see today are indicators to me that the “end is near”. I just have to be patient and wait for the inevitable to happen. That’s the patient part and the plan I use that makes me tick. You see from my side, everyone with a plan is going to be right over time. It is a given. It’s more important to be right, not only more often than not, but to a greater degree, having your gains far exceed your losses. That’s the result and it works.
Face it folks, you are going to be wrong from time to time. Everyone is and if this is not something you can admit to you are not a real investor or trader. Being wrong is the best way to learn. You just have to control yourself and learn from your losses.
My labor of love is just about completed. I’m not going to bore you with the details, I have done that far too often. Those who follow me, and there are tens of thousands we can count, are patient. Quite frankly there was no choice but more so, they know that good things take time. I never thought it would all take this long but it has. I do not have the ability to put a product on the market unless it achieves the goals I seek. This time it’s being able to teach you the “right way” to invest and trade so that you can be the “best damn investor or trader” you can possibly be. That in a nutshell is what I’m doing and sooner than not it is all going to be available to you and those you care for.
Until then I am blessed to have an early adopter of what I teach and how I teach it. It seems like I’ve known Mahdi Nikpour for years but in reality it’s been a little less than a year. Damn, he’s good and more so, he has given me the gift of time with his writing and publishing. What follows is his last thoughts and it shows that basic geoeconomic theory is alive and living around the world. That’s important as far too often we take advantage of the philosophies we practice here in the Unite States. Learning how to be the best damn trader and invetor you can possibly be requires operating around the globe. I’ve done it for years. Mahdi is just proving me to be right, thanks Mahdi.
The World According to Mahdi
That title kind of takes me back to a movie that starred Robin Williams, “The World According to Garp”. It was a good one, something you should take the time to watch as time allows.
Navigating Geopolitical Mazes: Trading Strategies Amidst Geopolitical Crossroads
The world throws a curveball and “commodity markets” scramble to catch it. From nuclear tensions to war-torn landscapes, each scenario unfolds, impacting the very resources that fuel our lives. Let's take a look at some of ongoing dramas and how a wise trader should react:
Act I: Nuclear Tensions & Space Weapons
This tense drama hangs heavy on the market, casting a shadow of risk over defense contractors and space-related industries. While the “basic case” suggests continued diplomatic dancing, worst-cases paint a chilling picture of an arms race, potentially benefiting aerospace giants but sending shockwaves through broader markets.
Act II: Ukraine War's Grim Reality
As the Ukrainian conflict just drags on, a humanitarian tragedy unfolds, impacting the resource-based sectors, energy and commodities. This actual “stalemate” implies continued volatility in basic oil and gas prices but the worst-case scenario of a wider conflict could trigger market panic and send prices soaring.
Well, Russia seems to be in a hurry to do something, right? I wonder what's the reason for that? Maybe they are interested in buying a few “Trump” signed Golden Sneakers or making a handshake with ghosts? Either way the volatility is going to soar. Nuclear tensions and the Ukraine conflict raises the specter of a continuation of a “disrupted supply chain'“ and sanctions, sending oil prices on a rollercoaster ride. The base case suggests a range-bound market with potential spikes on escalation. Worst-case, brace for stratospheric prices impacting everything from transportation to heating costs.
Trading Strategy: Hedge Your Bets
Like The Ticker does for a living, consider options contracts for downside protection and upside participation. He’s a hedger and I am too. Kind of a “buy when they sell & sell when they buy” type of investor. I’ve tried it and it works. How about you?
Based on Act I: The prudent investor hedges their bets, diversifying away from riskier assets and seeking havens in gold or defensive sectors like healthcare. Basic nuclear anxieties trigger the classic “safe-haven” play, pushing gold prices north. Silver could follow suit, benefiting from both “safe-haven” demand and industrial applications but be prepared for quick reversals as well.
Based on Act II: Energy-independent companies and alternative energy players could emerge as winners, while “resource-heavy industries” face many headwinds. Investing in companies developing and providing renewable energy solutions can end up being a good idea. Consider ETFs tracking the clean energy sector for broad exposure.
Act III: Gulf Markets & Interest Rates
The Gulf markets await their cue, their performance hinging on the Federal Reserve's next act. The base case of “gradual rate easing” paints a picture of cautious optimism, with select regional stocks showing potential. The worst-case scenario of delayed cuts or economic turmoil throws cold water on the play, favoring safe-haven assets like US Treasuries. Analysis of individual company fundamentals and their risk management strategies are crucial for navigating this economic tightrope.
Based on Act II & III: Steel and copper face a mixed bag. The Ukraine war disrupts supply chains, pushing prices up. Delayed rate cuts in the Gulf dampen infrastructure projects, potentially suppressing demand. So it is best that we take a “wait-and-see” approach on this and we all say and hedge while we wait.
Act IV: Brazil's Corn Harvest & Exports
Corn takes center stage like it always does, from ethanol production to just serving as a source for food manufacturers. Brazil's dwindling corn harvest throws a wrench into the global food security script. The basic case whispers of manageable shifts in trade flows, favoring alternative corn producers and potentially other grains like wheat and soybeans. The worst-case scenario screams food price inflation, potentially benefiting agricultural commodities and inflation-hedged assets. Investors should keep a close eye on global corn production and trade dynamics, diversifying portfolios to mitigate food security risks.
Act V: Russia & Turkish Sunflower Oil Market
Russia steps into the spotlight, filling the “sunflower oil” void left by Iran and India. The base case sees a smooth transition, while the worst-case scenario warns of global price hikes. Investors assess their exposure to sunflower oil-dependent industries and consider alternative cooking oil producers as potential beneficiaries. When looking at Ukraine's situation, corn, sunflower and wheat production, together with the Middle East's continuous conflicts you have to wonder. I continually ask myself Bloomberg's primary question over and over again. Are we heading for a soft landing, a hard one or no landing at all? Who knows, maybe the world is heading for a massive recession or even a depression. Who knows but face it, hedging gives us a plan to follow.
Thanks Mahdi, your work and thoughts are excellent and again you are giving me the time I need to get my work done. Face it folks, there are only so many hours in a day and sleep is essential. For me it happens when I start to make mistakes. What triggers you? Back to the basics of getting my courses done so I can teach. It’s not just nice to have Mahdi on board to voice his thoughts, it’s important to have a perspective from someone from another part of the world. Thanks again.
The only person to influence my life like Allen Meltzer did is John Nash. I was blessed in graduate school to understand the values he preached. He was right in his thoughts but it took Russell Crowe in “A Beautiful Mind” to bring attention to what he wanted us to learn and practice. It’s funny where influences come from. My Dad had a great influence on my life in a positive way. You are witnessing it evolve as I type and film. I did not fully appreciate the effect John Nash would have on me until I realized that he was teaching up how to act globally, the “right way”. A pacifist without question, he simply was right and everyone should appreciate his mind.