Ukraine: A Temporary Blip on the Long Term Radar

Feb 24, 2022

The only thing the market is concerned with today is the war between Russia and Ukraine.

But what about tomorrow? Next week? Next month?

I think in times like these it's important that we traders take a step back and look at the long term.

If you do that, this conflict won't seem anywhere as important as we think it is today.

In this video, I'll explain why.

Hello, friends. This is Video Bhambwani here and I'm back in this video to basically answer one very nagging worry that many of my viewers must be definitely hamming about the most burning issue in the market right now.

Russia and Ukraine. Are we going to go to war? Will there be a big decline in the markets because of that? Can be expect earth shaking volatility in the markets and, more importantly, should be sent out a portfolio holdings and go to the safety of cash?

Now there are two things that I always tell traders in the market and whenever I meet them in the seminars or training sessions or wherever.

The first thing is, nothing happened in the financial markets without a reason, and since we are talking about financial markets, the reason has to be financial too.

And the second aspect is that we traders are not expected or required to box, run or swim faster than opponents. We are brain warriors. We think with the heads. We fight with the heads and we win with our heads too.

So I practise what I call a 360 degree worldview, which depends on the cause and effect theory and therefore, once I know the cause, I can guesstimate as to how long the effect will last, so I can place my money on the chessboard, called the market and position it in front of one square to the other, so as to get the best possible results.

I'm gonna share some of my thoughts on what's happening in Ukraine right now, and you can basically feel free to agree or disagree. My comments section is always open to feedback from your side. Now you see, the first and foremost thing is that you need to understand what the history of Ukraine verses Russia is and why what is happening and therefore you can estimate or guesstimate rather as to how long it will last.

You see, Russia was earlier known as the Soviet Union. As the word union suggests, it was a conglomerate of many erstwhile countries which were loosely cobbled together and they were all obviously under the Communist Party and a premier by the name of Mikhail Gorbachev. He is still alive, a great statesman who in the 1990s triggered off movement or triggered off something called glasnost.

Now glasnost in Russia means openness or transparency. Earlier, the Communist Party just issued orders and everybody had to obey them. But glasnost there was consultation. There was involvement, so therefore, many of these countries actually preferred to splinter away over a period of time.

Mr. Putin, Vladimir Putin, is an ex-KGB chief and therefore an extremely conservative, old school Communist Party member. He is basically of the opinion as there are many of the old school Communist Party school of thought, that Mikhail Gorbachev's policy of glasnost has resulted in breaking Russia apart and to be able to dominate the world and be a single world power, Russia must be united.

Therefore this is a unification process by Putin, which is why I think diplomacy, talking across the table, trying to give him sops, threatening him with the economic sanctions, boycotting him from exporting oil, gas of metals and food grains etc, will not really work too much because he is a very wily, very shrewd, very smart pollination cum KGB officer. He will basically tire out people keep on extended negotiations and keep troops and the border, and therefore wear out his opponents.

In the interim, there is something in the armed forces called trench fatigue. When two opposite armies opposition against each other and they dug their trenches, they have soldiers in their trenches, they are all pointing their gun sights at the opposite party, over a period of time indiscipline, stress, and even trench for dig sets in. If one accidental shot is fired, it might actually trigger a war. Now Putin is basically hoping that over a period of time, either the battle, the preparation of battle or even the rhetorical battle will result entrench fatigue and therefore either the NATO forces will withdraw or there might trigger a cataclysmic war. The other aspect is that the people initially will suffer from shock and awe.

I made a video saying a 40% of all active traders in the market today are under the age of 30. So these new traders have not seen what a bear market looks like. What a decline looks like. So these guys are going to experience a serious decline initially.

But is it the end of the universe kind of a scenario? Absolutely not. Let me take you back in time. I've been trading these markets since 1986 and I am going to give you a list of one I have seen.

So in the 1990s, at the beginning of the 1990s, I saw the Gulf war 1. The American forces, the coalition forces, the UK forces, France, Germany, etc bombed Iraq. Now thereafter, a prime ministerial candidate, Rajiv Gandhi, was assassinated. In 1992, there were bomb blasts. In 1995 there were bomb blasts again. At the turn of the century on Y2K, they were basically Y2K related worries which triggered a dotcom bust in the month of March 2000. Let's not forget the 2001 9/11 attacks on the world trade centres in America.

Those were shocking events. The markets reacted, but they pulled back. In 2002 and 2003, the US attacks on Afghanistan, US attacks on Iraq, we have seen at all the markets survived and look at where it is now.

So what will happen? There's something called recency bias. Recency bias in behavioural science says, human beings tend to focus on things that are nearer to them and something that has happened in the recent past.

Do remember that on 15th of August, 2021 that's not even so far ago, not too distant past, we basically woke up, and when we switched on our televisions on 15th of his 2021, we woke up and switched on a television, and we were confronted with the news of how the Taliban was swiftly but surely running over Afghanistan and the US forces, the armed forces were simply panicking and evacuating out of the country.

What happened? Do you think the market got worried for it for too long? And remember, Afghanistan is in our back yard. Ukraine is far, far away. So the markets are gonna say okay, this is worrying. For a brief period of time some companies which are doing a lot of export import business with Russia, their payments might get stuck. Their orders might shrink a little bit, but the market moves on.

Another case in point. In 2014, I used to see a shocking a video of course with different people of the Isis. The familiar all too familiar video would be a Western or maybe even a Middle East citizen would be made to sit in front of the camera and one of the Isis fighters would simply behead him.

Every time this video would crop up, markets would fall, gold would rise, and there would be a little bit of pandemonium. But over a period of time, what really happened? Markets moved on. Markets moved on.

The fear that oil prices will go through the roof did not really work out. Oil prices actually fell. So what will happen with the Ukraine Russia tension? Let's take a very concise, very forensic kind of a view, a cause and effect view.

Russia is a major exporter of aluminium, copper, nickel. We are already seen prices of these metals zoom up. We are already seeing a flight to safety and safe haven buying in gold and silver. So the markets have already started doing what they do best in case of defensive investments. Run to bullion.

We have already seen oil and natural gas prices jump up anticipating war, but frankly, this was my worry also, I was expecting that there would be a slight worry about force majeure. Now force majeure is the clause in any contract which says I am going to buy or maybe sell something, and due to some circumstances beyond my control, earthquakes, wars, acts of God, acts of man, circumstances beyond my control, I may not be able to honour my commitments. That's force majeure.

I was worried that the market would worry that this war like situation might lead to a force majeure by the Russians, where their oil and natural gas supplies are concerned. But the Russians have already said that supplies will continue seamlessly. So I think the markets are going to get calmer about this. There's no need to panic.

The other thing is Ukraine. Ukraine is a very, very mineral rich country and it is the bread basket of the region, just like Punjab is the bread basket of India. Ukraine exports a lot of wheat. It is because of Ukrainian week that Russia has a lot of muscle power in the food grain, international export markets. So can wheat supplies get disrupted? Yes, they possibly can, but wheat is already expensive and agricultural commodities markets in America has already priced in whatever it needed to be priced in.

So base metals have already priced in and they are still pricing in. If bullets get fired, yes prices might go up a little bit. Will this worry be perpetual? Not at all. Bullion is already up. Gas and oil prices are already up, but the Russians have said they will continue to supply.

Remember, they need money to fight a war. So I don't think they're going to shut off the tap and say, okay, no more gas and no more oil for the West. I think as long as there is a war, money will be required and the Russians will sell.

If it all, there is protracted tension over a period of time believe me, the markets will move on. Will the Russians give up after Ukraine? I can tell you something with a certain degree of conviction. I don't think this will stop. Once a powerful leader like Putin has said I want to reunite the countries that have broken out from the erstwhile Soviet Union, he will continue to do so.

The markets will continue to get worried for a period of time and then will move on and it will be business as usual. So should be losing your night's sleep? Should be sleeping with your lights on in the night? No, I don't think so. Your long-term portfolio is gonna be fine. It's going to be just fine. Don't worry above that.

On this optimistic note, I bid goodbye to you not before reminding you took click like on this video if you liked what you saw. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive instant alerts about fresh videos being put up out here. Good, bad or ugly, you're always welcome to post comments.

Help me reach out to fellow like-minded investors and traders by recommending my videos to your family and friends. Thank you for your patience, my friends. Till we meet again in my next, this is Vijay Bhambwani signing off for now. Take good care of yourself, your health, your family, and your investments and trades.

Bye for now.

Warm regards,


Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst

Recent Articles

Pyramiding PSU Bank Stocks September 22, 2023
How to trade PSU banking stocks now.
5 Smallcap Stocks to Add to Your Watchlist Right Now September 12, 2023
These smallcaps are looking good on the charts. Track them closely.
Vodafone Idea - Can Idea Change Your Life? September 6, 2023
What is the right way to trade Vodafone Idea?
Repro Books Ltd: The Next Multibagger Penny Stock? August 28, 2023
Is this the next big multibagger penny stock? Find out...

Equitymaster requests your view! Post a comment on "Ukraine: A Temporary Blip on the Long Term Radar". Click here!