Ukraine War... How much will S&P drop this week?

[Kamban]

I do not think our sun is massive enough to form a black hole.

I think it will become a white dwarf.

[Kamban]

The interesting stock market part will be to see if (when?) major events happen:
-NATO jumps into the fray as above to try to decisively end it

I think Germany and France are smart enough to not get involved directly in a war where their actual security is not at stake. They also know Putin is very unpredictable and if they get into a war with him, there is no way to know if this will be just a conventional warfare.

[Tim]

Reports of peace talks happening Monday between Ukraine and Russia. I very much hope they are fruitful.

Not so sure Russia/Ukraine are the actual parties that have the authority to make any agreements.
I doubt Putin would say, “Sorry about the bombs. Are we good?”. Ukraine might request, “Stop bombing the crap out of my country.” Just musing. Zelensskyy might succeed in pausing the aggression. That would be a win for him.

[TheDangerZone]

I am definitely not buying index funds at this time... probably much better to enjoy the volatility unless a single stock you like really slumps.

Personally, I have not picked back up very much since this thread started... a few blocks of Google last week. I will look to get a few thousand NVO or BX back and more and more GOOG, but I'm in no hurry... there should be plenty of opportunities upcoming.

The market volatility should last as long as the conflict does... and I'd say that's now through March, at minimum (not "a short one" per thread page 4). The US and other countries are clearly propping Ukraine up as well as they can with aerial intel to let them be dug in and mainly ready for and ambushing any Russian advances. Ukraine is fairly tough. They can sit and defend for quite awhile with NATO country satellite maps, drones, and intel letting them know what attacks are coming where. It also helps to have many countries providing basically limitless ammo and supplies (many of which are likely US supply under guise of Poland, Bulgaria etc Ukraine neighbors).

I think that after a bit more propaganda of civilian lives lost, a few more failed peace talks, etc... then a few major powers are going to jump in and declare war, try to swiftly end this. That is, unless the current tactics of Ukraine supply assists, mapping, weapons, news media attacks, and any other underhanded ways of attacking Russia with commandos disguised as Ukraine are actually working to hold Russia out. I think it's near impossible Russia caves to the world opinion and the negative news pressure back in Moscow. It is more likely Russia begins to start fires to make smoke so the clear air assistance from countries "not involved in the war" isn't very effective. I'm sure they have thought of this, but they might be avoiding it to not get a bad rap for "burning Ukraine to the ground." News flash: Russia will always have a bad rap regardless.

The interesting stock market part will be to see if (when?) major events happen:
-NATO jumps into the fray as above to try to decisively end it
-a US or UK drone or fighter gets shot down in Ukraine, a few of American or Brit or French special forces "supply truck" guys get captured/killed and exposed to blatantly prove that countries who haven't declared are already very in the war
-Russia gets sick of indirectly fighting half the world in Ukraine uses a low-powered nuke to try to end the Ukraine situation
-China wakes up due to aforementioned issues (mainly NATO countries sneaking around in the war but not declared)
-something else happens that will really escalate the situation.
[Ukraine surrender seems highly unlikely as they have endless supply and surveillance help, which is the hardest part of a war]

...Personally, I still have thousands of shares of SDS and thousands of SPXU to short the US market. I like the US market, and I got burnt bad at the end of last week after looking clever early week... but I still just don't see that type of record market gains happening three days in a row with energy spiking, war costs, global economy grinding, most other major world markets slumping, etc. I may very well be wrong. I'll likely pull most of the shorts before market close tomorrow or definitely on Tuesday. I doubt the Monday peace talks will gain any traction, but State of the Union Address is Tuesday night, and the markets seem to spike when Sleepy Joe takes the mic and says anything but overtly declaring war.

We shall see. Nobody knows anything.

I would love to see the reaction of an actual diplomat or senior military strategist after reading your post. Probably a similar reaction to a physician when the patient says they googled their symptoms and already know their diagnosis.

[xraygoggles]

I had not been keen on LETF's in a previous thread, but changed my mind in the last 12 months. I am currently using mainly non-callable/real estate backed funding facility and LETF's. I have 80% vanilla index funds and 20% LETF's. The funding cost was not that much more for the non-callable debt in 2020-21, but this year the LETF's have a significantly cheaper funding cost. I have been meaning to get a margin loan for even lower borrowing costs. I may do this if borrowing costs continue to increase and the cost difference makes it worth the effort. I think it is important to have a bank loan facility to bail you out if you do have a sizable margin loan.

When I said I am 2X levered, I have 2X LETF's and my net equity in the index funds is about 50% for the vanilla index funds. I have some property that I intend to sell in the next 2-6 years. So the debt is mainly to smooth out the fact that I am very short my final desired index fund allocation. The index funds and LETF are around 25% of my NW and the other 75% is still in property. When I sell the property, I intend to discharge the debt on the vanilla index funds and eliminate the leverage. I guess I could also discharge the debt by selling the LETF if they have appreciated enough and keep the property. But the properties I have are so cashflow negative, I can't retire unless I sell them.

What is your % LETF in retirement and taxable space ? Do you have something to rebalance with the LETF's?

Well, I've only recently begun adding some leverage, so rn I'm around 1.1x levered, not much. My goal is 1.3-1.5x of index portfolio over time. I'm strictly using 2x, so it should be good for the long run. Historically, 1.7x is the sweet spot for US equities, but hard part is holding on to it during dips of course.

[Max Power]

Well, I've only recently begun adding some leverage, so rn I'm around 1.1x levered, not much. My goal is 1.3-1.5x of index portfolio over time. I'm strictly using 2x, so it should be good for the long run. Historically, 1.7x is the sweet spot for US equities, but hard part is holding on to it during dips of course.

Are you just using the basic ones like SPXL and UPRO and SSO? I don't see how you can hold those for years with the ER drag of circa 1%.

Personally, in bull markets, I think a mix of index and single stocks (esp tech) work plenty fine. I do love the leveraged inverse bear ones as I said above (tomorrow will be very good or very very bad, lol), but that's only for certain really short-term plays. I don't see anything with ER that high and tracking error as being viable for more than short bursts.

Are there leveraged 2x or 3x etc ones (either regular or inverse) with a reasonable ER?

[artemis]

You guys do know Alibaba, the largest company in China, is on the NYSE, right? It was number one market cap NYSE company at one time.

But as a non-US company, it is not an S&P 500 company or a US small cap company, and that means it won’t be represented in my other holdings. And that is what I care about.

We all, well anyone who holds any index funds, have international exposure whether we like it or not (both directly and via US companies doing business/sales abroad). It is a global economy.

That doesn’t mean we can’t take steps to reduce our exposure to hostile nations’ economies, though. And both China and Russia right now ARE hostile nations, like it or not (and I definitely don’t like it).

Lenin once said that capitalists would sell communists the rope that the communists would use to hang them. I am very much afraid that he was right, but that doesn’t mean I can’t make some changes to try to reduce that from happening. I see no reason to purchase stocks from companies incorporated in hostile authoritarian countries. To the degree that I can, I will avoid buying those companies’ products as well.

[burritos]

Are Russia and China allies? They don't seem to resemble each other in any way shape or form. Just for a thought experiment, what would the world opinion be if China pulled a Risk-like-move and took the eastern coast of Russia? Would they look like a boss or would the west think, "holy crap" we need to unite against the asian imperialists?

[Dont_know_mind]

Well, I've only recently begun adding some leverage, so rn I'm around 1.1x levered, not much. My goal is 1.3-1.5x of index portfolio over time. I'm strictly using 2x, so it should be good for the long run. Historically, 1.7x is the sweet spot for US equities, but hard part is holding on to it during dips of course.

You could add new investments as 2X LETF, as long as your balance is not too large initially on the LETF, may not be too hard behaviourally. I guess you have to have confidence in the levered strategy to be able to hold during the drawdowns and you also have to be be right in a 20 year time horizon. I have also been volatility harvesting, selling the vanilla and swapping for 2X LETF with 5-10% corrections. I am not doing this with SP500. I don't have the confidence it would hold up well in an inflationary environment.

[Dont_know_mind]

The Ukraine thing is so fascinating on so many levels.

Recency bias, when the right thing may have been to send troops from the start. But the public is nowhere near there. So for the public to be there, Putin would have to level Ukraine and a few other nasty things. But then, possibly more recriminations later - like the WW2 paradox: the US population was not there to be involved in WW2 until enough, but Hitler would have been easier to stop if they had acted earlier.

All around, a sad situation. But then so are the others, Middle east included and so far we haven't seen anywhere near the casualties yet.

I can't se why the US can't send troops to Ukraine. It did to Iraq and Vietnam and Russia had nukes then too. Only difference is the public was for it then. So really, it just depends on the public (voters). But it's hard to get away from the logic that the US is the dominant superpower in the world. Can it really step down from that. Ah, maybe not for long.

One thing I find amazing is the twitter. It's an incredibly powerful platform and as far as modern warfare is concerned, for mobilising and informing the population in real time. And social media in general in terms of influencing the hearts and minds of people.

[Dont_know_mind]

With the Ruble and the Moscow stock exchange not trading today, I wonder if any hedge funds will be affected if they do not reopen for a while. All the futures contracts in Ruble would be undeliverable, so surely they would have to open after a few days.

[TheDangerZone]

Not so sure Russia/Ukraine are the actual parties that have the authority to make any agreements.
I doubt Putin would say, “Sorry about the bombs. Are we good?”. Ukraine might request, “Stop bombing the crap out of my country.” Just musing. Zelensskyy might succeed in pausing the aggression. That would be a win for him.

Kind of an odd thing to say.

[zlandar]

The Ukraine thing is so fascinating on so many levels.

Recency bias, when the right thing may have been to send troops from the start. But the public is nowhere near there. So for the public to be there, Putin would have to level Ukraine and a few other nasty things. But then, possibly more recriminations later - like the WW2 paradox: the US population was not there to be involved in WW2 until enough, but Hitler would have been easier to stop if they had acted earlier.

All around, a sad situation. But then so are the others, Middle east included and so far we haven't seen anywhere near the casualties yet.

I can't se why the US can't send troops to Ukraine. It did to Iraq and Vietnam and Russia had nukes then too. Only difference is the public was for it then. So really, it just depends on the public (voters). But it's hard to get away from the logic that the US is the dominant superpower in the world. Can it really step down from that. Ah, maybe not for long.

One thing I find amazing is the twitter. It's an incredibly powerful platform and as far as modern warfare is concerned, for mobilising and informing the population in real time. And social media in general in terms of influencing the hearts and minds of people.

The US has never directly engaged Russian forces in large-scale combat. Both use proxies in prior conflicts.

If the US did send in boots it would play into Putin's hands. Putin has been claiming NATO's expansion is threatening Russia's security. If Russia managed to capture any US service members they would be paraded in front of cameras with Putin screaming "SEE! IT WAS THE AMERICANS!"

We need to let the EU take a major role. They have been passive for too long and this is in their backyard. It can't always be the US riding to the rescue.

[artemis]

Are Russia and China allies? They don't seem to resemble each other in any way shape or form.

Right now they are frenemies. Their short-term interests are aligned in that both want to see Western countries weakened on the international stage. But that is where their interests end. As you note, China and Russia have had border clashes in the past, and Russia controls resources in China that China definitely would like to control.

[Kamban]

The US has never directly engaged Russian forces in large-scale combat. Both use proxies in prior conflicts.

If the US did send in boots it would play into Putin's hands. Putin has been claiming NATO's expansion is threatening Russia's security. If Russia managed to capture any US service members they would be paraded in front of cameras with Putin screaming "SEE! IT WAS THE AMERICANS!"

We need to let the EU take a major role. They have been passive for too long and this is in their backyard. It can't always be the US riding to the rescue.

US troops are exhausted. We have sent them in multiple deployments to Irag and Afghanistan where they have been killed and maimed. In their battles they have killed innocent civilians. The liberators became occupiers and the people who hailed them started to resent them and finally hated them. I don't want them going to yet another war where we will never win. And things can quickly spiral out of control.

I think the major powers in Europe like Germany, France and UK.have to start taking their roles seriously rather than ride on American coattails. Why should they buy gas and trade with Russia while we have our troops killed. Let them come to the forefront.