Monday, August 11, 2008

The New Cold War

We are in a Cold War II. US and allies already gave up Georgia. The Putin's regime in Russia is more like Stalin's one with every coming day. Propaganda on official Russian TV and press would make Goebbels blush.

What does it mean for investments?

First of all, if you still have anything invested in Russia, get it out this week. May be you can do it next week. After that, just write it down. You gave KGB guys a present. They will thank you. Maybe some of your friends or relatives will be killed by Russian made weapons (they supply major terror supporting countries: Iran and Syria). I'm still looking at the best way of shorting Russia.

The fact that oil didn't move today is telling. Oil is going down more. It's probably time to get into DUG or DTO once again.

BP has too much money in Russia and around. Sell first, ask questions later. If you own some company you know has a lot of exposure to Russia or surroundings, sell. I mean, sell, sell, sell.

Buy US defense companies. I think Raytheon and General Dynamics are both good. Thinking of buying one right now. Boeing is a little bit scary because of big exposure to airline orders. GE is still "don't buy". Let's wait when it starts spinning off at least something. Doesn't matter who is the next president, he will increase spending on military. If not, will be told to do so by Congress. US gave up on Georgia, but we just can't give up on NATO allies. US will need more weapons and allies will also need more. Raytheon is also major contractor for anti-missile systems, which might come handy soon.

Currency situation: dollar is the king. As usual in crisis time. Europe is to close to Russia, developing countries are too vulnerable to market gyrations, commodity producing countries don't get as much as 3 months ago. Of course, if you, by chance, still holding Russian rouble, try to find a way to sell. It's going down. Russians prefer to hold dollars in uncertain times. Or Euro, but I bet on a greenback. I think, in a couple of years, Russia will nationalize everything and confiscate hard currencies from population, but for now, Russians will buy dollars. Russia is boasting 600 billion of currency reserves, it'll be gone in couple of years. They will find out a way to waste that. Especially now, when both price of oil and oil production in Russia is going down.

Full disclosure: at the time of publication author had no positions in any stocks mentioned. Positions can change any time.

Disclaimer: This article is not intended as an investment advice. Every person should make her/his own investment decisions based on all available information and advice from her/his own financial advisor.

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