Declarations Against Interest
Tucker Carlson's interview of Russian President Vladimir Putin last week generated a flurry of reactions on X, but the problem with most of them was you knew exactly what they were going to say before you read them. Ukraine supporters almost invariably attacked Putin, and Tucker for interviewing him. In situations like this, often the best analysis comes from declarations against interest: someone willing to call it as he sees it, even if what he sees may reflect poorly on his side. The analysis below by Oleksiy Arestovych, Ukrainian President Vladimir Zelensky's former advisor and spokesman, is effectively a declaration against interest, and is worth reading both because of that, and because of Arestovych's knowledge and past prescience about Russia-Ukraine relations--in 2019, Arestovych predicted that Russia would invade Ukraine as early as 2022.
Following Arestovych's post, we'll close with an update on an investment strategy to limit risk during periods of heightened geopolitical risk.
- I watched Putin’s interview.
Alas, I do not share (thank God) the general opinion about “...a worthless grandfather.”
And now I will try to massage your tailbone, because you don’t want to think for yourself, but want to repeat other people’s mantras, not wanting to analyze the consequences of what you saw.
- Putin is completely adequate. He understands what he is doing very well and is in good physical, mental and emotional shape. Hello to those who buried him a year ago.
- Putin sets out a coherent system of views that he himself believes in (hello, jokes about the Merovingians and Ladoga).
- Putin is psychologically increasingly getting rid of his pro-Western orientation - the only thing that was holding him back from within.
“Oh, this is a mythology divorced from real history!..” the average person puffs on social networks and runs to hide in the bathroom from Putin’s missiles flying at him.
I have a simple question:
-- When will you start thinking - at least about the reasons that directly determine your life?
- Myth. Come on, name me at least one state ideology that is not based on mythology, which to one degree or another does not correspond to real history? Who and when did this prevent them from acting in the present?
- Let's say it's good: the villain Putin is the only one who relies on a fictitious ideology and mythology.
So what if, in view of this mythology, he takes completely material actions?
“An idea, taking possession of the masses, becomes a material force”--remember that?
A specific mythology has taken hold of the masses and forty thousand volunteers come to Russian military registration and enlistment offices every month.
And they are not going to stop.
And how many volunteers come to our military registration and enlistment offices every month, dear real historians?
What kind of true stories do we tell if our “volunteers” have to be grabbed by force on the street?
And what stories does the West tell that it cannot collectively produce a million shells a year, in a situation where North Korea produces one and a half?
Putin will not stop.
He will carry out his tasks, which are dictated to him by the picture of the world, to the end.
Moreover, judging by his statements, he is improving in his picture of the world, in the sense of acquiring more and more motivation.
Yes, he lies a lot and deliberately, distorts, manipulates.
Okay, we have defeated funny Putin with his stupid myths.
-- Maybe someone can name our clever myths: ours and the West?
Our truth, lack of manipulation, directness?
-- And what is this so-called “world system” of yours worth, so reasonable, so strong, so free, if “... one funny, out-of-touch pseudo-historian” managed to render it inoperative?
Investing In Times Of War
Last fall, we shared a strategy here for investing during times of war and increased geopolitical risk.
The gist of it was this:
The Hedged Portfolio Method
The basic idea here is to buy and hedge a handful of promising names that are relatively inexpensive to hedge. Here's the process we use do that:
- Estimate potential returns over the next six months for every security with options traded in the U.S.
- Calculate the least expensive way of hedging each of those securities while capturing that estimated return.
- Subtract the hedging cost from the estimated returns, and rank the names by estimated return net of hedging cost.
- Buy and hedge and handful of the top names.
There's a bit more to the process than that--we also include a step to minimize cash, since everything's hedged--but that's the basic idea.
Manually, it would be. But we use an automated system where you just type in the amount of money you want to invest, the largest drawdown you're willing to risk, and our portfolio construction algorithm does the rest.
Our hedged portfolios last for six months, so we just got the results from ones created six months ago--and they're pretty strong. For example, this was the hedged portfolio our system created for an investor last August who was unwilling to risk a decline of more than 30% over the next six months.
Screen captures via the Portfolio Armor web app.
And here's how that portfolio performed over the next six months, net of hedging and trading costs: it was up more than 25%, while SPY was up about 11% over the same time frame.
You can find an interactive version of that chart here. If you're worried about the Ukraine or Mideast wars spinning out of control, this approach might be worth considering.
If You Want To Stay In Touch
You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on Twitter here, or become a free subscriber to our trading Substack using the link below (we're using that for our occasional emails now).