The Death Of Navalny

Portfolio Armor's Photo
by Portfolio Armor
Saturday, Feb 17, 2024 - 23:58
Alexie Navalny at an anti-minority rally.
Alexei Navalny at an ethnonationalist rally. 

Cutting Through The Propaganda

News of Alexei Navalny's death in a Russian prison prompted a lot of dishonest and bad takes. Let's cut through the propaganda by highlighting some of the best and most informative takes on this news. Following that, we'll close with a brief hedged investing update. 

Did Putin Have Navalny Killed? 

Possibly, but given current information, Navalny's death seems similar to that of Gonzalo Lira: both regime opponents in ill health who likely received poor treatment in prison (though as Zero Hedge noted, Biden is making hay of Navalny's death while he said nothing about Lira's). As our friend Sergei Witte pointed out, Navalny's health had been weakened by a hunger strike. 

And as the Russian podcasters Russians with Attitude admitted, Russian prisons are not good for one's health and are in need of reform. 

Was Navalny A Western-Style Liberal Democrat? 

No, he was actually an ethnonationalist, who agitated against Russia's minority ethnic groups. 

In contrast, Putin has always been a pluralist, in a Russian imperial sense, showing respect to Russia's minority ethnicities and religions. 

Was Navalny A Major Rival Of Putin?

Not really. He had about 2% approval in Russian polls. So why have Western Russia hawks lavished so much praise on Navalny and not on other Russian dissidents? Aaron Maté offered the best explanation of that: because Navalny was the only prominent Russian dissident who worked with the West against Russia. 

Here is the full text of Maté's post [emphasis ours]: 

What @McFaul says here is a joke. Navalny was a marginal opposition figure who polled at around 2%. Putin didn't fear him; it served Putin to have him seen in the West as his main opposition.

The Russian gov't meanwhile has just barred anti-war candidate Boris Nadezhdin. A Russian court has also issued a draconian prison sentence to anti-war sociologist Boris Kagarlitsky.

We don't hear about people like Nadezhdin and Kagarlitsky in the West nearly as much for one reason: unlike Navalny, they don't collaborate with Western governments. Navalny worked with NATO intel cutout Bellingcat and went through the "Yale World Fellow" program, a regime change training ground.

For this reason, we also don't hear that Navalny was an unrepentant xenophobe who compared Muslim immigrants to cockroaches and rotten teeth. (…)

His death is a tragedy. He was undoubtedly mistreated. But because he served US interests, US state media will make him into someone he was not.

And just compare their fawning coverage to their silence on, or even support for, the ongoing persecution of Julian Assange.

Or their complete silence on the mistreatment and death of US citizen Gonzalo Lira in Ukrainian custody -- universally ignored in US media.

Ultimately, neocons in the West hate Russia more than they care about any of the values they profess to, such as respect for minorities. Any Western politician with Navalny's views would be universally condemned here. The worst thing that could come out of Navalny's death would be more money to extend the Ukraine War. McFaul thinks of that as punishing Putin, but in reality it would lead to more suffering and death for Ukrainian conscripts fighting a war they can't win. 

The best thing for both Russians and Ukrainians would be a negotiated settlement to the war, sooner rather than later. 

Let's wrap this up on a more positive note with our hedged investing update. 

Strong Hedged Portfolio Performance Continues

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: 

  1. Estimate potential returns over the next six months for every security with options traded in the U.S. 
  2. Calculate the least expensive way of hedging each of those securities while capturing that estimated return. 
  3. Subtract the hedging cost from the estimated returns, and rank the names by estimated return net of hedging cost. 
  4. 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. 

Sounds Difficult? 

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 20% 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 20.53%, while SPY was up 13.26% over the same time frame. 

You can find an interactive version of that chart here, and you can use our website to create your own hedged portfolios. 


If You Want To Stay In Touch

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