Wednesday, 5 March 2014

Well I got that wrong

The Ukraine effect on the markets turns out to be a one day wonder. The markets have made up the ground they lost and then some. That does not mean its all over but it does mean that the appetite for risk remains unassuaged.

I am left feeling foolish even though yesterday I made back half of Monday's losses . That was luck rather than judgement. I kept hold of my mining shares and stoked up my holdings a little. That paid off despite weak gold prices. I am now 45% in cash after buying ABG RRS and SLW and selling most of my non mining shares.

I am now left in a quandary. Does this thing move up further or have we reached the end of the line? (There are precedents for the market retracing after the first down day in a major pull back. So we could still be seeing the start of a big pull back - as shown in the DJI chart above.) Or do I take my monthly market analysis seriously and accept that I have drawn in my horns a few days or weeks too soon, but I should call it a day nevertheless.

I am dragged in two directions. I'd dearly like to reduce my loss for the year a bit more before the end of my financial year on April 5th. But then again I don't want them to grow.

And there's still the very big risk that I am right about the Ukraine and Putin is just biding his time before he strikes again. I still think that Yanukovych will be back, with Russian backing and that no-one will do anything about it. The US continues to talk tall but it lacks support, to say nothing of the fact that it has lost the moral high ground after all its recent overseas excursions.

Russian trade with Europe is so important that even words of outrage this side of the Atlantic will be be muted. Poland and all those former Soviet satellites will be sweating a bit and will be glad that their membership of NATO is well and truly in place.

The markets could be in for more nasty and unpredictable shocks like Monday's as the Russian "tanks" move forward. Let's just hope it continues to be soldiers that hold their fire and the new "unelected" Ukrainian leadership gives in gracefully to the inevitable so bloodshed is avoided

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