As Goes Russia So Goes the World

There’s lots of fear out there coming into today and as Russia moves, the global markets will move. As you can see from the way the country fund ETFs are acting, the myth of global diversification is just that; a myth. Any hint of economic or geo-political risk tends to crush global markets and it’s a further reminder why it’s safest to invest in the US, especially in higher quality companies.

The market is extremely oversold with buy signals in abundance. The key here is how you position size in case Russia does steamroll. Using fixed risk (fixed dollar risk) is always important and even more-so when volatility rises from global events. If you have fixed dollar risk and you’re wrong, you lose one unit. If you’re right and the market rallies you have the potential to make multiple units. The key here, no matter how oversold things become is to not increase leverage, not increase position size, and not place on short puts.

Let’s hope Putin looks at his stock portfolio and has a change of mind.

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