Ukraine: An Extension of the Emerging Market Crisis

At least we’re not in the Ukraine…or Turkey, or Thailand, or Venezuela for that matter. The people in these countries have had enough of endemic political corruption and want change. They’re taking to the streets, which usually ends in bloodshed as the detested politicians try and hold onto power for as long as they can, crushing all opposition in order to do so.

Those in the Ukraine demanding honest government looked like they gained a victory early in the week with the overthrow of that lunatic Yanukovych. But now the Russians have responded. They don’t want the Ukraine to turn towards the West. Besides, there is a large part of eastern and southern Ukraine that identifies itself with Russia. Russia’s Black Sea naval fleet is stationed in the port City of Sevastopol, and the Crimean region is distinctly Russian. The country is split.

Russia will do all that it can to maintain its influence over Ukraine. Most of the gas Russia sends to Europe traverses the Ukraine (which actually means ‘borderland’) via a network of pipelines. Russia wants the country to join a customs union with it, Belarus and Kazakhstan, rather than join the EU.

Chances are it’s going to get ugly. Power vacuums nearly always are. Will it have any effect on markets? Not immediately, but the US has already warned Russia not to get involved, something that the Russians will no doubt ignore completely. After the Syrian debacle, Russia knows the US has no stomach for foreign wars, apart from rhetoric and a promise of financial assistance, so it will do pretty much as it pleases to keep the old Soviet Bloc together.

If things escalate, as they probably will in the coming months, markets will begin to take notice. It will be an extension of the ‘emerging markets‘ crisis, which is not really a crisis right now because investors don’t appear at all phased about an economic slowdown in 50% of the global economy.

But history shows that in rampant bull markets investors aren’t worried about anything unless it’s staring them right in the face. After all, there might be another 5% upside to capture…


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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

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