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Overhaul in a Day

I decided to make a number of changes to my portfolio today.

I wrote on the weekend that I hadn’t really changed much leading into the invasion of Ukraine, other than adding a bit more on the hedge side. I think that is because the uncertainty of the situation has taken a while to sink in for me.

So today I changed tact. I sold a lot of stocks. And I bought a few others that are tied to the commodities Russia exports.

What sparked this was a search through the brokerage document database I have access to. I started searching for the word “Russia”. I quickly came across documents that showed just how large its influence on various commodities was.

I don’t think I realized just how big of a commodity exporter Russia is. And that really got me wondering how this is going to ripple through the world economy.

At the end of this post I’ve snipped a bunch of the tables and charts I found. Russia is just such a big player in the export of so many basic commodities. And then on top of that Ukraine is a large grain exporter and they actually export a fair bit of other commodities as well – steel for example.

I was already on edge about market exposure. So when the market almost got to even today, I said to myself that I would be crazy not to take this opportunity to make wholesale changes.

I sold a lot of my bank positions and a lot of my biotech positions. I now only own a little BCBP, a little BSVN, and a bit of a few biotechs trading well below cash. I added to my index short some. And then I added some small-ish commodity stock positions like Stelco, Algoma, Peabody Energy, and Diamcor Mining (Russia is 30% of the diamond industry!).

(Note: I also bought JJG, the grain ETF, and added a little to BIOX. I forgot those ones in the original post).

None of these long positions are very big. I just thought if I’m going to have some long exposure, this seems to be the place to do it.

My basic thought here is that A. I have no idea how events are going to unfold but B. It seems unlikely that something will happen in the near-term to lift the sanctions that are going to impact all these commodities that Russia exports. I guess what I am saying is that while I don’t know what the world will look like tomorrow or next week, it is hard to imagine a fast return to status quo.

That said, let me emphasize – small positions. I tweeted today that the “best advantage a tiny retail investor has is ability to just sit it out”. I did that during COVID and I made a pretty big move in that direction today.

This is all just to hard to figure out. I’d rather stand aside and wait.

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