For investors, the latest news from Russia means the prices of some commodities will likely rise, at least in the short term.
But maybe the situation can be mitigated from affecting the poorest people in the world by supplying alternatives.
Unwanted side-effects
From bitter experience, I find that wheat gives me bloating and wind anyway. So I switched to eating oats as an alternative some considerable time ago. Maybe a programme of education and alternative imports to poorer nations could help the situation – I’ll leave that one hanging, as sharper minds than mine decide what will happen next.
But I can’t help but draw an analogy with the process of stock investing. Sometimes the brightest hopes among the stocks in my portfolio don’t work out as planned. So I dump them and switch to alternatives. And that attitude has had a transformational effect on my investment results.
In case readers don’t know, Russia axed its Ukraine grain deal just before the deadline for renewal.
Ukraine is one of the world’s major grain producers. The country mainly grows and exports wheat, corn and barley. And the European Commission reckons Ukraine accounts for 10% of the world wheat market, 15% of the corn market, and 13% of the barley market, according to German broadcaster DW.
And with more than 50% of world trade, it’s also the main player on the sunflower oil market.
Flexible and nimble
It pays to be flexible and nimble in today’s geopolitical environment. And the same mindset can work well in the world of investing.
However, I’d set that against aiming for a long-term investment strategy. After all, it takes time for great businesses to work hard in a portfolio. And to compound their earnings to produce a satisfactory investment outcome.
But I’ve added a bit of stock-trader wisdom to my approach in recent years. And that’s because the tactics employed by traders tend to be more focused and precise.
I learnt from the legendary US trader/investor Jesse Livermore that his most successful investments “were right from the start”. And I gleaned from celebrated US stock trader Dan Zanger that “winning horses don’t back-up into the gate.”
And to me, that means stopping losses, and stopping them early by selling. So that’s what I do.
Heck, even the dyed-in-the-wool long-term investor with the biggest store of patience in the whole entire world – Lord John Lee – owned up to stopping losses a few years ago. As did one of the most-accomplished value investors the UK has ever seen – Anthony Bolton – years earlier.
The moral of the story? It’s Billionaire investor Warren Buffett’s no. 1 rule of money management – first don’t lose.
In other words, I aim to approach my long-term stocks and shares investment strategy with a risk-first attitude. And if my positions aren’t ‘right’ from the start, I’m ruthless with them, and they’re out – no questions.
