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Talkin' Shop: Russia-Ukraine Conflict

Eric Crittenden discusses how the Russian invasion of Ukraine impacts an all-weather strategy, and how the strategy is built to handle these types of environments.

Transcript

Matt: So obviously there’s a lot going on in the world. We have the war in Ukraine, energy prices are surging, some markets are limit up and then they’re limit down. How do all these current events or extreme events at any point in time impact the way you manage money?

Eric: I would say that they don’t. They don’t impact the way I manage money. We have rules and a systematic process in place that was designed over more than 50 years of data and our thesis is that those 50 years of data going back to 1970 includes most plausible market conditions, especially when you randomize that data in the form of a Monte Carlo simulation.

So, it doesn’t affect, we’re not getting in there and saying we’re going to trade differently now that Russia invaded Ukraine, or that there are sanctions, or that we’re about to buy oil from Venezuela. I feel like that’s a loser’s game.

A lot of people feel like if we could look forward, if we could look ahead and say if this happens then this, then this. In my experience there are so many weird unintended consequences and non-linear relationships that trying to predict what a Russian invasion of Ukraine would lead to ends up causing more problems than it solves.

So, it doesn’t affect anything on the strategy side. The strategy is supposed to be able to handle wars, plagues, famine, stuff like that.

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