Hey guys, it's sasha last night, vladimir putin officially recognized the two breakaway ukrainian republics as independent nations, and immediately moves russian troops across the border. The stock market is crashing this morning, as i'm recording this video with many tech and growth stocks down between three and five percent. Maybe it's going to get a lot better. Maybe it's going to get a lot worse by the time.

You're watching defense and oil sectors are naturally booming on the results of this, which is helping to prop up the overall stock market, and there is the fact that the stock market has already been anticipating the development of this ukraine situation in recent weeks. So a lot of stocks have already been slaughtered before this morning's market open and although the statement from russia last night was largely expected, it still shocked. The world putin presented a very long speech on which he went into a huge amount of detail around his view. On the historic imbalance and injustice in how the soviet union, and then russia has been treated by everybody else, it was a particularly passionate and angry speech that presented a very acute picture of why russia feels that recent actions by nato have crossed the line and i'm Not here to go into politics or take sides or tell you what my opinion on this is because the fact of the matter is that this is all just a very tragic waste of human potential.

But at the end of the speech, putin went and announced that russia's patience was tested too far and they now had to take action and that action at the end of the speech was the immediate recognition of the donetsk and legansk regions as independent states. The conflict in eastern ukraine has been ongoing since 2014 and in the last few months, several hundred thousand people who live in these breakaway territories have officially been granted russian citizenship and passports and, coupled with the recent military movements, this clearly has been something that was in The works for a while immediately after putin concluded his speech. He went into a large kremlin hall to sign a declaration that confirmed russia's recognition of each of these breakaway republics with the separatist leaders, but then immediately after signing those declarations, putin also signed two more papers. These papers are a cooperation pact with each of the republics, and the decree that was issued said that, following requests from the separatist leaders, russia will be providing a peacekeeping mission to these republics that they declared independent about a minute earlier and before the inc had the Chance to dry on that paper, russian tanks had crossed the border to provide the peacekeeping support to these two republics, and naturally the ukraine in the west are urgently planning a response with heavy sanctions, apparently coming in the next few hours.

So what does this mean? For the stock market, well this morning, everything that isn't focused on defense, so energy has been dropping like a stone, although i'm expecting this to yoyo up and down quite a lot through the day, the drops are actually somewhat measured: the s p 500, as i'm recording This video is only down about 0.7, which is barely a sneeze compared to many debt trading days that we've seen over the past few weeks, and there are a few different factors at play here. The first factor is that a lot of this panic, a lot of this anticipation, has already gone into stock valuations. We have had months of the stock market selling off for a combination of fears. We've had u.s inflation and interest rates and the old military build up around ukraine, and but perhaps the bigger factor is the financial implications, because when people begin actually thinking things through, the stock market does like to react to news in the short term.

And there is some logic to it. Of course, there is a heightened risk of a conflict where nato is indirectly or even remotely, possibly directly involved in some shape and, of course, general global. Political instability is not good for business on the macro, but in the grand scheme of things, what a real impact on the us stock market would even a full invasion of the ukraine have in the long term. In a speech last night putin referenced that ukraine's total trade volume with the eu reached a peak of 43.3 billion euros in 2019 before the pandemic started.

So the volume of trade of this entire country of the ukraine with the whole of europe is roughly 10 less than the revenue of tesla last year or roughly equal to the revenue of walmart over about one month. The entire ukraine economy contributes around 1 of the eu's exports and imports, and this is excluding all of eu's internal trade, and the trade volume with the united states is relatively negligible even in comparison to those numbers. The stock market loves a big news story to react to, but as a long-term investor, the key is to step back and understand the real long-term implications. Here are russian tanks and dom bass going to mean that that guy from seattle is going to rush and cancel his tesla order immediately, a higher oil price is going to crush the public sentiment on moving to electric vehicles over the coming years and decades.

Well, tesla is down three percent, as i'm recording this video. So apparently that is the implication. Even the impact on long-term global macro economics is somewhat difficult to quantify in any meaningful way. If you're wondering how much of a blanket overreaction, this is look no further than palantir the most active stock in pre-market trading is down 4.4 percent.

As i'm recording this video - and this is a company whose biggest clients are the us government, us intelligence and u.s military. So it is somewhat clear that market movements on days like this are not really driven by some kind of logic and deductions of what a fair value for a stock is we're in the middle of a fire sale. The shop that is shutting down tomorrow has to get rid of all of its stock at whatever price someone will pay for it today, regardless of what the right price for each item is, and if people are not buying, the price just keeps on going down, and, Yes, in the background of all of this us, inflation is still there sitting at seven and a half cent and it's looking very likely to be heading towards eight percent or even higher when we see the february numbers in march. And yes, that means that the fed is eventually going to have to get his head out of his ass and start raising rates, because the policy of doing nothing is surprisingly having a very limited impact on inflation.

And all the financial gurus on youtube are telling you that a recession is imminent. It is going to happen right now and it's going to completely crush everything because they know how to draw a made-up line between two random points on the graph, and you know what it could happen. But then again the world is coming out of the biggest health crisis in modern history, and when we zoom out and go past this conflict, we may well see one of the biggest rebounds in economic history as well. The fact is, neither i not anybody else knows.

What i do know is that pandering to short-term guesses and trying to time the stock market movements is mathematically, a losing strategy, no matter how sure you think you are in the moment, it might give you some wins. Like if you are playing the roulette table at a casino, but i can tell you now that if you sit at that roulette table long enough you're going to lose money because math says so and in the case you didn't know, i am a big fan of Math and analysis, so i base all of my personal investing decisions on numbers rather than what some random person says, or some kind of sentiment, because in the long term, numbers trump everything a stock can be undervalued for many months and many years. But if you are correct in your assessment of the under valuation and the numbers begin proving that you were right, then eventually the market will catch up. It always does because, if people begin seeing that you can buy a dollar somewhere for a lot less than a dollar guess what they're going to do, they're going to go and line up in the queue to go and buy that dollar? And this is where being smart with your investments is key.

Holding positions in companies that can be very strongly adversely impacted by a market downturn can lead to very big problems. Don't get me wrong, i'm not saying that this is not going to happen, because it is true. A lot of companies in a market downturn like what we are potentially seeing may fail. If a company has a balance sheet with bucket loads of debt on it, then interest rates going from 0 to 15 might be a shock too far.

If a company doesn't have enough cash to even lasted a few months, which a lot of popular stocks on youtube are actually doing, if it's cash flow is burning money, then yes, raising funds could prove very difficult in these circumstances. In times of uncertainty, it is critical to focus attention on your risk assessment and a very critical qualitative analysis of the businesses that you are invested in. To be frank, you probably should have done this analysis when the sun was shining in russia. We say that you should prepare your sledge in the summer, but if you are interested in a company that has strong fundamentals and a robust outlook and that company goes and smashes, every quarterly result come rain and shine, and that company is maybe growing at 40 or 50 per year, consistently and sometimes even accelerating and as business model is not predicated on geopolitical issues like oil.

Then what is the problem? Naturally enough with everything? That's happened in the stock market over the last three months. I get a lot of comments on my channel from people who fundamentally do not understand how investing works. A lot of people have simply not been in the game for longer than a few months. A lot of people have self-declared themselves to be some kind of financial geniuses because they invested during the biggest bull run in history.

There are a lot of keyboard warriors telling me that i am a back holder or telling me that, of course, i suck, because i shared some analysis about a company's financials, where i said some good things about their balance sheets and their p, l and the company. Then went and lost 50 percent of its share price, so i am clearly a complete idiot, but here is a simple fact: i do not care one iota. What the short-term price movement on the stock is, because i am not here to make one gazillion return in three months. I am not here to trade based on noise and i literally do not care at all about the dweebs coming out of their mom's basement.

To celebrate a macro market movement that proves exactly nothing. I am here for long-term investing gains that provide mathematically, robust performance over periods of time, measured in years and decades, because time has a very funny habit of separating the wheat from the chaff and all the noise panic, name-calling, made-up technical analysis and the rest of it Is going to dissipate into the annals of history with literally nobody caring about it at all in 20 years time? The only thing that'll matter in the long term is numbers.