Sp and black swans24 Mar 2022 06:22
Our sp is held back by 2 big black swan events. One war In Ukraine creating risk off atmosphere affecting expectations of valuations of unlisted shares and affecting the sp of our 3 traded shares. Second fear of major interest rate rises also affecting expectations of valuations. Our 3 traded shares well down on IPO and September 30 2021 half year results.
I must say I made 2 analytical errors on the war. First was not expecting Russia to invest beyond Donansk -if the invaded at all. Then having invaded more generally I expected a quick Russian military win followed by relatively limited terms to withdraw that would be met.
What we increasingly have is a military stalemate and the possibility of a Ukrainian win in a military sense. Unthinkable 4 weeks ago but the invasion has reveled Russian weaknesses and Ukrainian strengths few predicted. This is clearly not the successor of the Russian army that defeated Hitler and Putin has done little to explain to his own population and troops as to why they are fighting.
While the fighting itself is so far between Russian and Ukrainian nationals the crucial military intelligence and weapons supplies are international. All the Ukrainian army need to do is hold the territory they hold and they will be resupplied from the west a vastly superior set of anti tank and aircraft missiles than the Russians have. Speed was needed on the Russian side to prevent this resupply.
Hard to know the Russian personal losses and the Ukrainians have good motivation to exaggerate but indications are it is at least 4,000 and could be as high a 10,000. Deaths are at most 1/3 of critically injured (was 1/10 in Vietnam for the Americans) so a large chunk of the invading force now out of theatre after only 4 weeks. Can’t be sustained without a clear national consensus as to why fight that is lacking on the Russian side.
The Russians have the means to level a city but that does not kill the majority of the combatants just motivates them more to fight. I once visited Vinh Thach in Vietnam. The Americans had bombed the surface wiping out the village on a key N/S supply route but the population went literally underground inflicting constant losses on the Americans which has become a national celebration by the Vietnamese of resistance to invasion.
The longer the Russian army is in Ukraine and the more they kill the more they create a bitter enemy that will fight now supplied day almost unlimited western portable arms and intelligence of the precise coordinates of where the enemy troops and equipment are. with drones modern wars are more about intelligence than numbers of tanks. A 50 million pound tank is very vulnerable to a 10,000 pound drone if the Ukrainians have both and can hold out long enough to use them.
SP wise however the hot fighting ends is good. The sooner the better. A Russian loss probably better for shares than a messy Russian win. More certainly that Russian wil not invade
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