The Ukraine crisis has taken another turn.
A referendum is now set to take place on Sunday (March 16) to decide if the Crimean peninsula will become part of Russia, and the outcome is hardly in doubt.
The overwhelming majority of the population there is Russian ethnic, speaks Russian, and will almost certainly vote in huge numbers to become part of Russia.
On the other hand, the West has clearly stated that the referendum is a violation of the Ukrainian Constitution, as are the Russian troops sent in to control the outcome.
To the West, this referendum is simply not valid, will not be recognized by them, and will only increase the animosity along with the geopolitical temperature.
Last week in Oil & Energy Investor, I discussed what the United States and the EU will probably do in response to what is now a political fait accompli.
Today, however, I want to give you some perspective on what investors should do now to protect themselves from the disturbing signs of a return to the Cold War.
This will be an evolving process.
But here's what you need understand as the events unfold...
The Downside of a Deepening Political Game
Obviously, Sunday's referendum is just the first step in a political game where the rules are being made up on the fly.
Still, there are some moves investors can make to protect their portfolios. Better yet, there are even some opportunities to profit from the uncertainty coming.
Today's column deals mostly with portfolio protection, although I will also give you a short-term way to profit as additional pressure is put on the Russian stock market. In my next column, I will expand on the opportunities that are set now to emerge.
But let's stick to the effect this situation will have on energy stocks in the short to medium term.
There will be no war over Crimea, but it is also safe to say a simple appeasement is not in the cards either. It is into this uneasy middle ground that both geopolitics and an investor's response to it will need to be positioned.
First let's talk about the losers.
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.