War is not good, it is not good for the people involved and not good for any business not related to the defense industry, however war does exist and will continue. As investors, we tend to want to invest in domestic companies and want the country to be at peace or not at war within its border. As long as that happens, the economic cycles continue and you can tailor your investments to the economic cycle.

In an article from the Associated Press, the ongoing war between Russia and Ukraine, suggests that Ukraine is winning, even though there is no winner in the war. Russia was the dominant force, it has oil and gas reserves, a larger army and military machine and for 100 years the links between Ukraine and Russia were very strong, including most Ukrainians speak Russian, as well as the best universities for Ukrainians was in Russia.

In the last year, Ukraine has become very good at drones, which is less expensive than military equipment, and the range and level of expansive capacity has gotten longer. This changes the strategy of drone warfare. Because of the scorched earth policy of the Nazis in WW II, where they burned everything done, the world declared things such as infrastructure such as bridges and roads to be off limits or war crime possibilities, when the war is done. Military units and supply lines are always targets. The next target is energy infrastructure, so citizens suffer, but what is consider normal life can continue.

Russia has one of the largest oil and gas reserves in the world, so every once in while Ukraine’s drones hit refineries to ensure gas shortages or Russia cannot export oil and gas, which reduces their budget surpluses.

Recently Ukraine has been targeting Wildberries distribution centers. If you use or know Amazon, the process works that multiple small business send their products to Amazon distribution centers and then Amazon trucks deliver the products. In Russia, Wildberries does the same thing. The owner Tatyana Kim was worth $8.1 billion. The attacks on 20 Wildberries distribution centers across Russia meant billions of dollars worth of merchandise was burnt. Multiple small businesses have no income and on line shopping in Russia has a set back. In addition, to build the distribution centers, Wildberries took out loans at VTB (one of Russia’s biggest banks) and other lenders, paying the money back will be a challenge.

An estimated 500,000 to 800,000 sellers use Wildberries. The company has 100,000 retail storefront distribution points.

The government has asked lenders to restructure loans to small and medium sized businesses that lost merchandise. Wildberries has pledged to support sellers with discounts on storage, free transfer of goods to other sites, discounted loans and other measures.

Linking to dividend paying stocks, for those companies that operate in a war zone, have flexibility and many contingencies or Plan A, B, C, D….. is a way of survival. Companies not operating in a war zone could learn from the successful businesses. One of the reasons investors tend to buy these types of stocks is few people do not believe that in an economic downturn, the companies have the ability to have many contingencies to get through the downturn with the ability to make profits. No matter what the economic cycle is, can the company make money?

There are more questions than answers, till the next time – to raising questions.