“Are you crazy…?”
That was the reaction I got from a London investor I spoke with at a recent summer drinks party.
I had made the mistake of revealing that I thought it was a good time to start looking at investing in the Russian stock market.
His reaction was understandable.
After all, everyone knows that Russia — both politically and economically — is going to hell in a hand basket.
And with new U.S. and European Union sanctions inevitable after last week’s tragic downing of a Malaysian airliner over Ukraine, only a fool and a knave would risk his money investing in Russia.
Frankly, I’d heard it all before.
And his reaction merely reinforced my decision.
I actually left that summer party early, to make just such a recommendation in a very public way on the “After the Bell” segment on Fox Business last Friday.
Are You Crazy?
“Are you crazy?” is a reaction I often hear when I speak about Russia.
After its collapse in 1998, everyone from Warren Buffett, George Soros and Jim Rogers concurred with one investor’s sentiment that “I would rather eat nuclear waste than invest in Russia.” (Ironically, Rogers has since changed his mind — and has been a big buyer of Russia since it annexed Crimea.)
Even with that, last week’s events were a game changer in terms of making investing in Russia morally repugnant.
The U.K.’s Sunday Times reported yesterday that Russian rebels on the ground were now claiming that it was a Ukrainian fighter that shot down the Malaysian airliner, which was already pre-loaded with dead bodies.
The level of denial boggles the mind…
The State of the Russian Market
Just to be clear: I’m looking at the Russian stock market purely from the perspective of a short-term trading and long-term investment opportunity.
First, let’s get some perspective.
We’ve all heard about how the BRIC countries, Brazil, Russia, India and China, are set to take over the world. Looked at through the right set of economic lenses, their collective economies are already larger than that of the United States.
Yet, the BRICs collectively have hardly put any money in investors’ pockets over the past five years.
Nicholas Vardy is currently editor of the monthly investment newsletter, The Alpha Investor Letter, which provides longer-term global investments. He also writes two weekly trading services, Triple Digit Trader and Bull Market Alert, which focus on making short-term profits in the hottest markets in the world.